19 aug 2020
Creating value in your building materials company
As the way we live and work changes, the building materials industry must readjust. Specifically, companies need to re-evaluate their business models. Part of any business model focuses on where and how value is created within the organisation. In the current environment, business models must focus on creating value through operational performance. To accomplish this, digitalisation is critical.
Digitalisation connects every link in the building-materials value chain. Systems communicate with each other. Instead of information sitting in silos, that information comes together to give you a true picture of your operations and anything else you want to know within your company. This isn’t about improvements in your processes. This is about changing the way you do business. Armed with accurate and actionable data, your company becomes more agile and can create more successful outcomes.
In a 2016 report by Roland Berger, 100% of building materials companies surveyed in Germany, Austria and Switzerland felt they had not ‘exhausted their digital potential’. It’s clear that the building materials industry knows they need to do more. On the whole, building materials companies focus their digitalisation efforts on production and distribution. The report doesn’t tell us why these companies feel they need to do more to digitalize, but it’s obvious that they’re not creating the value they’d hope for. Otherwise, they’d be satisfied with what they are doing.
From our experience, we have an idea of what’s most likely happening. While some of these companies aren’t adopting all of the technologies available to them, others are working with legacy systems.
Legacy systems throw up roadblocks
The 2018 AMCS Digital Transportation Barometer survey uncovered several issues facing waste management and recycling companies, one of which is that legacy systems are the biggest challenge to a successful digital transformation.
Legacy systems have several problems, one of which is that they’re outdated, which makes them difficult to manage. They require frequent maintenance, and contemporary solutions can’t integrate with your old systems without investing time and money – hardly a practical route when you’re looking to cut wasteful spending. Many building materials companies fall into supplementing their legacy systems with paper processes.
This is anything but digitalisation, and working this way is not creating value. In fact, it has a negative effect on the company. Without integrating systems, information is still sitting in silos, inaccessible to employees in different departments. Those systems can’t communicate with each other and share that information. It can even slow down process automation rather than speed it up.
The lesson here is, integrating your systems is the first step towards creating value.
Transforming operational performance
Your smartest move is to use cloud-based systems, such as your ERP and the modules you want to use with it. There’s no upfront capital investment required, it scales with you, nor is any maintenance involved – it’s done seamlessly by your provider on their end.
But what cloud-based solutions can improve your company’s performance, thus creating value?
Building materials logistics involves a series of highly complex supply-chain demands and narrow time windows. For example, the ready-mix concrete sector requires you to know where your trucks are every minute of the day. You have to calculate loading times and driving times, taking into account any traffic problems. Then there’s waiting time, which you need to minimise in order to increase efficiency. And, of course, you have to react to changes in order volumes and ad hoc orders.
Digitalisation automates all of these processes. No errors or miscalculations. It’s done swiftly and seamlessly, enabling your team to get it right the first time. This shows your customers that you understand their needs. What would constitute challenges to your non-digitalised competitors is easy for your company. You can perform where others can’t, in other words.
Now imagine if you could capture every event that occurs during the course of a day, whether you distribute concrete, cement, or aggregates. A mobile device in your truck can capture these events in real time and communicate that information to the dispatcher back at the office. The dispatcher can see what’s happening and re-optimise the rest of the day’s planning in response.
For ready-mix concrete, this would improve your number of loads per vehicle by up to 25%. For cement. For every building materials company, re-optimising the day’s planning enables them to accommodate customers’ needs.
Another digital tool: Multiple stops are common, especially in the cement sector. Figuring out the logical sequence of deliveries is time consuming. Route optimisation automates this process for you, giving the drivers the most efficient routes. Your company meets narrow time windows (while lowering your CO2 emissions), which demonstrates your reliability. Hence, customers remain loyal and continue to use your services, which creates more opportunities and thus, value.
With digitalisation, documentation is electronic. Everything, including certificates, photos and signatures, is easily accessible using a mobile device. Drivers don’t have to fiddle about for their paperwork. For third-party hauliers, who are often juggling different jobs, this is tremendous benefit that lets them better service your customers. Again, value.
Transportation optimisation can monitor cement distributors’ stock levels, so that they never run dry and can fulfil customer orders. This is another example of seizing opportunities and meeting customer needs.
This is also a huge benefit for aggregates. For instance, transporting some materials in certain areas requires a certificate authenticating the material type and where it’s coming from. The ability to call up your documentation in an instant when called upon is vital to optimising your operations.
Talk to AMCS now
Digitalisation provides fantastic efficiencies while making your operations transparent. This isn’t the future. Digitalisation is happening now. It’s transforming construction. If you’re going to perform at optimal levels, it needs to transform your company too.
At AMCS, our deep knowledge of the industry and digitalisation means we can help you create more value. Get in touch today and we’ll be happy to answer any questions.