How to overcome complexities & future proof your …...They are struggling to differentiate or re-invent themselves and as a consequence, their product and service offerings remain

Construction supply chainHow to overcome complexities & future proof your business using the right approach to technology

WHITEPAPER

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Contents

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Many construction companies have changed their business models, from being one large entity managing all areas of the supply chain, to working with smaller external specialist companies to deliver a subset of these services.

As a result, the number of companies needing to interact with each other to complete a project has significantly increased over the years. In addition to this, the servitisation trend is on the rise; a growing number of businesses are creating service and maintenance companies themselves.

However, regardless of how much business dynamics may be changing, all companies are facing the same challenge within their service operations. How do you make the construction supply chain more customer-centric with so many partners, suppliers, vendors and contractors, mergers and acquisitions to manage?

Complexities and trends within the construction sector

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Since 2013, the UK construction sector has grown each year with output in Q3 2018 14% higher compared to Q1 2017.1

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The large number of differing types of businesses and service offerings in the construction industry has resulted in a supply chain eco-system that is both vast and complex. This means it’s even more important to ensure smooth and hassle-free customer connections, regardless of where your business sits.

While investment in new construction technology, such as building information modelling, 3D printing, and robotics will help achieve productivity and profit improvements – it comes with an initial adoption learning curve

that could lead to disruption. This is where change management is crucial.

When aligned with a business goal, defining and communicating the change is a much smoother process and increases the chances of a successful adoption. Those affected must be considered and then informed and this needs to be planned in advance. Training and support should be next, giving users the time to understand not just the technology, but the benefits too.

Finally, a measurement of the impact should take place, in the theme of ‘warts and all’ – mistakes are a teaching opportunity after all.

In this whitepaper, we will take a look at the current construction landscape, trends and challenges. After which we will share best practices for becoming better connected within your own business in order to become more customer orientated; and ultimately provide a more intimate customer service.

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A significant recession has driven down margins

across the construction sector causing many

companies to introduce new product lines

or services, to help increase sales. This has

been achieved mainly through acquisition

and mergers, particularly within the industry’s

larger organisations.

Smaller companies have instead focused on becoming more specialised in their offerings. One example is engineering companies who now offer construction management services to appeal to a wider customer base.

However, many businesses are stuck in the middle, lacking the purchasing power of larger companies and the agility of smaller ones. They are struggling to differentiate or re-invent themselves and as a consequence, their product and service offerings remain unchanged.

When it comes to technology, the construction industry is one of the least digitised sectors in the UK. The long term benefits of technological advances have been greatly underestimated, causing the industry to become vulnerable to new tech start-ups. Disruptors in this space are being bestowed with huge financial backing.

SoftBank Group Corp recently invested almost $1bn (£754m) in Katerra Inc, a technology driven construction company that manufactures large building components off site, for final assembly on-site.2

The economic impact of this lack of digitisation is clear. A recent McKinsey report concluded that while the construction sector makes up 13% of global GDP and employs 7% of the world’s population, it has only produced a 1% increase in productivity each year over the past 20 years.

This is in comparison to an almost 3% increase for the world economy as a whole. If the construction sector had risen at the same rate, a further $1.6 trillion per year would have been added to its global value2. While the industry has largely been a technology laggard, it is now undergoing a massive refresh to drive efficiencies and improve project management.

Along with concerns over digitisation, the size and age demographic of the industry’s workforce is a potential time bomb.

02 Recession, digitisation and an ageing workforce: the challenges

The UK construction sector has never faced such turmoil and this loss of manpower would make achieving the historic levels of GDP highly unlikely. It would also restrict the ability of the UK to meet its crucial social and physical infrastructure projects as well as the construction required by other industries to house their own businesses.

The dependence on a few key employees is another question mark, especially in small and medium sized companies relying on a small group of senior employees to produce a large share of revenue. A worker shortage, as construction is not viewed as a desirable industry and struggles to attract young talent, is a very real threat. One way to combat this is with Artificial Intelligence (AI).

Use of Head Mounted Displays (HMDs) such as Microsoft’s Hololens creates a workplace where the physical and digital worlds meet – and it’s exactly this kind of futuristic technology that can attract a younger, more digitally minded employee.

