The process of procuring manufactured components can be complex, and companies on a budget may accept the first or second passable option that passes them by rather than delve any deeper.
However, by failing to put in the due diligence to both forging strong supplier connections, searching around the extended market and researching alternate methods of material sourcing, you could be losing out on a significant amount of money.
It is recommended that before you make any decision on parts, construction, equipment, or personnel, you should ensure that it’s entirely covered under both the Building Code of Australia (BCA), and any materials are up to Australian Standards (on top of any specific legislation might apply to whatever piece you’re looking at).
Additionally, a risk assessment should be conducted (as it would for any other purchase) as a result of any changes, and the outcomes found should be followed to the letter.
Buy bulk and save
The first and most obvious step is that of quantity. No matter where you source materials from, sourcing your materials in larger bulk amounts is less costly by the kilogram than in smaller, incremental amounts.
If you don’t already, buying materials in bulk amounts and keeping them in storage can represent a massive saving compared to purchasing it on a per-job basis. It also:
- Allows you to dodge market trends which may drive up prices short term (and take advantage of dips);
- Gives excess stock for emergency use; and
- Will stop you running out of materials at a crucial stage and sending your gears grinding to a halt.
Bulk purchases and inventory management systems
This requires a degree of knowledge in inventory management. In order to maximise any potential cost reduction from keeping a stock of materials, you’ll need the following:
- A minimum threshold at which you need to resupply at (so you’re not caught blindsided and can shop ahead of time for a good price);
- Adequate free storage; and
- A sorting system for your materials, either manually or through a computerised inventory system.
A robust storage plan prevents you from understocking, but more importantly stops you from overstocking. While you’re less productive if you run out early, overstocking requires additional storage, which can run up prices significantly in the short term.
In general, Inefficiencies in storage can account for administrative losses (from having to reassess and refile) and productivity losses (from an inability to efficiently get and store materials). It’s better to have a haphazard plan than no plan at all, but you’ll need to keep a tight lid on things if you want to cut costs.
Using salvaged materials
Another avenue to consider when sourcing materials is the existence of salvaged materials. These are materials bought specifically from salvage companies, or repurposed from other job sites from either reconstituted or discarded supplies.
Salvaged materials can include everything from lumber and brick to interior furnishings, and with some foresight you can purchase a lot more raw materials for less than regular cost. The first thing to do is get over the stigma of salvaged materials; keep a keen eye out and you’ll eventually come face to face with stock that’s good as new, or even better than your regular supplied stock.
Any stockist that you take materials from has to ensure that any materials that they sell you are up to Australian Standards, but that doesn’t mean that you should take their word for granted either. Individually ascertain the quality of each batch, because due to the very nature of the method you’re going to get lots that are of varying qualities.
Build working relationships with suppliers
Efficiency translates to money, and this also applies to your suppliers. Having a quick, efficient and healthy working relationship with your supply chain can have lasting ramifications for your bottom dollar.
People perform better when they feel connected to other people; they’re more likely to work faster, come up with solutions, and they demonstrably go out of their way when things go awry. If you want to keep your nose to the ground for deals, have a better standing point for negotiations (particularly on bulk buys), and have a supplier that you can count on during high stress times, then build a healthy working relationship.
The easiest way to do this is by taking a leaf out of the business classic How To Win Friends And Influence People:
“The only way on earth to influence other people is to talk about what they want and show them how to get it”.
That is to say, give them what they want. Be speedy with your turnaround, pleasant in your dealings, and strive to be the best client that they have. You’ll find that all subsequent dealings with are increasingly pleasant. After all, they want precisely what you want; an efficient sale and a reliable business associate that guarantees that sale. A guaranteed sale is worth a dozen unreliable clients, and this will reflect greatly when it comes time to renegotiate contract terms.
Research
The final word on materials is information: which options exist to source from, how stable market prices are, and what materials you can replace while remaining up to safety and building standards.
Market research is key to any business undertaking and, for something as vital as building materials for a construction company, it should be a no-brainer. The amount of businesses who source one material supplier and never think twice about their overheads from that point onwards is staggering, when even a preliminary check will potentially open up huge avenues of savings across the board.