flexiblefullpage -
billboard - default
interstitial1 - interstitial
Currently Reading

Early-stage procurement: The next evolution of the construction supply chain

Building Materials

Early-stage procurement: The next evolution of the construction supply chain

Austin Commercial’s Jason Earnhardt explains why supply chain issues for the construction industry are not going to go away and how developers and owners can get ahead of project roadblocks.

By Jason Earnhardt, Supply Chain Manager, Austin Commercial | June 20, 2022
Early-stage procurement: The next evolution of the construction supply chain
Photo: Pixabay

Anyone who has taken even a passing glance at the news over the last year has become acutely aware of the supply chain. Empty grocery store shelves may be the first image that springs to mind, but when it comes to the construction industry, the discussion is a little more nuanced.

First, let’s define our terms. The true supply chain is material tracking from cradle to grave. It is an entire system designed to identify a need, acquire the need, and deliver the need. In the just-in-time (JIT) model used by companies from Walmart to Dell to the biggest names in construction, the system has minimal lag time and little room for inefficiency.

In a consumer-facing JIT inventory system, say for computers, a company would have just enough parts on hand to fulfill the current need. Customers order, the company puts together the product and ships it out. The system ideally works together in perfect harmony. Until it doesn't. Just one hitch in the system, let alone several, and the entire ecosystem falls apart. 

In construction, JIT has been the modus operandi for decades. The material is delivered to site as and when it is needed. This model does have a number of benefits of course—lower required cashflow upfront and a limited need for storage and security. But, as we saw starting in March of 2020, unforeseen events can have a catastrophic ripple effect on a JIT model. 

As widely used as JIT has been, it has never been truly efficient. There are hundreds of moving parts and risk baked into the calculus. The model didn’t need to account for extreme employment variables, local policy restricting movement and workforce, increased costs associated with delays, shortages and fluctuating commodities. In the old model, LEAN upgrades helped to tighten up the system, but was never intended to account for all of these global variables.

As we see it here at Austin, the last two years have given us the opportunity to reinvent how construction works, how we can own the process of supply chain, and how we can pass on what we’ve learned to our clients.

A Supply Chain House of Cards

The disruption to the construction supply chain has gone far beyond just difficulty obtaining materials. Frozen finances, limited workforce and shortened workforce weeks have all stopped projects in their tracks. And that’s just on-site—on the manufacturing side, staff shortages and difficulties sourcing raw material are compounding the challenges for projects across the country. 

The truth is that supply chain problems will likely get much worse if the entire system doesn’t change. COVID may have been the reason that we put a magnifying glass on the inefficiencies and risk inherent to the JIT model, but the system was always very fragile. Now that we see it can come down as quickly as a house of cards, it’s time for a new way of managing the construction supply chain. A holistic view that combines logistics, risk mitigation and a new procurement process all tied together with analytics.

A New Way Forward for the Construction Supply Chain

In the traditional model, supply chain issues would often trickle down to the sub-contractors. GCs, subs and trades would procure parts from a local supplier and, more often than not, the owner wouldn’t know or care, as long as the project was getting done. That is simply is not a viable workflow any longer as local part suppliers are rarely an option and cash flow is a real issue for even medium-sized GCs. 

So how are we fixing this? How are we continuing to get projects done in this climate? We are customizing our project management process for each client but, in general, we are using a number of tools and risk-mitigation strategies and looking at the supply chain in a holistic way.

The biggest weapon in our arsenal at the moment is early-stage procurement. We are going out at the beginning of a project and instead of making purchases for each phase, we are getting all the materials for the project on site and storing it. We get our hands on all the materials, we stock it, we store it and protect it on campus for as long as necessary. We are procuring extra equipment for material storage like forklifts and box trailers and adding resources to get everything moved around and in the right place. On one of our largest projects, we have essentially created our own “microport” with highly detailed and trackable logistics to keep everything running smoothly and on time. 

It takes experience and expertise to make this all work efficiently, but the new model gives us price protection in a volatile marketplace. It gives us the peace of mind of accounting for everything we need ahead of time. And it gives us more control in an increasingly uncertain world.

