October 3, 2023

Materials Sourcing Strategies to Improve Cost Management

Kojo founder Maria Davidson presents at SMACNA 2023

After planning which materials you need, deciding when to buy them and which vendors to purchase them from will have a direct impact on your profit margins. Don't underestimate the importance of gathering relevant information before making purchasing decisions—every detail counts. 

Knowing what limits efficiency in sourcing, when to request a quote, and where to source materials from will improve your quality and cost management. When you combine sourcing strategies with efficient materials planning, you’ll outshine the competition. 

Common Inefficiencies in Sourcing

Without a reliable, structured approach to sourcing materials, numerous factors limit efficiency. These are just a few that can result in the loss of valuable time and profit margins: 

Determining Which Materials Need to Be Purchased and Their Quantities

If knowing what materials to purchase was simply a matter of building a bill of materials (BOM), there wouldn't be inefficiencies. However, material requests from the field can be chaotic and lack visibility into warehouse inventory or what's on hold with vendors. Effective material planning includes an organized method to exchange accurate information between the office and the jobsite. 

Identifying When It Makes Sense to Source Pricing and Availability

Not everything needs a quote, but without a standard material planning process, it won't be clear when to request pricing and availability. Having guidelines for requests for quotes (RFQs) will help prevent missed cost savings and unnecessary quoting.

Identifying Which Vendors to Request Quotes From

In today's market, contractors must source from a variety of vendors to protect their bottom line amid supply chain disruptions and inflation. However, it can be time-consuming to establish new contacts and standardize comparisons of pricing, inventory availability, and lead times without a good system. 

Knowing When It Makes Sense to Request a Quote

Learning to manage your BOM and recognize when sourcing quotes is pragmatic will save you money. It will also ensure your quality standards aren't compromised by cost overruns or materials shortages. 

When You Have Bulk Orders

The difference in pricing from one vendor to another may not seem significant per unit—until you’re purchasing a large volume of that material. Before placing any large orders, source multiple quotes and compare pricing. For your construction plan to be strategic, calculate the amount of material needed for all of your active projects. Using this approach, you will capitalize on cost-saving opportunities and streamline procurement.

Before the Job Begins

Proactive construction planning means knowing how to make the most of your time. Look for chances to buy in bulk and request quotes for any materials that might be hard to source in advance. This will help keep your costs in the best position for you to be profitable and prevent surprises. 

When There’s Price Uncertainty

Materials shortages and supply chain disruptions can drive price fluctuations unexpectedly. Past experience with a vendor isn’t a reliable indicator of the current market rate, and purchasing without knowing the price is an expensive lesson. If there’s any uncertainty, request a quote to be sure you’re sourcing at the right price.

When You Don’t Know Who to Buy From

Always request quotes for materials you use infrequently or are unfamiliar with. This will give you a better awareness of the market and insights into competitive pricing and availability for future construction planning. 

Improving Quality Management with Automation

Effective construction planning relies on sourcing materials competitively. On each project, successful contractors maintain a balance of cost, time, and quality management. Quality isn't only a measure of reputation but also of meeting compliance and safety standards. 

A strong quality management plan for construction projects includes effective materials sourcing to maintain required expectations. If there are shortages, delays, or cost overruns, the project’s quality will be compromised. 

Material requirements planning software simplifies this process with an integrated inventory and supply management system. Automation streamlines RFQ processes to improve project outcomes. 

Benefits of Automation in Construction Planning

  • Digital vendor pricing and availability for unified quote comparisons
  • Visibility into purchase orders and delivery status to prevent duplication
  • Real-time inventory management to reduce waste
  • Digital BOM for proactive materials management 
  • Reduced errors and miscommunication between the jobsite and the office
  • Centralized database of every RFQ to optimize construction planning

By automating procurement, you can eliminate blind spots that reduce sourcing efficiency and quality management. A streamlined RFQ process allows you to source materials with confidence that you’re receiving the best price and availability. It supports improved communication and efficiency across your team, ensures the accuracy of cost estimates, and can even accelerate construction schedules.  

Upgrade Your Construction Planning

Set these materials sourcing strategies in motion to get ahead of your competition. To raise your standards for construction management and improve the entire procurement process, read 7 Steps to Better Procurement for Specialty Contractors.

Related posts

Blog / 
May 6, 2024

Kojo Completes SOC-2 Certification

Read post
Blog / 
March 6, 2024

Four CFO Pain Points Every Construction Firm Should Eliminate

Read post
Blog / 
January 17, 2024

2023 Year In Review

Read post

Related posts

Press Releases / 
May 1, 2024

Kojo Expands Fintech Offering To Modernize The Payment Process For Contractors

Read post
Press Releases / 
November 8, 2023

Kojo Launches New Integrations With Nation's Largest Suppliers for Trade Contractors

Read post
Press Releases / 
November 1, 2023

Kojo Adds Power Design, Inc. As Key New Enterprise Partner

Read post