Expert Insight: Managing the risk from rogue construction procurement
COINS' Procurement expert, David Bullock, explores the risks caused to construction businesses through rogue procurement and highlights how construction software can reduce these.
During these crazy days of lockdown I have had plenty of time to review my own procurement behaviour as an individual, and as a family. I don’t think we are alone in the fact that our online purchasing has gone through the roof. I can’t actually remember when I had a week go by without there being a parcel left at my door, and our cardboard recycling mountain growing!
My wife would probably claim that my procurement has ‘gone rogue’, did we really need that 1kg bag of coffee beans? Did I get them from our usual shop? Did I get them at our preferred rate, with free delivery? The answer was yes we did need them, yes the usual supplier, and yes it was free delivery. I knew what we wanted, where to get it from and the terms that I could purchase it under. This was made possible by procuring in the most efficient manner for the goods that I required, and they were delivered the next day. Everyone is happy!
Over the last few years I have talked with many companies within the construction sector, and I hear a similar message about knowing what they spend, but not really knowing what they buy.
The construction industry is such a complex sector and it is very easy for there to be many inefficient procurement processes in play, through no fault of our own. That’s just the nature of the beast. We may know what we need for our job, we may search around for the items and then try to procure them. In some cases complex approval processes tie everyone up in knots, fuelling confusions and causing delivery delays, in other cases these rules are too lax and we may end up with the goods we want but they may not be fit for purpose, or potentially put us in harms way if they do not meet the right health and safety standards.
Unfortunately this has been happening for years and its difficult to see how we can break out of this cycle.
Your supply chain management team is doing their best to manage umpteen partners and negotiate very attractive product prices for your business, only to see the site-based construction teams circumvent the preferred supplier with someone else, probably with good intentions. They were perhaps not aware of the hard work that has gone into building up a strong buyer-supplier relationship and the wider savings the business could have made. It all adds up! It affects the bottom line and the profitability of the project and thus the business. Inefficient processes, rogue procurement, poor supplier relationships, lack of visibility.
So, where does my own ‘procurement at home’ story come into this? It highlights the fact that we are already becoming used to the efficiencies that an online world can bring to our home life and that there must be a way to bring them into our working life.
Well, a wind of change is coming in terms of how we will procure in the future.
We get bombarded by messages across social media about digitisation within the industry and how poor the construction sector is at moving with the times. We are seeing that our own home lives are changing, our own business practices are changing too. We work from home more than ever before, Teams and Zoom meetings are becoming the normal way to do business these days.
The construction industry can become so much more efficient if we only take a look at how we can reduce the time and manual processes within our own procurement function; provide visibility of who your staff should be procuring from, and what products they can procure; reduce the risk of the wrong product being purchased, which could put people in harm’s way; provide greater visibility of what is being bought; allow clarity of where your requisitions and purchases are in the process.
Software for construction companies can help to transform procurement processes, enabling teams to access real-time information, wherever they are based, on a single platform. COINS construction management software has fully integrated features such as e-Procurement tools that revolutionise how construction businesses requisition and order; supply chain management construction solutions which monitor and manage performance, adhere to compliance and governance, and create a more collaborative supply chain; and an Electronic Trading platform which becomes embedded into your ‘business as usual’ approach.
A wind of change is coming to the construction industry and COINS is determined to help drive procurement efficiencies right across the sector for contractors, house builders and their respective supply chain partners alike.
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