IRONPROS: Based on the current economic landscape and evolution of the industry, what are the biggest bottlenecks in construction procurement today?
Eric Helitzer: The construction procurement landscape is constantly evolving, and in today's economic climate, several key factors are creating significant bottlenecks:
- Disparate Workflows: Communication between field teams, office staff, and suppliers is often fragmented across multiple channels (phone, email, text, pen/paper), leading to inefficiencies and misunderstandings.
- Tracking Cost Codes: The complexity and manual nature of tracking cost code by line item for budget management create significant challenges. Mismanagement and errors in cost coding can lead to budget overruns and inefficient tracking of expenses.
- Establishing Pricing Upfront with Vendors: Negotiating and agreeing on prices with vendors can be slow and complicated. Post-COVID market fluctuations have made vendors less willing to lock in prices for extended periods, leading to added steps in the process to request quotes and issues with "blind" purchase orders.
- Invoice Reconciliation: The traditional manual process of reconciling invoices is time-consuming, prone to errors, and involves multiple stakeholders, slowing down payment processing and affecting cash flow visibility.
- Material Requests from the Field: The traditional methods of handling material requests are slow and involve a lot of back-and-forth communication, causing delays and stress for field workers who need timely access to materials.
IRONPROS: What solutions can construction businesses use or apply in their operations to overcome these bottlenecks?
Eric Helitzer: To address the challenge of disparate workflows, businesses should adopt unified communication platforms like SubBase's construction material management tool.
This approach consolidates all communication channels into a single interface, enabling seamless interaction between field teams, office staff, and suppliers. By centralizing communication, the platform eliminates the inefficiencies and misunderstandings caused by using multiple channels such as phone, email, and text. Real-time updates and feedback ensure that all stakeholders are on the same page, allowing for quicker decision-making and issue resolution.
Tracking cost codes can be significantly streamlined by utilizing automated procurement tracking tools. SubBase’s solution, for example, integrates cost-coding features throughout the purchasing process. This automation simplifies the organization and real-time tracking of costs, providing a clear and immediate picture of the budget. By removing the need for manual tracking, businesses can reduce errors and inefficiencies, enabling better budget management and more accurate forecasting of future expenses.
Establishing upfront pricing with vendors can be expedited through platforms that offer instant access to vendor pricing and facilitate quick Request for Quotes (RFQ) options. SubBase's user-friendly interface allows for rapid communication with vendors and the easy retrieval of pricing confirmations. By maintaining a consistent and transparent line of communication, businesses can strengthen their relationships with vendors, ensuring smoother and more reliable negotiations..
Leveraging historical data through such platforms also helps validate current prices and forecast future pricing trends, improving budgeting accuracy and reducing the risk of unexpected cost increases.
Invoice reconciliation, traditionally a cumbersome and error-prone process, can be transformed with automated systems. SubBase’s automatic material invoice reconciliation streamlines this task by matching invoices with corresponding purchase orders and delivery tickets automatically. This reduces the manual effort required and accelerates the approval workflow. By integrating invoice processing with accounting systems, businesses can ensure real-time budget updates, faster payments, and improved cash flow visibility, ultimately leading to happier vendors and more efficient operations.
Handling material requests from the field becomes much more efficient with construction purchase order software that streamlines the request process. SubBase’s system allows field workers to submit requests directly through a centralized platform, making them immediately visible to office staff. Real-time tracking of these requests reduces delays and eliminates the need for excessive back-and-forth communication.
Automated approval processes ensure that materials are ordered quickly, minimizing stress for field workers and keeping projects on track. This integration of material request handling with existing purchasing workflows not only enhances productivity but also ensures timely delivery of materials, contributing to smoother project execution and better overall outcomes.
IRONPROS: How has construction procurement changed in the past decade?
Eric Helitzer: The past decade has seen a significant transformation in construction procurement, driven by several key factors:
- Generational Shift and Technology Adoption: The construction industry has witnessed a generational shift as younger professionals enter the workforce. This new generation expects seamless technology integration, reflecting the broader digital transformation happening across industries. They bring with them a familiarity with digital tools and a preference for efficient, tech-enabled workflows. This shift has accelerated the adoption of digital solutions across all stakeholder levels in the construction sector. The urgency for digital adoption was further emphasized by the COVID-19 pandemic, which underscored the need for robust technology solutions to maintain operations amidst disruptions.
- COVID-19 Impact: The COVID-19 pandemic had a profound impact on the construction industry, particularly affecting material pricing and supply chains. The unprecedented fluctuations in material prices and supply chain disruptions highlighted the vulnerabilities of traditional procurement processes. This period exposed the critical need for advanced technology solutions that could track price fluctuations in real-time and optimize material procurement strategies. Companies realized that relying on outdated methods was no longer viable in an unpredictable market, prompting a shift towards more resilient and agile procurement practices.
- Consumerization of Procurement: The entry of younger workers, who are accustomed to the convenience and efficiency of online shopping platforms like Amazon, has driven a push for a more user-friendly and tech-enabled procurement experience in the workplace. This trend, known as the consumerization of the enterprise, translates to expectations for faster turnaround times, improved communication, and greater transparency in the procurement process. These workers seek a streamlined experience that mirrors their personal shopping habits, demanding intuitive interfaces, real-time updates, and seamless integration with other digital tools.
- Rise of Artificial Intelligence (AI): Lastly, the integration of AI in construction procurement has been a game-changer. AI technologies are transforming the way procurement teams operate by providing deeper insights into purchasing decisions and automating manual tasks. AI-driven tools can analyze vast amounts of data to identify trends, predict future needs, and optimize procurement strategies. This allows procurement teams to make more informed decisions, reduce errors, and increase efficiency. AI's ability to automate routine tasks frees up valuable time for procurement professionals to focus on strategic activities, ultimately enabling them to work smarter, not harder.
IRONPROS: What role does technology play in streamlining construction procurement?
Eric Helitzer: Today, technology plays a multifaceted role in streamlining construction procurement by enhancing visibility, streamlining workflows, organizing processes, and leveraging data insights for better decision-making.
A key example is SubBase, which revolutionizes traditional, manual workflows from the field to the office by incorporating vendors to ensure comprehensive communication. SubBase digitizes these workflows in a way that makes sense for all parties involved, without changing the essential processes. This is crucial because every purchase, regardless of size, involves multiple stakeholders.
SubBase enhances efficiency by automating status updates and the creation of purchase orders, which are typically manual and time-consuming tasks. Furthermore, SubBase closes the loop on the accounting process by reconciling invoices with purchase orders and seamlessly integrating this data into accounting systems. This provides real-time spend updates, allowing controllers, CFOs, and business owners to better forecast and assess the profitability of their projects.
By leveraging technology, SubBase eliminates the manual tasks associated with procurement, ensuring smoother operations, improved accuracy, and enhanced financial oversight. This enables construction businesses to operate more efficiently and make informed decisions, ultimately driving project success.
IRONPROS: What are the hidden challenges in adopting new technology for construction businesses?
Eric Helitzer: Adopting new technology in construction businesses presents several hidden challenges, primarily revolving around cultural resistance and the complexity of implementation.
1. Lack of Buy-In from Leadership: One of the biggest hidden challenges is the absence of strong support from top leadership. For technology adoption to be successful, decision-makers must prioritize and champion this initiative. In the subcontractor world, achieving this buy-in can be particularly difficult. Without a cultural shift driven by leadership, initiatives to integrate new technology often falter. Leaders need to create a culture that embraces innovation and understands the necessity of technological advancements to stay competitive. The mantra "innovate or die" underscores the importance of this top-down commitment.
2. Disruption to Existing Workflows: Another significant challenge is introducing technology without causing major disruptions to existing workflows. Technology, by its nature, requires some degree of change, and this can be met with resistance if not handled carefully. Understanding the current workflow thoroughly is essential before injecting new technology into it. The goal is to enhance the workflow without overwhelming users with abrupt changes. This involves a meticulous implementation process that respects and integrates existing practices while gradually introducing new tools.
3. Complexity of Implementation: Implementation itself is a major hurdle. Construction projects involve numerous nuances and complexities, and procurement processes are particularly intricate. Introducing new technology requires not only technical integration but also user training and adaptation. Many businesses struggle with this aspect, as it's not just about plugging in a new system but ensuring it works seamlessly with existing processes. Effective implementation involves detailed planning, clear communication, and ongoing support to address any issues that arise during the transition.
SubBase addresses these challenges by providing a solution that minimizes disruption while enhancing efficiency. It digitizes workflows without fundamentally altering them, making the transition smoother for all parties involved. By automating status updates, purchase order creation, and invoice reconciliation, SubBase streamlines procurement processes while respecting the complexity and nuances of the construction industry.
IRONPROS: Please provide an overview of SubBase and its mission.
Eric Helitzer: SubBase is a platform designed by construction experts who recognize the industry's ongoing digital transformation, particularly the advantages many specialty trade contractors and self-performing GC’s are experiencing. Understanding the specific challenges facing the materials management portion of their business, we developed a platform tailored to address the many issues effectively.
Our mission is to streamline all aspects of material management for contractors and their relationship-based suppliers. We aim to simplify workflows, enhance communication, and empower both sides of the market with unprecedented visibility and financial transparency. By doing so, we ensure that everyone involved in the procurement process, from field teams to office staff and vendors, operates more efficiently and effectively.
SubBase replaces the chaotic mix of emails, texts, and spreadsheets with a single, user-friendly platform that integrates seamlessly into existing workflows. This allows users to simplify procurement processes and boost efficiency without needing to change their current ways of working. Our platform brings clarity, organization, and real-time updates to the material management process, making it easier for subcontractors and self-performing GCs to successfully manage their projects and bottom-lines.
IRONPROS: What can customers expect from SubBase in 2024?
Eric Helitzer: In 2024, customers can look forward to several exciting developments and enhancements from SubBase, aimed at improving the efficiency and capabilities of their construction procurement processes.
SubBase is diving deeper into data analytics to provide users with more insightful and actionable information. This focus will enable better decision-making and project management by offering comprehensive data-driven insights.
We are also expanding our services to include the equipment rental space. This new venture will cater to the needs of construction businesses looking to manage their equipment rentals more efficiently in one spot. SubBase plans to take this offering nationwide, making it accessible to customers across the country.
Additionally, in 2024, SubBase will further integrate its platform with both subcontractors and vendors. This will ensure seamless communication and collaboration across all parties involved in construction projects. These integrations aim to streamline workflows and improve coordination, enhancing overall project efficiency.
Moreover, we are set to enhance its reporting functionalities, providing users with more detailed and customizable reports. These advanced reporting capabilities will help businesses track progress, manage budgets, and forecast future needs with greater accuracy.
