Business

Increase Efficiency to Offset Costs and Survive the Materials Shortage

Viable solutions for businesses to gain the visibility they need to cut down on wasted hours and lost profits.
By Bart Ronan
January 26, 2022
Topics
Business

The construction industry is in a difficult position: Labor shortages are straining operational capacities while the federal infrastructure bill is going to create a remarkable influx of new projects that could prove difficult to manage in the current environment. These circumstances are made even more difficult by a materials shortage that is adding tremendous costs to construction projects nationwide. It is projected that steel, iron scrap and especially lumber have surged in cost this year. With supply chain issues only getting worse, the industry needs to consider how to account for revenue lost to increased costs.

Every business has inefficiencies, but construction companies are particularly prone to the inefficiencies that are the result of manual processes and legacy software that can’t adapt to today’s modern tech environment. The industry needs to embrace construction technology that can help them regain this year’s losses. If contractors are going to adopt one piece of new technology this year, they should be sure it provides the tools needed to quickly create efficiency in:

  • Scheduling and dispatching;
  • Asset utilization;
  • Fleet management; and
  • Invoicing and payments.

Scheduling and Dispatching

Scheduling and dispatching with a white board, spreadsheet and phone calls, while standard, are actually costing businesses valuable time and money. Dispatchers are required to stay sharp through hectic conditions and juggle several tasks at once, most of them tedious and time consuming. Construction tech solves this problem by putting all of these tasks into one digital system that gives dispatchers a clear view of their overall logistics and the ability to adjust quickly, when needed. This shift allows dispatchers to turn their attention away from answering phone calls asking where trucks are toward more high-impact activities for the business.

Asset Utilization

A key metric for any business is how assets are actually performing against where they should be. Especially while facing a materials shortage, construction leaders need to know that their trucks are where they need to be, when they need to be there and that they are working at capacity to get materials to the jobsite.

Tracking asset utilization and resource allocation is important because:

  1. Increasing the hours that each truck is out on the road and full of materials is one tactic to steer businesses toward more operational efficiency; and
  2. Knowing how many hours trucks are in use gives valuable insights into planning for repairs and preventive maintenance that can be completed during the slower times.

The last thing a business needs is assets that are not driving profit or subject to preventable equipment breakdown—technology can provide the insight needed to prevent this.

Fleet Management

Construction tech has come a long way with the real time visibility it provides into trucking operations. GPS tracking and route optimization allow construction leaders to save critical time and operational expenses.

Real-time GPS tracking allows businesses to see where their trucks are versus where they are supposed to be, accurate clock-in and clock-out times for their drivers, and where routes see the most delays. This visibility keeps drivers on track (therefore on budget) and gives construction leaders valuable insight into day-to-day operations they never had previously. Similarly, route optimization takes into account live road conditions that cause delays and automatically updates the best route to get materials where they need to go. This saves on fuel costs and driver hours and improves overall efficiency.

The increased visibility and route guidance that GPS can bring also provides more opportunity for dispatchers and fleet owners to identify back-haul opportunities. Ensuring trucks are driving with a full load in both directions ensures the company is maximizing the potential of the fleet.

Invoicing and Payments

A little known cost driver is, ironically, invoicing and managing payments. Without a streamlined system, companies should expect additional costs, errors and time delays that can cost thousands of dollars. If invoices aren’t processed properly, it creates more work for back-office teams. On average, businesses lose 728 hours annually due to manual invoice processing. A digital system that keeps an accurate record of employee time cards, payment logs, load slips and more can save dollars and time for the team.

With the current materials and labor shortages, technology can also provide the mechanism needed to pay haulers more quickly for their work. Delayed and prolonged payment cycles have plagued the industry for decades. For example, hired haulers or fleets can often go without pay for 30, 60 or even 90 days. Construction tech platforms offering accelerated payment methods can cut that down to seven days—or less. Adoption of the chosen technology is just as important as the technology itself and offering faster payments is a proven way to gain the adoption you need to see an increase in efficiency.

The materials shortage is set to have a long-term impact on construction company operations even after the initial shortage is over. More than 80% of contractors report at least one materials shortage, and 94% say cost fluctuations are having a moderate to high impact on their businesses. The technologies outlined above are viable solutions for businesses to gain the visibility they need to cut down on wasted hours and lost profit, offsetting the financial burden of materials constraints.

by Bart Ronan
Bart Ronan is the CEO of Trux, a Software-as-a-Service (SaaS) solution designed to help material producers, trucking companies, and contractors streamline truck scheduling, driver communication, and back-office processes. Before joining Trux, Bart served as Senior Director of Finance for Fuze.

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