The construction materials industry, known for its vast scale and global presence, is continuously striving to enhance its competitiveness by refining its procurement processes. Material procurement in construction plays a pivotal role in the industry's success, prompting companies to explore innovative strategies and tools. Over the past years, the adoption of procurement tools has revolutionized the way companies operate, leading to a multitude of advantages. In this article, we will explore the benefits of using these tools in construction materials procurement and showcase companies that have successfully implemented them.
What are the benefits of using procurement tools in the Construction industry?
- Improved supplier relationships: According to a report by Deloitte, supplier relationship management is a critical aspect of procurement, and procurement tools like FactWise and SAP Ariba can help companies manage their supplier relationships more effectively. CRH's use of a procurement tools to consolidate suppliers and negotiate better prices resulted in savings of up to $1.1 billion in 2018, according to a report by The Construction Index.
- Streamlined processes: The construction industry is known for its complex procurement processes, and tools like Procore and Aconex can help companies streamline these processes. A report by MarketsandMarkets forecasts that the global construction management software market, which includes procurement tools, will grow from $1.8 billion in 2019 to $2.7 billion by 2024. LafargeHolcim's use of Aconex to automate its invoice approval process resulted in a significant reduction in time taken, according to a case study by Oracle.
- Reduced costs: According to a report by McKinsey, construction companies can achieve cost savings of up to 20% by implementing digital solutions like procurement tools. USG Corporation's implementation of a procurement tool that automated its processes resulted in a 30% reduction in procurement costs, according to a case study by SAP.
- Improved transparency: Greater transparency is a key benefit of procurement tools. According to a report by Accenture, procurement tools can provide real-time visibility into procurement processes, enabling companies to identify areas for improvement. CEMEX's use of a procurement tool to gain better visibility into its processes resulted in significant cost savings, according to a case study by JAGGAER.
- Better risk management: According to a report by Grand View Research, the use of procurement tools can help companies manage supply chain risks more effectively. Boral's implementation of a procurement tool to improve its supplier risk management resulted in greater visibility into its supply chain, according to a case study by SAP Ariba.
- Improved compliance: Compliance is a critical aspect of procurement, and procurement tools can help companies ensure compliance with regulations and standards. Saint-Gobain's ensured its suppliers met ethical standards and environmental regulations by using procurement tools that resulted in improved compliance, according to a case study by SAP Ariba.
- Enhanced collaboration: Collaboration is essential in the construction industry, and procurement tools like Procore and Aconex enable greater collaboration between stakeholders in construction projects. Aconex's use on the construction of the new Wembley Stadium in London resulted in improved collaboration and communication between stakeholders, according to a case study by Oracle.
- Improved forecasting: Procurement tools provide data analytics capabilities that enable construction materials companies to forecast demand and plan procurement activities. According to a report by MarketsandMarkets, the use of procurement tools for data analytics is a key trend in the construction management software market. This helps to reduce the risk of stock shortages and overstocking, improving inventory management.
In conclusion, the adoption of procurement tools has brought significant benefits to the construction materials industry, revolutionizing procurement processes and enhancing overall competitiveness. Material procurement in construction plays a vital role in driving these advantages, leading companies to explore innovative strategies and tools. As the industry continues to evolve, leveraging procurement tools will be crucial for construction materials companies to stay ahead in a highly competitive market and ensure successful material procurement processes.
FactWise is a unified E-procurement platform with a fully integrated suite of procurement products. The platform is used by global product manufacturing companies to transform their procurement organization via analytics and automation to reduce costs, improve supplier diversity and strengthen supplier relationships, mitigate risk, meet ESG goals and standards, and increase compliance and efficiency.
At FactWise, we are committed to building truly distinctive procurement software solutions that delight users and provide sustainable positive impact to the organizations we serve. We do this by providing transparency and insights to leaders (31% increase in governance), streamlining and automating processes to improve efficiency (20% increase in efficiency), and driving bottom-line impact by unlocking savings potential (25% cost reduction for direct spend).