How Investing in a Materials Management Software can Save You Thousands of Dollars by Reducing Inefficiencies

While materials count for a considerable amount of construction costs, the way materials are managed seems to be improvised rather than approached methodically. In the construction industry, one of the common challenges organizations face is issues with their onsite material management. Our research suggests that the management of materials effectively has, over the years, been a problem for most firms in the construction industry. In construction project operations, there is always a tendency for mismanagement of materials creating various operational and business challenges. 

But what is Materials Management in the construction industry? 

Construction material management is the process of sourcing appropriate materials at a reasonable cost and ensuring their availability — at the right place and time — to meet project requirements and deadlines. It is a vital function for construction projects of every scope. The quality of your construction material management can make or break a project budget. A poor materials management strategy can result in skyrocketing costs through decreased labor productivity, material waste, and missed project milestones and deadlines. However, a carefully-planned materials-management strategy has the potential of an immense impact on the business growth of your organization. 

The key objectives of an effective materials management process are as follows: 

•  To have adequate materials on hand when needed 
• To pay the lowest possible prices, consistent with quality and value requirements for purchased materials
•  To minimize pilferage and better manage inventory 
• To operate efficiently 

The importance of effective materials management 

Since materials constitute a majority of the costs of a construction project, managing them effectively might have an immense impact on the long-term sustainability and growth of your organization. Some of the key factors why materials management might impact your business are as follows: 

• Reduces idle time of onsite labor 
• Ensures better planning – to gain an economy in purchasing raw materials 
•  Improves inventory management – to carry reserve stock to avoid stock out 
•  Satisfies demand during the period of replenishment  
•  Reduces pilferage and accuracy in stock reconciliation
•  Stabilizes fluctuations in consumption
  

Materials Management: Traditional and Non-Digitized

Lengthy process, siloed, risk of outdated information, manual & paper-based record data

Figure 1- Traditional materials management process (before Steer)

The process above represents the traditional materials management process before using a Construction management process. Without the use of a technology application, this is highly siloed, lengthy, and prone to human errors if recording data is paper-based. The total cycle time (including waiting time) is almost 153 hours and this does not include inefficiencies due to manual record keeping, paper-based forms, and human errors.  

Materials Management: Digitized

Instant, Streamlined, Real-time status visibility, Collaborative, Digitized data records 

 Figure 2- Digitized materials management process (After Steer) 

The efficient use of construction management software makes the materials management process digitized and therefore streamlined, collaborative with the status of any request available for the concerned stakeholder to view accurately real-time. Comparing the cycle time to the manual process highlights a significant reduction in cycle time to 94 hours (compared with 153 hours in the manual process). While this translates approximately into 40% time savings, it must be noted that the qualitative factors of convenience and visibility cannot be overlooked.  

Computing the ROI of a Materials Management Software 

Computing the total number of hours saved (annually) by digitizing the Materials Management process would give us the Productivity Gains ROI of a staggering 345%.  

While these would be the gains due to process optimization, the implementation of a materials management software would result in significant materials cost reduction. While research has pegged this between 6.0-9.7% of total project cost, this would translate into approximately 144% of project cost savings ROI.

Combining both of the above would give us approximately ~600% ROI on using a materials management software, which makes it an absolute no-brainer to deploy your preferred digital application immediately.  

The ROI Calculator for the materials management software is available here for you to enter numbers specific to your construction project/organization to gain a better understanding of how a materials management software would be able to impact the profitability of your company.  

Steer: Seamless Materials Management for Business Growth 

Construction materials account for as much as 65- 70% of the overall construction project budget, it is critical to optimize planning, procurement, utilization, and management of project inventory. An effective material management system involves many moving parts and numerous stakeholders. The reliance on pen-and-paper methods of organization in the construction industry can often lead to errors and miscommunications, which contributes to many of the problems and delays discussed above. 

Construction companies today are starting to turn to digital solutions as a way to address these problems. Leveraging technology can help construction companies to better manage their inventory while having end-to-end control, from estimate to consumption. The top construction materials management solution would focus on empowering decision-makers, by optimizing core processes and providing real-time insights across materials categories.  
 
Transitioning your project team to Steer Platform can bring many benefits to the overall growth and profitability of your construction business, providing close to 600% return on investment on the software. While there would definitely be an increased order accuracy, the platform would also ensure improved scheduling of material delivery to minimize delays and maximize backhauling opportunities. Steer Platform would help with timely payments and increased trust between subcontractors and the digital tracking of high-risk materials to ensure that your team is always on top of any ad-hoc requirement that might need catering to. 

Overall, Steer ensures better organization of material management and access to information through digital storage of all documentation such as order forms, invoices, and other documents. Not to mention the benefit it might provide to improved accuracy in budget forecasting and scheduling from better access to up-to-date data. 
 
Powered by its no-code engine, the pre-built templates construction firms and contractors complete control over their purchasing processes, inventory flow, and tracking, while ensuring that the solution might be customizable to your organization’s unique process requirements.