New Infographic Highlights Impact of Brexit on Construction
Uncertainty has been the dominant feeling for most UK businesses since the June 2016 Referendum resulted in a vote to leave the European Union. But with the planned withdrawal date fast approaching, this uncertainty is only increasing.
As the political situation changes daily, even hourly, it’s still not clear what Brexit will mean for the construction supply chain. Will new trade tariffs make components more expensive? Will imports take longer to arrive due to customs checks? And will changes in the value of the pound mean it’s necessary to find new suppliers altogether?
Faced with this uncertainty, many organisations have been turning to stockpiling – and as a result, construction businesses are currently facing the second longest delays for deliveries since March 2015. But with the situation set to continue, construction businesses can help to improve their situation by turning to digital technology.
To learn about the effects of Brexit on construction and stockpiling, take a look at our infographic, and read, below.
The rise of stockpiling
As the terms of the Brexit withdrawal remain unconfirmed, industries from healthcare to groceries are turning to stockpiling, and construction is no exception.
Demand for supplies has soared. Sales in the construction products manufacturing sector rose in Q4 2018 by 27% for heavy-side materials and 50% for light side materials. Other businesses, like those in the manufacturing sphere, are likewise attempting to secure components in advance, reducing availability further.
Stockpiling is creating additional challenges due to demand for transportation and warehousing. As a result, firms face delivery times that in February 2019 grew by the greatest margin for six months.
These delays are already impacting jobs that are in progress, and the situation could worsen in the weeks ahead. However, with access to more information about the status of work on-site, firms can plan ahead – and look to protect themselves.
The power of planning
Digital tools can enable firms to not only plan when materials will be needed more easily but track the status of jobs on the ground. At present, many firms struggle to know the exact status of jobs due to their continuing use of paper-based plans; a quarter (22%) of businesses still rely entirely on paper, slowing communications between the office and the jobsite.
On-site digital tools can easily collect information about progress on jobs in real-time and deliver site-labour and materials reports. The procurement team can then use this information to order materials for the point when they’ll be needed, even accounting for supply-side delays of days or weeks.
If a project is delayed by a lack of materials, digital tools can also enable contractors to provide ongoing updates to both clients and subcontractors. This means that even during times of uncertainty, everyone can be kept informed of progress.
Better supplier relationships
When materials are scare, relationships with suppliers can be critical for securing the components needed. Construction firms can use digital tools to create more collaborative relationships with their suppliers, particularly through meeting payment terms. Late payments can be enormously damaging to suppliers, especially if they are small businesses; 37% have run into cashflow difficulties as a result.
By linking supplier portals and purchase order systems to individual jobs, construction businesses can authorise payments more quickly, as well as ensuring prompt payment for supplies. This can encourage suppliers to prioritise these orders, safe in the knowledge that they will receive payment quickly and reliably.
Equally, construction businesses can also help to make deliveries as quick and hassle-free as possible by highlighting delivery locations on digital site-maps, along with any instructions for the supplier. By creating a more collaborative dynamic, firms can create closer relationships and secure crucial materials when they are in short supply.
When firms face material shortages, it’s more important than ever that projects are built right the first time. However, mistakes remain a critical issue for UK firms. Two-thirds of industry professionals cite rework as the biggest source of unnecessary time for their business.
Critically, correcting mistakes can also result in wasted materials. Anecdotally, we hear from firms that anywhere between 2 and 12% of materials may be lost to mistakes on each project, depending on its complexity. When materials are in short supply, this rework can create extensive delays and losses.
To ease the impact of shortages, it’s vital for firms to make the best use of the materials that they have. Digital collaboration tools can help to ensure that the whole team is working from the latest plans, with responsibilities clearly assigned. This will equally help firms to eliminate errors, maximise their productivity and boost their profitability in the long term.
Weathering supply chain uncertainty
Unfortunately, at present, there’s no end to the supply chain issues that construction is experiencing – and it could be weeks, months or years before the situation is finally resolved. It’s impossible for firms to fully insulate themselves against this uncertainty.
However, firms can place themselves in the best position possible by using digital tools to gain a real-time view of progress on the ground, foster closer relationships with suppliers and minimise costly rework. Whatever the political outcomes of Brexit, these attributes will help firms to navigate the years ahead.