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When considering the current workforce age and the levels of new entrant attraction, there could be a 20-25% decline of available labour within the next decade.3

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With a shortage of younger staff comes a heavy reliance on a diminishing number of ageing employees, that increases both labour and project costs. Technology can help here too. Once identified, knowledge can be captured and made easily accessible via Wikis, allowing companies to create virtual encyclopaedias of their key insights. Using a range of tools such as process flow charts, ‘responsible, accountable, consulted and informed’ (RACI) matrixes and mind maps, succession planning can take place and ensure the retirees depart with fully-trained staff ready to pick up the baton.

In the UK, there are around two million construction workers, however they are employed by a staggering 200,000 businesses3. In this environment, companies try to pass risk on by use of subcontract terms.

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Many companies are deeply entwined into a particular sub-sector, such as residential or industrial. When challenges occur in a specific area, it can negatively impact their business resulting in industry concentration.

Similarly, customer concentration occurs when many professional services companies depend upon a small number of heavyweight clients for the majority of their revenue. The loss of these contracts can be catastrophic,

leading to uneven workload and cash flow. As the majority of work in the industry is carried out on a project basis, work demands and bill payments can fluctuate wildly and can be difficult to manage, especially for smaller companies.

Ultimately, their business reputation is at stake. In this highly competitive sector, the

extent to which a company’s reputation has a recognisable name is extremely important, and any bad publicity can have a big impact on the ability to win new business.

The business impact of industry and customer concentration

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Automation software is enabling businesses

from all sectors to save time and costs when

properly implemented, and the construction

industry is no exception. Without effective

management of time, costs and resources,

companies are falling behind their competitors.

When using dynamic, automated software, companies can free up staff to concentrate on development and maximising revenue streams - by providing a more seamless experience throughout the customer journey. As above, this must not be rushed into. Following a thorough and well-planned change management plan is critical to ensuring new technology is adopted correctly, first time.

Invoicing is one area of the supply chain that requires a large amount of time and costs to keep running smoothly if using manual processes. For Kohler Co, a global leader in the manufacture of luxury kitchen and bath products, around a quarter of its accounts

team capacity was being used in handling email queries. Many of which were generic and needed to be routed globally – a process that was overly complex, time-consuming and error-prone. Taking a cloud-based approach enabled Kohler Co to leverage Microsoft Office 365 and using Microsoft Dynamics 365 Sales, bridging the gap by routing communications to the correct shared services sub team.

Kohler Co is now live on the Microsoft systems and currently has around 25 users up and running. It has automated invoices coming via email going straight into the system, has reduced the number of queries and can track the vendor queries. It has been able to capture key data which is now ready for investigation to help further improve the service.” - Marcus Judge, Director, IT Services EMEA, Kohler Co

Automated invoices coming via email now go straight into the system, reducing the number of enquiries and vendor queries.

Microsoft Dynamics 365 captures key data which is now ready for investigation to help further improve the service. All of this helps to strengthen Kohler’s brand as a company that strives to provide a gracious experience; no matter if it’s a customer, supplier or vendor the business is dealing with, workflows can be managed seamlessly within its ecosystem.

Duplicate detection rules are another area where automation can save time and costs. With the substantial number of construction-related companies currently operating, it’s not uncommon to see vendors listed multiple times in various systems.

This creates a risk of payments being senttwice. Poor quality data also means time wasted by staff trying to understand which entry to access. Curbing these duplicates is as simple as running a comparison - and Microsoft Dynamics 365 has this functionality built in.

04 Saving time and costs with automation

After choosing which data to compare, for example email or physical addresses, the software will flag duplicates and allow you to choose the response.

Automated scheduling is already creating a big impact within the construction industry. The overheads caused when unexpected changes occur, particularly with supply chains made up of many moving parts, can be unwieldy. By implementing automated scheduling software, these issues can be minimised, and efficiencies increased.

When rescheduling is needed, the calculations happens in real time which allows for an immediate update to all parties involved. For example, if a contractor’s arrival is delayed, businesses using CRM systems like Microsoft Dynamics 365 can have a notification sent to the site informing them of the delay and new date.

Any further changes to the contractor’s schedule will also be updated, and any other notifications can be sent, helping improve customer satisfaction.

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Managing customer interactions with disparate

eco-systems can be a complex undertaking.

The different methods used when connecting

with existing customers or potential customers,

as well as the relationships between partners,

suppliers and vendors, can lead to a confused

and time-consuming back office – not to

mention the customer frustrations that can

arise as a result.

With the tough economic conditions facing the construction industry there is a sharp focus on better ways to track and manage the sales process from start to finish. CRM solutions help businesses to organise, manage and rationalise any interaction that relates to marketing, sales, customer service and support – both internally and externally with customers. Microsoft Dynamics 365 lets companies streamline and simplify business processes by creating efficient business ecosystems, even for the most complex of supply chain networks.

