Virtually all industries today are undergoing digital transformation, but the opportunities for cost savings, as well as productivity and service improvements, are arguably greatest in the Heavy Building Materials (HBM) industry because of all of their current manual and paper-based processes.
How is digitization starting to transform this industry? What’s the value proposition for contractors, haulers, and suppliers in this industry? I addressed those questions and more with Kyle Wilberts, a business consultant at Command Alkon, in a recent episode of Talking Logistics.
Today’s Challenges in the HBM Industry
The heavy building materials (HBM) industry is a lot different, and has different challenges, than traditional manufacturing or retail. Therefore, I began our discussion by asking Kyle to describe some of the unique challenges facing contractors, haulers and suppliers in this industry. Kyle noted that the ecosystem surrounding these three groups has changed dramatically over the past ten years. “The projects have become larger and more complex, with many involving budgets over a billion dollars,” says Kyle. “They are also being completed faster. Projects that ten years ago might have been completed in ten years are now being completed in three years, for example. So the expectations are much higher.
“At the same time, the projects are more complex, with more advanced materials. This requires more extensive verification and documentation by contractors, haulers and suppliers. Unfortunately, this is still primarily done using manual, paper-based methods in our industry. Likewise, accounts payable and receivables are also paper-based, often with hundreds of tickets per day having to be gathered and analyzed to understand costs. Thus, there is a lot of room for improvement and digitization.”
Unlimited Opportunities for Digitization to Help
Given that there is so much paper being processed in this industry, Kyle says there are virtually unlimited opportunities for digitization to help. He gives the simple example of signing tickets for receipt of materials. Instead of the slow, manual process of signing and collecting all of that paper, a smartphone app could be used to snap a photo of the load and ticket and send it immediately to accounting. “Perhaps the biggest advantage is for rejected loads,” says Kyle. “The photo can verify why the load was rejected rather than having to go back later to research and justify the rejection. This management by exception is much more efficient.”
A Supply Chain Operating Network for the Heavy Building Materials Industry
Kyle notes there are many other examples of where digitization can be used to drive efficiencies in the HBM industry. He says, however, that it all comes down to the ordering, delivery, and payment for materials, which involves different stakeholders. If you can digitize and automate those processes between industry stakeholders via a shared, common platform — which is the focus of BuildIt, a new solution Command Alkon recently introduced — then you can start to eliminate some of the inefficiencies that plague the industry. BuildIt digitally captures all of the pertinent information at each stage and centralizes it into a database all parties can access, given proper security. This provides immediate visibility to all stakeholders so they can analyze what is happening across multiple dimensions in order to make better, more accurate and timely decisions, adjustments, and payments.
Besides better decisions, one of the value propositions is standardization. Kyle explains that, “Prior to BuildIt, most of this information was stored in spreadsheets, which can be used a thousand different ways, [often creating a lot of confusion]. By allowing stakeholders to build one standard process everyone can use and understand, you eliminate this confusion. This leads to better communication and greater efficiencies.”
Another benefit is visibility and cost analysis. Kyle provided an example. “If I need 3,000 yards of aggregate to complete my work for the day and I look in BuildIt in the afternoon and see I have only received 1,700 yards so far, I know I’m not going to make my numbers for the day and I’m going to immediately ask the supplier where the rest of my order is.”
Kyle and I discussed other questions and topics: What are “tickets” and why are they important? What value does having baseline data offer? How is communication enhanced via a digital platform? What are the next developments?
I encourage you to watch the full video for answers to those questions and more. Then post a question or comment and share your perspective!