How Startup Tech Is Helping Heal the Construction Supply Chain

Global supply chains are in a bad state, particularly in the construction industry. This is in part due to the ongoing conflicts in the Middle East and Eastern Europe, as well as worker shortages, extreme weather events, port congestion, additional information requirements for environmental reporting and demand for overseas materials. All these factors have made the procurement of materials for construction projects difficult.

Fortunately, startups backed by investors in the industry are already developing the technologies and tools to overcome these challenges while making the construction supply chain more efficient, transparent and sustainable.

THE SUPPLY-CHAIN CRISIS

Let’s break down some of those supply-chain disruptions. Overwhelmed ports and global conflicts have made many companies opt for overland shipments by trucks instead of ships and planes. However, there aren’t enough drivers to take on the increased traffic, and, what’s worse, experts expect the current driver shortage to double over the next five years.

Beyond global supply-chain issues, there are some factors that impact the construction industry in particular. One of these factors is communication along the supply chain. The industry features a wide array of stakeholders, including material suppliers, transportation and logistics companies, distributors, subcontractors, builders, architects and engineers. Each project requires coordination across all those stakeholders through various phases, from sourcing raw materials and managing logistics to coordinating building efforts. That means any difficulties in communication along the supply chain make it challenging to synchronize activities, anticipate delays and manage unexpected disruptions.

Also, many construction materials are either perishable or very bulky and heavy, like timber, cement and steel. These materials can't be easily stockpiled or shipped in advance, as they either degrade or take up substantial storage space. For instance, concrete needs to be delivered and used immediately, as when it hardens it becomes unusable. Delays in procurement or logistics can halt entire projects and significantly increase costs as companies must pay for downtime, reschedule labor or source materials from more expensive suppliers on short notice.

These inefficiencies also contribute significantly to increased greenhouse gas emissions and make it harder for companies to meet sustainability goals. Many construction companies have set ambitious targets to reduce their environmental impact, such as achieving net-zero emissions by 2050, but making progress toward those goals hasn’t been so easy. For instance, when materials are sourced from distant suppliers due to local shortages or logistical challenges, emissions increase from the transportation process, expanding the project's carbon footprint.

Additionally, supply-chain companies are facing new regulations and requirements to report their environmental data as part of the transportation information in Module A4 of Environmental Product Declarations. This module, in line with EN15804standards, focuses on the impacts of transporting products to the building site. This requirement presents a major challenge for companies, as they must meticulously track all travel distances, the type of vehicle used and the fuel type, and report this information uniformly across the entire supply chain. This process demands not only precise logistics management but also the implementation of monitoring and reporting systems to ensure the uniformity and accuracy of environmental data.

FIXING THE SUPPLY CHAIN

To simplify the supply chain and compensate for worker shortages and other challenges, several startups are developing procurement platforms that optimize and help with logistics. These efforts reduce costs and increase customer experience while simultaneously helping companies stay on track with sustainability commitments.

Some startups are developing platforms that offer real-time data and monitoring to provide construction companies with up-to-the-minute insights into the status of materials, deliveries and workforce allocation. Companies can now track shipments in real time, optimize routes and ensure that materials arrive at construction sites as they are needed, helping with planning and reducing delays.

Other startups are working to digitize traditionally manual processes, allowing companies to manage supply chains with greater transparency and accuracy. For example, some of these tools help with reporting environmental data of the transport, recording data about distances, vehicle type, license plate and fuel type. Some other features are optimizing delivery scheduling and routing, helping to minimize downtime and reduce congestion at construction sites. Others focus on improving communication between suppliers and contractors, reducing the risk of project delays. For instance, Voyage Control has a digital platform for onsite logistics management, delivery scheduling and resource allocation that coordinates all involved actors.

The data collected by these platforms in turn facilitates an increasingly important technology: predictive analytics. As platforms analyze vast amounts of data, they can also take into account labor or material shortages and even weather disruptions to predict potential bottlenecks, recommend alternative suppliers or adjust delivery schedules to minimize downtime. This predictive power helps construction companies optimize resource allocation from the design phase through delivery, ensuring that materials arrive at the right time and without unnecessary stockpiling.

Moreover, construction companies are using blockchain technology to create immutable records of transactions and material origins, ensuring greater transparency and reducing the risk of fraud or mismanagement. This transparency builds trust among stakeholders and allows for more efficient tracking of materials from suppliers to construction sites, further streamlining the procurement process.

All of these technologies have significantly reduced the carbon footprint of the construction industry while helping compensate for many of the challenges that have made construction professionals’ lives difficult in recent years.

THE FUTURE OF PROCUREMENT

As investors focus on funding startups that prioritize supply-chain optimization, the construction sector is becoming better equipped to handle global tensions, manage material and fuel price volatility and combat labor shortages. Government regulations and sustainability incentives are also pushing the industry toward greener practices, putting the focus on sustainable materials and more efficient logistics. Initiatives like the U.S. Inflation Reduction Act offer tax incentives for companies adopting energy-efficient materials, while certifications such as LEED encourage the use of low-carbon alternatives. Environmental product declarations evaluate the entire lifecycle of materials and projects, influencing decisions also to reduce the carbon footprint in logistics by selecting suppliers or routes with lower emissions. New tech tools help construction firms stay compliant with these regulations by tracking sustainability metrics and optimizing resource use.

By embracing these technologies and aligning with regulatory requirements, companies will be better positioned to overcome supply-chain challenges and thrive in a competitive, eco-conscious market.

SEE ALSO: MINIMAL STARTUP CAPITAL COMMON FOR CONSTRUCTION ENTREPRENEURS