Process, Technology | 7 min read

Production Planning: Mistakes To Avoid in Building Materials Supply Chain Management

Posted By
Emily Buchan

It's safe to say that mistakes in supply chain management can be costly—especially when it comes to important areas like production planning and scheduling. These costs can quickly add up not only in time spent correcting them, but also in actual resources and dollar costs you'll incur.

To optimize your production planning and delivery systems, it's always important to consider what available measures to take to avoid these common construction materials supply chain mistakes in the future.

Mistake #1: Inadequate Risk Management

By far, one of the biggest mistakes that supply chain management professionals often make involves underestimating the sheer amount of risk they're likely to face. More often than not, they're so focused on today that they fail to plan for the future.

Quality management is obviously a big concern, as no building materials manufacturer wants to send poor quality products to others. By having a solid quality management system in place, you can avoid shipment delays due to issues like faulty materials in a way that helps meet or exceed customer expectations as well.

Transportation failures and delays are also an omnipresent risk, but they're especially so given everything going on with the COVID-19 pandemic. Adequate risk management becomes about building time for these potential delays into your delivery process so that in the event they do occur, at the very least the rest of your supply chain is impacted as little as possible.

To prepare for risk as much as possible, begin by creating a construction supply chain emergency plan. Think about all the different ways that you'll be able to move materials around, all while setting aside some type of emergency budget that you can draw from in case you experience disruptions. You'll also want to build up your inventory by creating a reserve of essential materials that you can use to continue normal operations, even if your business is impacted for several months at a time. This includes not only finished products but also raw materials as well.

Finally, conduct a supply chain vulnerability audit to see where your weakest links are. This will help illustrate where you need to find alternative options.

Mistake #2: Mismanaging Manufacturing Capacity

Another issue that often creeps up unexpectedly involves organizations that allow their supply chains to get too "messy" by working with too many vendors at one time. On the one hand, a certain amount of this is expected as your business continues to grow and evolve. On the other hand, if your supply chain involves a significant number of vendors, along with other entities like contractors, suppliers and shipping companies, it just makes everything far more complicated (and risky) than it needs to be.

Every so often, you should look at all of your supply chain partners and move away from any that you don't explicitly need to be working with. Doing this is also often a great way to identify those vendors who may actually be hurting your bottom line, not helping it. Striking a balance here can be tricky, sure—but again it can help avoid major hurdles, remove bottlenecks, and help make your supply chain more cost effective and efficient as well.

Mistake #3: Making Do With Outdated Technology

Believe it or not, there are still many building materials companies that are still operating in a world of pen and paper—which is a major problem in and of itself. If you're still performing certain key functions like construction procurement or manufacturing planning manually and are trying to make sense of everything with hard copies and paper records, it's likely that you're dealing with the same recurring problems time and again. Much of this has to do with outdated technology—if the tech even exists within the enterprise at all.

By embracing a solution like an automated enterprise resource planning system, however, you can streamline your supply chain operations significantly. It's about more than just learning how to make a production plan and communicate production schedules and order lead times to channel partners. Not only does this give you a chance to automate certain core administrative tasks like document management and raw materials procurement, but it also helps simplify tasks like accounts payable as well. Not only will you be able to make sure these core tasks are taken care of in a way that is A) accurate and B) repeatable, but you'll also decrease overhead costs and be able to focus on those business development opportunities that truly need your attention.

Mistake #4: Collecting Data Rather Than Information

Finally, you need to understand that one of the most invaluable resources that your business has access to is, and will always be, your data. Effective supply chain management is about so much more than just delivering goods to your direct and indirect distribution channels. Both you and your partners are creating a tremendous amount of data every day regarding consumer purchasing behavior, social activity and more—all of which gives you insight into how to serve them better in the future. It would be a hinderance not to tap into this insight whenever you have the opportunity to do so.

Not only that, but data also helps shed light into other important areas of your business like the cost of raw materials, the cost of machine maintenance, the cost (and value) of supplier contracts, downtime costs and productivity metrics.

Far too often, manufacturers make the mistake of assuming that data related to inventory is all they need to be focusing on. But really, it's so much more than that. You need to pay more attention to ALL of the data that is available to you to uncover the true story about what is going on with your business and where the industry will be 12 to 18 months from now.

You'll also want to make sure that data is able to freely move across your supply chain so that it is always in the hands of the people who need it the most. This is another area where an ERP solution can help you succeed—it will break down those data silos that commonly exist with outdated technology to guarantee decision makers throughout your organization and partner network are equipped to make good decisions.

Likewise, a more modern solution will also help address another major issue impacting the proper use of production planning tools: cybersecurity. If sensitive customer information is stolen by hackers, it could do an incredible amount of reputation damage that you might not ever be able to recover from. At a bare minimum, putting some type of modern IT solution in place can minimize the risk of this happening as much as possible.