E-procurement and efficiency in the construction industry
During the past year or so, there has been much media coverage of the advantages of e-commerce to the construction industry. Even the smallest of firms have been considering how best to streamline their business and lower costs by using the internet at all stages of the demand and supply chain.
A carefully selected web-based solution can bring many advantages to any business. This is particularly so for those operating within the construction industry. In such a large and fragmented industry, there are several areas where e-commerce can bring immediate benefits. The extent to which e-commerce has aroused interest within the industry is obvious from the many projects announced and launched in the past year. High– profile names have added their support to various internet collaborations and ventures, but these projects have yet to make a noticeable impact. Many companies offer tendering and costing through to purchasing and project collaboration on a single website, but to date these appear to have been premature and too ambitious.
On average, project procurement costs equate to 30-40% of contractors’ annual revenues. Most of the time spent on procurement involves routine activities such as requisition, supplier selection, purchase order and material receipt processing. Around 75% of the time spent by a purchasing department relates to these lower value-added activities; consequently, less than 25% is spent on crucial longer-term activities, such as sourcing strategies and supplier partnering.
Procurement process optimisation
The service offered by easyMaterial is designed to streamline the procurement process. Developed by people from within the construction industry, this is a solution that will ease the procurement process. The internet does not instantly solve all the problems experienced in the `real world’. A platform for suppliers is provided by easyMaterial to display their product list, prices and stock to the business-to-business, business-to– government and, in the second phase, business-to-consumer markets; i.e. anyone with internet access. The site goes further than being solely an online catalogue, and works in real time, connecting to the ‘live’ database of each supplier, showing the customer real-time information. While providing the time benefits of a onestop shop, the easyMaterial system recognises registered users through the login details. This provides them with the ability to shop using their preferred suppliers, conduct instant product research, gain trade account access, and make price comparisons and checks on stock availability, delivery terms and conditions. Orders can be placed with several suppliers in a particular product sector.
Advantages for the project manager
The benefits such a system offers in sourcing, estimating and procuring are obvious, leading to dramatic cost reductions and greater efficiency from using existing sources. Furthermore, the traditional method of procurement is a paper-heavy operation, making bookkeeping and inventory management prone to error. The easyMaterial system gives a clear idea of the impact of supply costs on each project. It maintains a personalised record of the users’ past purchases, allowing access to a record of expenses and electronically archiving transactions.
A particular advantage for the project manager is that orders can be placed remotely and the accounts of current projects accessed. This facilitates monitoring of each project’s procurement activities, much like having a virtual filing cabinet accessible remotely to all those authorised by the login and password.
Continuing traditional relationships
There has been particular emphasis on maintaining traditional relationships between merchants and their customers. The creators of easyMaterial have sought to incorporate all the advantages of trading with a longstanding supplier. If the user wishes to trade with their favourite merchant, they can use their trade account and pre-existing discount price structure.
The classification system has been developed specifically for construction materials, such as concrete work, which splits into the headings of cement and aggregates, cement and admixtures, structural units, concrete reinforcement and miscellaneous. These then sub-divide further: for example, different kinds of cement and aggregate are listed. The shop floor is easy to use and products are selected from the drop-down menu of product categories. A powerful search engine enables products to be quickly located.
Resources from The Concrete Society
The site includes a section that enables industry professionals to access a comprehensive library of technical information. The Concrete Society provides easyMaterial with access to their on-line resources, and the Building Centre gives the opportunity to purchase all publications on-line. An extensive directory contains a comprehensive listing of industry professionals, including subcontractors, surveyors and architects.
The importance of independence
For a venture like this to be successful, it is important to maintain independence and serve the construction industry by providing a fair and neutral trading platform. This has led easyMaterial to receive support from a number of respected bodies within the construction industry. The Federation of Master Builders has exclusively endorsed the company and is encouraging all members to use the system.
Internet-based procurement is faster than the traditional route, helping users throughout the construction industry to focus on other aspects and maximise profits.
Copyright The Concrete Society Jul/Aug 2001
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