The COVID-19 pandemic has thrust the construction industry—and most other industries, for that matter—into uncharted territory. Yet according to the consulting firm McKinsey, a roadmap does exist to help construction businesses stay on course operationally and put them in position to thrive in the “next normal,” whatever that ends up looking like.
“Companies that came out ahead after the financial crisis of 2008 typically moved fast and hard on productivity (including cost reduction), rapidly reallocated resources, and made bold moves (including early divestitures and acquisitions in recovery) to prepare for the future,” members of the firm’s engineering, construction and building materials practice write in a recent blog post. “Leaders also invested heavily in digital technologies, differentiated their portfolios and offerings, and cleaned up their balance sheets.”
One bold but necessary move that construction material manufacturers are making as a result of the pandemic is to invest to strengthen their planning and forecasting so they—and their supply chains—are better equipped to overcome disruptions and meet customer demand during a period of unprecedented unpredictability. In particular, manufacturers in a wide range of industries—including metals like steel and aluminum and building materials such as roofing, flooring, cement and concrete—target four key areas to bolster their planning and forecasting capabilities.
1. Workplace safety
An already serious shortage of skilled construction labor has worsened due to the pandemic, a powerful reminder of just how critical people are to executing production plans in a highly changeable business environment.
Digital tools can help a manufacturer keep a workforce safe, healthy and productive, enabling it to conduct health screenings and track screening results, monitor compliance with social/physical distancing policies and generally track employee interactions in the workplace.
Integrating a greater degree of automation into factories not only helps to improve worker safety, but it also reduces risk of manual errors and frees people for higher-value pursuits like customer service and innovation that are essential to maintaining a competitive edge.
2. Intelligent supply, demand and logistics
“As supply chains worldwide have buckled under extreme pressure from the pandemic,” says a recent article in Forbes, “strategic thinkers and doers are already rebuilding models of excellence around three standards: quality data, holistic visibility, and supplier collaboration.”
In the absence of historical data from which to draw insight on how to navigate a pandemic, manufacturers are looking to other data sources to maintain a grip on their planning and forecasting, and to preserve the overall integrity of their supply chains. An integrated digital platform with real-time insight into customer demand, supplier capacity and inventory, and transportation logistics can provide a complete data picture to solidify decision-making and planning across the enterprise. Demand-sensing tools in the platform can provide visibility into customer demand in individual markets, giving the manufacturer timely data directly from customers to plan, adjust and prioritize production on the fly to ensure products get to the customers and communities that need them.
Because of the pandemic, manufacturers have prioritized building greater resilience, reliability and risk-reduction into their supply chains. As a result, more manufacturers likely will re-shore production and increase reliance on local sources. With an integrated digital core, manufacturers can manage multiple tiers of suppliers in real time, sharing data and collaboratively working through potential disruptions with their partners to maintain supply chain integrity.
The same approach holds true with logistics. By maintaining closer digital connections with their transportation partners, manufacturers can quickly and accurately analyze and execute alternative, multi-modal delivery pathways and collaboratively troubleshoot a disruption. These days, manufacturers have the means to model complete supply and logistical networks with a digital representation of those networks. Using predictive tools to synthesize and analyze data from various internal and external sources, the “digital twin” can reveal risks, segment and prioritize suppliers and logistics providers, and test the viability of options to mitigate disruptions.
3. Intelligent manufacturing and assets
The pandemic has put even more pressure on construction material or building material manufacturers to squeeze additional efficiencies out of their operations. With an intelligent digital core to which their factories and operational assets (as well as the supply and demand chains) are connected, and through which data flows transparently across the enterprise, a company can optimize production processes to respond in real time to unexpected changes in demand and supply. The agility that comes from this end-to-end visibility serves a company well during a crisis and otherwise.
When assets inside the factory, at warehouses and across other parts of the operation are Internet of Things (IoT) sensor-equipped, connected to one another and networked with a central digital core, a manufacturer has the power to quickly gain insight from operational data and, using predictive tools like digital twin, to dynamically maintain, simulate and optimize overall asset performance while minimizing operational disruption. These capabilities also enable a manufacturer to shift their production capabilities and their supply chains to new tasks, products and revenue streams.
4. Dynamic planning capability
During the pandemic, other manufacturers relied heavily on an integrated resource planning platform to connect strategic and operational planning to real-time visibility and execution.
Customer demand, supply and logistics scenarios were volatile, as some suppliers went dark entirely or curtailed production, and transportation became an iffy proposition in certain regions. In a matter of weeks, the monthly forecasting processes manufacturers were no longer helpful.
That volatility prompted some manufacturers to quickly move to weekly and even daily pandemic forecasts. With the ability to rapidly evaluate scenarios and conduct continuous, dynamic planning by synthesizing fresh supply, demand, logistics, workforce and capacity data, some manufacturers could adjust to changing conditions to ensure that all aspects of its business were aligned to a forward-looking plan.
As focused as construction industry businesses are on reacting to today’s volatile market conditions, they also need to be strategically proactive, McKinsey says. “Organizations must think through the moves they can make today to come out ahead later.”
Developing stronger, more flexible planning and forecasting capabilities is one move manufacturers and construction companies can make to benefit themselves, their customers and their partners today and in the “next normal.”
