Advertisement
Supply chain problems have plagued all industries and companies (large and small). The construction and development industry in South Africa is no exception.
While the supply chain problems were driven by the pandemic and, in some ways, started off as an unforeseen problem, it’s helped the construction and development industry both here and abroad learn some vital lessons.
1. Manage expectations
Since the start of the pandemic in 2020 South Africa’s construction industry has had to grapple with shutdowns, civil unrest, natural disasters, the war in Ukraine and out of control inflation in various parts of the world.
Dealing with supply chain disruption has been another major problem. Procurement of building materials, which usually took weeks to implement, started taking months to arrive as Databuild’s CEO Morag Evans pointed out in one report.
Advertisement
He also highlighted the merits of managing expectations and not giving into panic buying. Evans tells Infrastructurenews: ‘Instead, project developers, professionals and contractors should accept supply chain disruptions as the ‘new reality’ and make adequate provision for this in their project plans and contracts.
‘This includes adding clauses that protect contractors against the consequences of failing to deliver within predicted timelines due to the unavailability of critical materials or components.’
2. Financial products can help with cash flow problems
Small businesses from all types of industries, including the building trade, have suffered the most in recent years with Covid-19, climate change, geopolitical events and the higher-than-normal prices of goods and services due to international rising inflation.
Supply chain disruptions and have an adverse effect on their bottom line but there are times where supply chain finance has come to the rescue.
Theron Theunissen, head of supply chain finance at TreasuryONE says: ‘A rising number of suppliers are requiring critical and consistent cash flow to keep their operations afloat.
‘These smaller suppliers can suggest a Supply Chain Finance solution that can be instituted by their larger clients, which will assist in maintaining their supply chain as well as relieve the strain of the market situation for themselves and their smaller vendors.
‘The Investec SCF solution – administered by TreasuryONE – will satisfy the need to upscale the digital infrastructure to deliver value to the larger clients while still allowing them the option of extending payment terms but offering their suppliers a cost-effective solution to have their receivables paid before maturity.’
3. There’s always alternative materials
If certain materials are hard to come by there are always alternatives to consider. For instance, with the cement shortage greener products were used instead. Upcycling of materials is also an option, which in turn can be good for the environment as they would’ve gone to waste.
4. When in doubt – bring in the experts
According to accounting, tax, audit and business advisory firm BeeneGarter some construction companies are hiring individuals with experience and qualifications in supply chain management who are experts in dealing with these sorts of challenges.
The company says: ‘Although investing in new employees and software is costly and requires due diligence, maintaining a strong supply chain is imperative in today’s business environment.’
5. Choose local
Partnering with local suppliers is always an option, particularly if they’re not dependent on international ingredients. While it may be cheaper to buy abroad, one thing the pandemic and supply chain issues has taught us is that buying from local suppliers can be more reliable and better for the economy in the long term.
