The construction industry is among the largest industries in the world economy, accounting for 13% of the world’s GDP. Approximately $10 trillion is spent annually on goods and services related to the construction industry. But despite the massive size, the construction industry struggles with lower productivity levels.
The construction supply chain is particularly complex. It encompasses a multitude of interconnected and interdependent activities involved in procuring and delivering materials for construction projects. Besides, the involvement of multiple stakeholders, such as suppliers, manufacturers, contractors, and project managers, further complicates the process.
A report by McKinsey suggests digitizing the supply chain process can unlock a staggering $1.6 trillion in additional value. And the integration of Artificial Intelligence (AI) and SaaS solutions in the construction industry can make it possible.
AI and SaaS technologies have emerged as significant transformative forces in revolutionizing the construction sector. They present promising opportunities to empower the construction supply chain and streamline operations.
This article provides a foundational understanding of SaaS and AI in construction. We will explore the many ways in which the two technologies can enhance processes and drive strategic construction supply chain management.
Overview of Construction Supply Chain
The construction supply chain is the process used to handle the flow of materials in the construction industry. It comprises multiple stages, including raw material procurement, manufacturing components, logistics, and project management. The process also involves maintaining the relationships between different stakeholders, such as suppliers, manufacturers, transporters, and more.
Successful supply chain management transports building materials swiftly and cost-efficiently. In other words, goods are delivered on time and within the stipulated budget, resulting in effective project execution.
But several recent disruptions, including the Covid-19 pandemic, the current global geopolitical situation, and the overall slowdown in new project development have put a strain on the construction supply chain.
In addition, there are some massive challenges that construction companies face in managing their supply chains. These include:
- Coordinating many fragmented processes
- Long lead times for sourcing and production
- Balancing inventory levels
- Adhering to environmental, safety, and legal regulations
- Cost overruns due to unexpected delays
- Limited visibility across the supply chain
All these factors further add to the complexities of the supply chain. Construction companies need an optimized supply chain that empowers them to complete their projects on time and maintain a competitive edge in the industry. Adopting AI and SaaS for construction can play a key role in overcoming these supply chain challenges. Let’s understand this in detail in our next segment.
The Role of AI in the Construction Supply Chain
AI is a revolutionary technology. It is fast becoming a key component of the modern construction industry.
AI enables construction companies to solve some of their greatest challenges, such as safety and operational costs. The technology can be used throughout the construction project, from planning and design to transportation and operation.
Let us look at some specific AI in construction use cases:
- Predictive analytics: AI algorithms can analyze massive amounts of data gathered from multiple sources to provide predictive analytics. This allows construction companies to anticipate any potential issues or predict delays. They can then take proactive measures to address the upcoming challenge and maintain business continuity.
- Demand forecasting: AI-enabled tools can analyze historical project data, market trends, and customer preferences to create accurate demand forecasting reports. Companies can use these reports to predict upcoming data and optimize material ordering and prevent excess inventory or stockouts.
- Supplier selection: AI technology can also help to evaluate suppliers in terms of product quality, dependability, and delivery times. Construction companies can continually assess the performance of each supplier and choose to work with the best ones. This will strengthen supplier relationships and boost supply chain efficiency.
- Route optimization: Construction companies can expedite transportation by identifying the most optimal routes for deliveries. This reduces fuel consumption, minimizes transportation costs, and decreases environmental footprint.
- Fleet management: Construction companies also use AI together with IoT devices for effective fleet management. They can benefit from real-time location tracking and fuel and battery monitoring. This can help to prevent equipment breakdowns and address issues before they even arise.
- Risk mitigation: AI can identify potential risks in the construction supply chain, enabling companies to develop risk mitigation strategies. Early detection of risks helps to reduce the impact on project timelines and budgets.
Leveraging SaaS Solutions in the Construction Supply Chain
SaaS solutions can streamline processes and boost efficiency in the construction supply chain. Besides, these solutions can enhance collaboration, communication, and decision-making.
Let us look at some specific SaaS for construction use cases:
- Cloud-based project management tools: There are plenty of SaaS-based project management tools that facilitate project planning, scheduling, seamless collaboration among team members, etc. Construction companies can use these tools to centralize all project data in one place and make informed decisions in real time.
- Procurement software: SaaS solutions streamline procurement by automating several activities. For instance, these solutions automate purchase orders and supplier management to ensure timely delivery of materials and equipment.
- Collaborative platforms: SaaS tools offer a collaborative platform where all stakeholders in the construction supply chain can communicate and exchange information. Such platforms improve transparency and foster teamwork by reducing the chances of miscommunication.
- Supply chain visibility tools: SaaS tools offer real-time supply chain visibility by allowing companies to track their inventory levels and shipment progress and pinpoint any potential issues. This improved visibility results in optimized construction supply chain management.
Integrating AI and SaaS in the Construction Supply Chain
AI and SaaS are uniquely positioned to benefit from each other. The amalgamation of the two presents a powerful way to optimize the construction supply chain. AI’s data-driven insights and SaaS’s cloud-based accessibility and collaboration features can help construction companies overcome traditional supply chain challenges. They can use the two technologies to unlock numerous benefits such as
- Improved data analysis: AI algorithms can analyze vast amounts of data. When combined with SaaS which centralizes all data, construction companies can gain access to a wealth of supply chain data that empowers strategic decision-making.
- Task automation: AI can automate several routine tasks in the construction industry like inventory management and supplier performance analysis. With SaaS, companies can enhance their operations and free up their valuable time to focus on more critical tasks.
- Optimal resource allocation: AI algorithms and SaaS platforms can assess historical data, market trends, and resource availability for optimal resource allocation across different construction projects. This helps to improve viability and reduce operational costs.
- Improved supply chain visibility: This is the most crucial benefit of integrating AI and SaaS in the construction industry. Combining AI’s predictive analytics with a cloud0-based SaaS platform can offer real-time visibility into the supply chain. Construction companies can track project progress and identify potential bottlenecks. They can also take active measures to mitigate the risks and ensure time project delivery.
Here’s everything you need to know.
A construction firm prepares and sends submittals to show how each part of the construction process will be executed. These submittals are aimed at minimizing defects and miscommunications during the construction process.
Algoscale’s client has to browse through hundreds of manufacturer websites to understand the proposal. This is a tedious and time-consuming process. The client required a solution that crawled multiple websites and collated data as per the requirements, displaying timely and accurate information.
The experts at Algoscale created a central repository that stored varied artifacts. The repository automatically grew each time a new artifact was discovered. Next, we designed an inbuilt submittal editor using APIs. An AI-powered web crawler was also activated by leveraging computer vision to analyze data from the designer’s specifications. This helped the client to locate the most appropriate matches, offer competitive options to distributors, and enable quick document markups.
As a result, the client was able to streamline the submittal process. The bid preparation time was cut down by 75%. The software also reduced the cost of acquisition and increased the number of bids to be processed. Thus, the client could submit high-quality bids while focusing on his core business functions and customer service.
AI in construction has massive potential. From planning to designing to optimizing supply chain management. AI combined with SaaS can unlock new avenues for construction companies.
If you are not yet using AI and SaaS for your construction business, you must take the leap now. Harness the power of our Artificial Intelligence services and take your business to the next level.
Our experts at Algoscale possess a deep understanding of this industry and can help you streamline your supply chain management. With us, you can experience perceptible benefits such as faster deliveries, optimized inventory, better collaboration, and timely project completion. Get in touch with us today to know more.