Integrating various systems allows for smarter communication and a joined-up approach that stores all customer data in one place.

One example of a successful adoption of a CRM solution is Kingspan Insulation. Kingspan is a supplier of insulation products to the construction industry with 1200 employees - they also have 400+ global CRM users that needed a flexible CRM solution, capable of scaling up to support its ambitious growth plans. After engaging HSO to implement the changeover, Kingspan have standardised their whole approach to CRM worldwide. This has resulted in reduced errors while streamlining efficiencies across international operations. With greater visibility of CRM activity worldwide, the company can drive significant efficiencies across sales and marketing, close more deals and manage marketing programmes more effectively.

“We are already reaping the rewards of having Microsoft Dynamics CRM in place to assist customer engagement around the world. It is helping us standardise our whole approach to CRM worldwide, reducing errors while also streamlining efficiencies.” - Yasmin Lewis - Divisional CRM Team Leader

A properly implemented CRM solution can help companies that belong to large and complex supply chain eco-systems spot trends and patterns in their engagement with customers.

These trends can then be analysed and strategies put in place for better communication and efficiencies to help drive customer satisfaction. One example of this is finding common or repeat customer queries and building the answers to these questions into sales or marketing collateral.

05 Increase customer satisfaction with CRM

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For businesses who work with a wide range

of third parties, the management of sales

procedures and tenders can be challenging

without the right tools.

This often results in having to process contracts at different times which can lead to insufficient control over relationships and projects. Trying to manage this whilst using an insufficient enterprise resource planning (ERP) system could have non-compliance implications when it comes to sales and marketing.

“Microsoft Dynamics CRM is undoubtedly

user-friendly. Classification, opportunity

management, quotations, interactions and

agreements in Outlook, following-up on

campaigns – we can manage everything easily

and get an insight into it all. It certainly has led

to us delivering a much-improved proactive

service to customers and potential customers

alike.” - Robert Dielemans, Manager Business Operations

Itho Daalderop, a leading manufacturer and supplier of energy-efficient solutions for heating, ventilation and control technology recognised the opportunity to capitalise fully on the market by accessing a complete picture of all construction projects at any given moment. They chose Microsoft Dynamics CRM to improve relationships and were thrilled with the results.

At Itho Daalderop, account Managers operated in multiple territories, sometimes with up to a

thousand contacts. The sheer amount of data was vast, but now, with Microsoft Dynamics CRM they can see directly which contacts are active and which are not. It’s much easier to pick out the blank spots, and they now get a real picture of the territories.

“With Microsoft Dynamics 365 it’s now much

easier build relationships we now get a real

picture of the territories”

Having this bigger picture, encompassing the entire process, with insights into the contact moments, discussion transcripts, reports and planning from all partners and contacts has allowed staff to take focused action to influence better customer outcomes.

Gain control over project and tender management06

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SummaryAs the construction industry explores new technology as part of modernisation, it will also require new, high-value skills and jobs to be filled. With the necessary training and education, this is entirely possible.

However, the key challenge here is not the availability

of new and exciting technologies that enable us

to rethink design, improve the supply chain and

revolutionise on-site execution; it’s the willingness and

ability of companies to actually put these into practice.

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Find out more about what your business can gain by harnessing the power of Microsoft Dynamics 365 for construction.

Contact HSO

Sources: 1Research Briefings | 2Gov UK | 3Cast Consultancy | 4The Telegraph

HSO UK

[email protected]

+44 (0)20 3128 7767

www.hso.com

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1st Floor, Enterprise Point, Altrincham Road, Sharston, Manchester. M22 9AF | T +44 (0)20 3128 7767 | [email protected]

Since 1989, HSO has been a Microsoft Solution integrator and has become a successful ICT company with more than 650 employees and offices in Europe, North America and Asia. HSO supports local and international companies in retail, wholesale distribution, manufacturing and service with their digital transformation journey. The foundation for this is Microsoft Dynamics 365: A complete platform of CRM, ERP, Office 365 and BI software. HSO takes care of the implementation, optimisation and 24/7 support of these cloud solutions. HSO belongs to the Microsoft Dynamics Inner Circle and is proud to have been named the ‘most customer-oriented Microsoft partner’.

More information about HSO can be found at www.hso.com. Follow us on Twitter via @HSO_Tweets.

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