Getting the Edge in Today's Global Product Supply Market

As developers and architects demand more high-quality and unique building materials, acquiring supplies has become a complicated endeavor. For suppliers and buyers alike, the expanding global market for specialty products poses both challenges and opportunities.

By David Balik

In all types of architecture - commercial, residential, public sector, or private - the bar for superior design has been raised. As designs become more innovative, so do the materials required to execute them. As a result, contractors are demanding more high-end, specialty materials from the supplier market.

That increase in demand is great news for suppliers, and the growing menu of products is great for contractors. But in today's global marketplace, that demand also presents new cost and service issues. Many specialty materials must be procured from overseas manufacturers and distributors, making supply chains more complex and increasing the cost of doing business.

Regional building industry suppliers are experiencing significantly higher supply-chain costs, which translate into higher retail price points for materials. In turn, many contractors are procuring specialty materials directly from overseas to avoid these costs. But many of those contractors are starting to experience poor customer service and inflexible ordering procedures from the overseas supply market. It's a no-win situation for both sides in our regional market.

So, how do suppliers and contractors remain competitive but also obtain excellent customer service in the global marketplace? For suppliers, the answer is to change the way you manage the supply chain. And for both contractors and suppliers, a prime solution is to revamp how you track and manage product supply and project data.

On the supplier side, your supply chain is the most important aspect of your operations. A properly managed chain adds to the bottom line, while a poorly managed one can bankrupt you. Incorporating the right business technologies and processes can drastically reduce the cost of doing business.

The key is to make your supply chain visible from start to finish to every entity that touches it. This is especially crucial when dealing with complex and precise architectural products for large construction projects. Often these products require unique fabrication with contributions from many different manufacturers before production is complete. The ability to produce, pack, ship, and track the right product at the appropriate time is essential to keeping projects on schedule.

To maximize your chain's visibility, a primary step is to integrate ordering, production, accounting, and warehouse management systems into a Web-based portal. This allows sales representatives, customers, distributors, and manufacturers to track inventory, place orders, and access product specifications online. Better yet, you can quickly identify and remedy inefficiencies in ordering, production, and delivery processes.

For example, General Glass International recently analyzed how we were handling requests for specialty glass samples. The results were astounding. Multiple product requests from the same prospective customer had gone undocumented. Shipping costs had not been tracked. Since we lacked an automated process for tracking these requests, the company spent more than $100,000 in excess shipping costs over two years. So, we employed a local IBM business partner to build a new Web site that lets users view images of our different products, track sample requests, and check inventory in real-time. The return on that investment was immediate.

Another solution works for both suppliers and contractors - properly equipping and mobilizing your workforce. Today's construction environment must be "on demand," or in other words, flexible. Providing employees with up-to-the-minute information about projects, orders, and client data is crucial to being responsive and curbing costs.

To accomplish this, contractors and suppliers need to make project data accessible and equip the workforce with the right access tools. As production schedules change or specs are altered, having "in-office" access to project data in the field is critical. By providing the workforce with the right tools and connectivity, the project team can make order modifications immediately, helping to spare additional production costs.