New Roadblocks to a New Process

Clearly, revolutionizing a model that has been in place for decades won’t come without snags. With that said, none of the challenges we’ve faced so far have been insurmountable. But they do require our clients to look at the supply chain in a new way. For instance, upfront procurement requires different financing and more funding at the beginning.

And of course, the biggest and most fundamental challenge of all: cash flow. Yes, this way of handling the supply chain costs money in exchange for on-time project delivery. On pre-pandemic contracts, none of these costs were accounted for. In private deals, GCs are issuing change orders and for municipal contracts, we’re starting to see more COVID-specific funds coming into play.

Regardless of these potential roadblocks, logistics and researching manufacturers has become a hallmark of our risk mitigation strategy for our clients and for ourselves. We have essentially become our own in-house logistics company, all in the name of keeping our clients’ projects on track.

In the long-run, it won’t just be Austin thinking this way--supply chain analysis and mastery is going to become a top-of-mind concern for everyone in the industry from owners to trades, as well as a crucial component in getting large-scale projects done on time well into the future.

Jason Earnhardt is a Supply Chain Manager for Austin Commercial. Combining a background in finance, analysis and construction, he has revolutionized how our clients look at risk mitigation, logistics and supply chain management.

Related Stories

Multifamily Housing | Sep 15, 2022

Toronto’s B-Line Condominiums completed using prefabricated panels

B-Line Condos, Toronto, completed using Sto Panel Technology.

Mass Timber | Aug 30, 2022

Mass timber construction in 2022: From fringe to mainstream

Two Timberlab executives discuss the market for mass timber construction and their company's marketing and manufacturing strategies. Sam Dicke, Business Development Manager, and Erica Spiritos, Director of Preconstruction, Timberlab, speak with BD+C's John Caulfield. 

Sponsored | BD+C University Course | Aug 24, 2022

Solutions for cladding performance and supply issues

This course covers design considerations and cladding assembly choices for creating high-performance building envelopes — a crucial element in healthy, energy-efficient buildings.

Sponsored | | Aug 4, 2022

Brighter vistas: Next-gen tools drive sustainability toward net zero line

New technologies, innovations, and tools are opening doors for building teams interested in better and more socially responsible design. 

Building Materials | Aug 3, 2022

Shawmut CEO Les Hiscoe on coping with a shaky supply chain in construction

BD+C's John Caulfield interviews Les Hiscoe, CEO of Shawmut Design and Construction, about how his firm keeps projects on schedule and budget in the face of shortages, delays, and price volatility.

Building Materials | Jul 20, 2022

LP Building Solutions celebrates 50th anniversary at NYSE ceremony

LP Building Solutions celebrates 50th anniversary at NYSE ceremony.

Sponsored | BD+C University Course | May 10, 2022

Design guide for parapets: Safety, continuity, and the building code

This course covers design considerations for parapets. The modern parapet must provide fire protection, serve as a fall-protective guard, transition and protect the roof/facade interface, conceal rooftop equipment, and contribute to the aesthetic character of the building. 

Sponsored | BD+C University Course | May 10, 2022

Designing smarter places of learning

This course explains the how structural steel building systems are suited to construction of education facilities.

Sponsored | BD+C University Course | May 5, 2022

Designing with architectural insulated metal wall panels

Insulated metal wall panels (IMPs) offer a sleek, modern, and lightweight envelope system that is highly customizable. This continuing education course explores the characteristics of insulated metal wall panels, including how they can offer a six-in-one design solution. Discussions also include design options, installation processes, code compliance, sustainability, and available warranties.

Sponsored | BD+C University Course | May 3, 2022

For glass openings, how big is too big?

Advances in glazing materials and glass building systems offer a seemingly unlimited horizon for not only glass performance, but also for the size and extent of these light, transparent forms. Both for enclosures and for indoor environments, novel products and assemblies allow for more glass and less opaque structure—often in places that previously limited their use.

boombox1 - default
boombox2 -
native1 -

More In Category

halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021


Magazine Subscription

Get our Newsletters

Each day, our editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.


Follow BD+C: