Picture yourself as the site manager of a construction project.
Employees are exhausting materials round the clock to achieve the project goals. Your client needs the project done by next week.
How do you track your materials to ensure they don’t run out and if they do, when should you replenish them?
The situation above is a common dilemma affecting project managers and organizations around the world. Restock too slow and you might use up all your materials and delay projects. Do it too early and you’ll spend unnecessary money.
This explains why material tracking is necessary not only in construction but in other activities that require multiple inputs to succeed.
In this article, we will cover everything you need to know about construction material tracking—from identifying what to track to implementing best practices.
What Materials Can You Track?
Construction material (also known as a building material) is any material used for building purposes such as houses, skyscrapers, landscapes, and so on.
Different specializations in the construction sector use different types of material. Carpenters, for instance, deal with wood-based products while plumbers work more with PVC and metal materials.
Common materials used in construction projects include:
Construction materials can also be man-made. Alloys like steel and copper are created from a mixture of natural metals and are used heavily in construction. In fact, it’s often cheaper and more effective to use man-made materials due to lesser scarcity and improved technology.
So, without further ado, here are the strategies to use for effective tracking of your construction materials.
5 Strategies to Implement to Your Construction Material Tracking
Managing construction materials without tech is like bringing a knife to a gunfight. Today’s business climate rewards companies that can work quickly and efficiently—two things impossible to achieve without the aid of technology.
1. Use Unique Tracking Identifiers
Tracking identifiers give each material unit a unique identity—think of it as a social security number for items. With serial numbers, you can track where the material has been all the way from delivery to storage and usage.
Several common identifiers used in industries are:
Smartphones have made it easier to track items with serial numbers. Today, scanners work directly with smartphone cameras and mobile apps so workers can scan, track, and update the status of materials in one device.
While barcodes are ubiquitous with serial numbers, we recommend using QR codes as they store more data and work better performance-wise.
Whenever a QR code is scanned with a smartphone, data is sent to the software responsible for managing materials along with the context of the scan (e.g. is it in storage or in delivery?).
The updated inventory is then sent back to the user so he or she can get the latest information on the company’s material stock.
This workflow increases productivity and reduces operating costs which is great for low margin industries like construction.
Leading companies all over the world are already benefiting from this trend; a Motorola-endorsed survey found that 67% of companies plan to use mobile tracking to manage inventory.
Doing all these without serial numbers and technology is impractical.
You’ll be spending ridiculous amounts of money on staff members and the tedious, repetitive work is likely to elicit costly mistakes among your workers.
2. Use Real-Time Tracking
Most solution providers include real-time tracking features to track the movements of material on the go.
Some platforms, for example, even integrate real-time tracking for all three core project components—materials, assets, and inventory—with specific project timelines, further improving the productivity of your business.
When you have a real-time, bird’s eye view of your materials, you can gain valuable insights that assist in decision making.
You will avoid common bottlenecks like urgent resupplies or insufficient resources to complete a project on time since you know exactly how much materials you need now and in the future.
Another benefit of real-time tracking is the ability to monitor materials as part of your security policy.
Hiring guards to watch over your materials is expensive and it doesn’t completely eliminate the risk of theft. Remote monitoring does the same job but cheaper and without the risk of employees getting hurt from attempted burglaries.
Real-time monitoring also helps with eliminating waste from unused and underutilized resources.
Warehouse and storage costs are rising every year which hampers your profitability the more idle materials you have. With technology, you can detect these materials early and move them to sites that need additional resources or resell them to minimize losses.
3. Invest in Automation
Your employees are far more capable than being assigned to clerical tasks that take too much time with minimal returns. An area where workers are commonly misassigned is in managing construction materials.
Do you really want your employees to count sandbags all day?
The more you automate the boring tasks, the more time your team has to work on core business objectives that drive the highest ROI. For this to happen, you would need to invest in software with features designed for construction firms not only in terms of automation, but also in material tracking.
For optimal results, analyze your work structure to identify repetitive tasks.
Tasks that have a specific set of procedures to follow are prime candidates for automation.
For example, if you have an employee going through containers daily to update material stock counts, deploy trackers instead to automate the job and free the employee to work on higher-level tasks.
You can use automation to replenish materials ahead of time hassle-free. Remember when we mentioned how stress-inducing rushed orders can be when you’re running low on materials?
That won’t be a problem anymore since certain tools can automatically contact suppliers, place an order, and schedule deliveries to sites when your materials reach a defined quantity known as the reorder point.
4. Plan Your Delivery Infrastructure
It’s wise to plan your delivery infrastructure for common scenarios.
- Where is the main delivery and storage point for orders?
- If a project site is out of the main coverage area, where are the secondary points?
- Where should deliveries be sent for last-minute orders?
All these questions should be addressed in your delivery groundwork.
Train your team to be well-versed with your company’s warehouses and storage locations. Run them through the procedures for when an order arrives and rehandled to mitigate issues like damaged materials or incorrect deliveries.
Be transparent when dealing with suppliers so they understand why you need the materials to be sent swiftly. The better your overall communication is, the fewer problems you’ll encounter when ordering construction materials.
If you are working within a strict timeline, look into last-minute delivery services to speed up your orders. Last-minute delivery providers specialize in rushed orders so there’s less risk of them damaging or losing your materials.
It does come at a premium but in a situation where the success of your project is on the line, it’s a no-brainer to work with them.
Also, be firm and upfront when dealing with suppliers, especially if it’s your first time working with them.
Many project delays arise from contract disputes which often end badly.
Make sure to clarify delivery things like:
- prices (including tax and miscellaneous fees)
- refund policies
- expected product quality during negotiations
This way, you stop pesky supplier disagreements from ever affecting your operations.
5. Make Use of Technology
The tips mentioned above revolve heavily around technology for a reason.
Satya Nadella, CEO of Microsoft said that every company is a software company. Even if you are not developing your own software, this means that you can profit from someone else's.
Technology is here to make your business easier.
When deploying software, make sure to use cloud-based one, so you can sync data across sites even if they’re in different countries.
Cloud-based systems provide vital information in real-time so you’ll be able to respond to business events faster like contacting suppliers for restocks or sending updates to cross-site managers within seconds.
Another business advantage that tech realizes is prescriptive intelligence.
Predictive maintenance is popular today but it only tells companies where problems might occur and when they’ll happen.
The solution would still have to be devised by maintenance teams which takes time especially if it’s a complex problem.
Prescriptive intelligence solves this problem by prescribing possible solutions to technicians.
For example, a program might tell you that orders are delayed due to storage locations being too far apart from project sites. From there, you can look into ways to bridge the gap hence overcoming delayed deliveries.
Prescriptive intelligence is essentially the improved version of predictive maintenance, yet the benefits it brings to productivity are endless.
The differences between multiple business intelligence types (Image Source)
Technology also helps companies move away from paper records to digital data. Of course, you still need paperwork for critical operations but too much of it can cause inefficiencies during work.
It would be impossible for employees to keep track of stacks of paper records without the features available in digital data like search functions or copy and paste.
Try finding a record from the last three years by hand—it’d take you days to do so!
Finally, it’s worth looking into whether asset-as-a-service (AaaS) solution would benefit your company’s operations. The model works exactly like prescription based software (SaaS) but for materials instead.
In asset-as-a-service, customers buy products on a subscription basis which includes consistent maintenance. For materials, the stock would be replenished after a period of time or at the customer’s request.
This model eliminates downtime since materials are delivered constantly, albeit with a rate that matches the customer’s usage.
Not only is it cheaper, but the asset-as-a-service model also makes management easier since there’s no need to track materials with laser precision every day.
Just a quick check every once in a while is enough to keep materials in stock to meet project goals.
Benefits of Tracking Construction Materials?
There are hundreds of materials to keep track of in a standard construction project.
1. Keep Track of Usage
Assets (e.g. machinery) can be equipped with telematics but most materials don’t have that luxury. Also, materials exist in many forms.
Estimating your cement stock is way different than calculating how many pieces of wood you have.
Material tracking overcomes these challenges by providing structure to how you measure and manage materials.
For example, instead of eyeballing how many bags of sand you have left, you can install trackers on each bag to automatically detect and alert workers if the supply is running out.
Tracking materials is also a great way for companies to benefit from data in terms of usage.
Increased visibility into how and where materials are used will allow managers to create in-depth reports.
This wealth of information then enables companies to make informed decisions regarding their materials, like recovering underutilized parts from one site and deploying it to another project running low on materials.
2. Reduce Operating Costs
Contrary to popular belief, construction companies don’t earn a lot from projects.
Profit margins of 1.5% to 2% are normal in the industry, with anything above 5% being close to impossible.
The millions that companies get from finished projects—which seems like a lot to outsiders—is just a tiny fraction of the total cost.
Net profit margins in different construction sectors (Data from)
Construction companies need to track materials to cut down excessive costs wherever possible.
The cost of a single unit may seem insignificant. However, factor in the cost for thousands of orders as well as fuel and labor fees for transport and you’ll notice a massive impact on operating margins.
The initial cost for material tracking may be expensive, but it will be a shrewd investment in the long run as a result of saving millions from excessive material spend.
It’s no surprise that companies will continue to ramp up tracking efforts in the future to realize this benefit.
Theft is another strong reason to invest in material tracking—theft.
The National Equipment Register estimates the cost incurred by businesses from stolen equipment to be somewhere between $300 million to $1 billion. With already tight margins, construction companies cannot afford to lose any more money to material theft—that is without considering potential losses from natural disasters.
With technology, you can receive alerts whenever materials disappear without notice or are operated without authorization.
Material tracking is especially useful for smaller businesses that lack the resources to hire security to safeguard materials, although corporations benefit just as much from spending less on physical security measures.
3. Achieve Sustainability
Another vital aspect of material tracking is to keep up with sustainability efforts. The construction industry is worth $1.3 trillion but it’s not something to get excited about.
Mass volumes of raw materials are harvested every year globally to meet construction demands, leading to environmental concerns due to depleted forests and increased pollution (e.g. carbon emissions).
A study by the Construction Climate Challenge organization concluded that 50% of climate change impacts come from the construction industry.
NASA’s studies have also shown a worrying increase in global temperatures as a result of climate change—a global catastrophe waiting to happen if left unmanaged in the future.
Material tracking helps solve sustainability issues by enabling companies to order only what they need. This prevents overstocking which limits the number of raw materials harvested to cater to the industry.
Material tracking also cuts down unnecessary costs so businesses can improve their profit margins while tackling climate change at the same time.
Challenges Faced by Construction Companies Without Material Tracking
Without material tracking, companies would have to rely on estimates which are unreliable for million-dollar operations like construction projects.
1. Buying the Right Amount of Materials
The number of materials needed depends on what companies need for their projects. The bigger question at hand is, what is the right amount to order?
As mentioned earlier, wasting money on excessive materials is not ideal for business growth. There must also be enough material to finish builds without risking quality and safety.
You may decide to work with cheap suppliers but the risk you undertake costs far more than buying high-quality materials.
Fines for accidents and non-compliance with quality laws can run up to millions even for light incidents (e.g. OSHA).
Different fine levels in OSHA’s guidelines (Source1, Source2)
Some material suppliers work with fixed contracts instead of one-time purchases to secure their cash flow and combat price manipulation. A miscalculation in the number of materials you need would cost you over the entire duration of the contract.
This is particularly common in multi-year projects that require constant resupply or construction materials.
If you find out you are short on materials, you would have to renegotiate with suppliers which results in rushed orders as projects have a set completion date.
Rushed orders are of course more expensive and there’s no guarantee the materials will arrive on time.
The worst-case scenario is if companies pay for urgent deliveries and receive the orders later than expected, causing project delays and leaving a deep hole in their pockets.
2. Effective Procurement
After you order materials, you often have to follow up with suppliers to ensure the materials arrive as expected—both schedule and quantity-wise.
This comes in the form of lengthy email chains, constant calls, and other back and forths that extend over a period of time.
If your company has enough materials to sustain this delay, it won’t be an issue.
But what if you need the materials ASAP?
Material procurement for rushed orders can get messy if communication between the buyer and supplier is poor.
You get frustrated by slow deliveries and responses from the supplier. You have to come up with excuses to tell your client why the project is delayed. Your workers struggle to perform their tasks without the necessary tools and materials.
One way to overcome this is by retrieving materials directly from the manufacturer. Although you’ll get your orders quickly, this will generate extra overhead as you need to pay drivers as well as bear logistics costs.
Large companies can get away with this but smaller ones won’t have enough resources to do so, let alone rent vehicles.
Also, consider the time wasted from having to follow up every day. A site manager who spends hours a day pushing suppliers to move faster could have used the same time to work on higher-value tasks instead.
Managers are major contributors to the overall performance of your projects so it’d be inefficient for them to deal with unnecessary tasks.
3. Material Storage and Handling
Materials sent to a site are usually stored in warehouses or containers. Sometimes, these storages may fill up, leaving excessive orders out in the cold.
It’s not advisable to leave materials exposed as they may deteriorate due to the rain or sun which loses businesses even more money. If the material is damaged prior to arrival, it may be refunded but that’s not the case with materials in storage.
Non-existent material tracking can also cause problems when materials are moved from one site to another, also known as rehandling.
Parts can get lost, damaged, or stolen during transport by dishonest operators. Arrived materials may be stored in the wrong places which creates difficulties for workers.
All these problems raise indirect costs that impact profit margins. For example, spending too much on labor costs for storage and transport will eat up budgets for other critical activities like daily employee allowances.
Ultimately, delays happen and clients get upset over slow project deliveries, thus tarnishing your company’s reputation in the industry.
Material Tracking is a Must For Your Construction Business
Every construction company should keep its operating costs in check and optimize operations —and effectively tracking materials is the way to go. Likewise, it may please you to know you are not causing too much damage to the environment from excessive materials.
Leverage technology to track materials and automate tedious tasks, and save both money and time.