Technology Boosting Procurement Autonomy in Construction
Procurement managers and contractors are continually having to tighten the purse strings as the construction industry continues to be impacted by high inflation, increasing borrowing costs and lower financing levels.
“With many contractors continuing to work on razor-thin margins, following the impact of the pandemic and the rising cost of supplies, it will become increasingly difficult to maintain healthy profit margins over time. When contractors are under great financial pressure – it penetrates every part of the supply chain,“ says Shah.
As supply chain inefficiencies — among other factors — cause procurement teams to exceed budget, construction is experiencing the highest number of insolvencies of any sector.
“Take delivery delays for equipment and/or services as an example. Our research revealed that over a quarter (28%) of senior procurement leaders have experienced delays - driving frustration, project setbacks, and inflating overall costs, causing firms to run over budget. We also found that most contractors (65%) use basic spreadsheets or even pen and paper to manage site inventory,” says Neeral Shah, Founder and CEO of YardLink.
“However, one of the most concerning inefficiencies driving up costs is the lack of autonomy procurement teams have. In 30% of SME construction firms, CEOs and Managing Directors are involved in purchasing decisions, which adds another layer of complexity to the process. Ultimately, these efficiencies mean when companies do run over budget, they do so by an average of 46%, equating to £7.6 million.”
Ranked by Deloitte as one of the 50 fastest-growing technology companies in the UK, YardLink is the UK’s leading construction procurement platform. Founded in 2017 by Shah, YardLink serves over 3,000 construction SMEs and facilitate deliveries of equipment, materials, fuel and waste management services to over 10,000 projects across the country, with its platform that connects customers customers with over 700 highly vetted suppliers, enabling contractors to source and manage equipment, materials and services within seconds.
A former investment banking analyst, his idea to launch the B2B marketplace digitising the $1TN construction supply chain came while providing trade finance for construction buyers around the world, as he noticed the problems the industry faced: fragmented supply chains and inefficient procurement strategies.
Following that experience, Shah then started working at a high-growth tech startup in the UK, where he discovered the power of digital marketplaces and network effects. Connecting these two experiences, he knew there had to be a better, digital solution to one of the construction industry’s biggest challenges with supply chains. That was when he decided to create YardLink.
Using procurement to boost profitability
In the digital age, technology and digitisation are driving forces for positive change. Through driving efficiencies across their supply chain management, technology and data can give procurement managers a competitive advantage.
“Despite the tough economic climate, digital tools offer procurement managers and contractors multiple opportunities to reduce costs – from enabling complete visibility over the different moving parts of the supply chain to reducing administrative burdens. The truth is that procurement teams could gain complete control and visibility over their entire supply chains if they digitise their procurement processes. It will open the door to a wealth of opportunities to reduce unnecessary costs and complexities involved in legacy management systems,” Shah shares.
“To navigate their way out of this harsh economic climate, procurement managers must move towards embracing technology. YardLink's platform exemplifies a crucial technological solution for procurement teams and the wider industry to gain control over their supply chains. Designed to address many of the challenges mentioned above, the platform provides comprehensive supply chain management, offering visibility across numerous projects.
“To be more precise, it enables users to reduce procurement costs by consolidating supply chains and minimising extensive supplier interactions. It also facilitates precise product searches, reducing errors and giving procurement teams access to approved, certified suppliers available locally. These features offer an efficient solution to speed up and simplify procurement, ultimately helping construction companies improve their profit margin.”
******
Make sure you check out the latest industry news and insights at Construction Digital and also sign up to our global conference series - Manufacturing LIVE 2024
******
Construction Digital is a BizClik brand
