Why the Status Quo in Building Supplies Delivery Isn't Good Enough

If you’re a building supplies distributor, your world is changing rapidly. Two big trends—digitization and consolidation—are sweeping through the building supplies industry and sweeping away conventional practices. One of the areas under the most pressure is last mile delivery: getting the stuff you’ve sold onto a build site.

In this new era, the way we’ve been doing that is far from optimal.

Fortunately, while technology is pressuring deliveries, it’s also providing solutions that lower costs, speed deliveries and even help ease the chronic shortage of delivery drivers.

Purchase Decisions Moving Upstream

The adoption of building information modeling (BIM) and digital twins along with offsite production of building components seem likely to shift some buying of supplies upstream from contractors and subs. In the U.S., nine out of ten architecture firms with more than 50 employees use BIM already. These upstream buyers may be more sophisticated, putting pressure on pricing and margins for suppliers. Also, direct-to-site delivery from online sources could reduce local deliveries overall. Shifting component production from on-site to offsite factories may reduce the need for local inventories too, and large production facilities with longer lead times might make same day/next day availability less important.

For traditional suppliers, implementing online ordering that integrates with their ERP/inventory/delivery tech stack could help blunt the impact of these changes, yet only a little more than a third of building supplies vendors surveyed said they offer online sales. The status quo of creating takeoffs, building estimates, and scheduling orders by hand can’t compete with the speed, accuracy, and efficiency of automated systems.

How your orders move from online/incoming to the loading dock, and from the dock to your customer’s site, is critical too. While less than one in ten building suppliers say they’re ready to invest in BIM software, about 40% say they plan to implement automated takeoff, inventory management or delivery optimization software in the next year.

Softening the Staffing Crunch

For many distributors finding and keeping yard workers and drivers is their single biggest problem. Tech can help here, too, by boosting productivity. A well-integrated stack that manages the process from end to end can make the daily loading process faster and less frustrating. Your tech should be able to accommodate day-of orders without disrupting the route plan or slowing down yard workers, so you’ll get more supplies loaded with fewer crew. The same goes for drivers. Highly optimized routes allow you to make more deliveries per day per driver. Smoother operations and better digital tools make everyone’s job easier, increasing job satisfaction and decreasing turnover.

Supplier Consolidation

To compete in the fast-evolving digital world, the big are getting bigger. Many suppliers are opening new locations while merger and acquisition activity from private equity firms is robust, bringing formerly independent distributors into ever-larger combinations.

Bigger companies are better able to stay in stock across the whole range of supplies and better able to negotiate prices from manufacturers. They’re also able to invest in technology, digitally integrating their operations from blueprint to building site.

This puts operations without a robust tech stack and end-to-end integration at a distinct disadvantage.

Gearing Up

Tuning up your tech stack is a necessity, but where to start? Since half of the total cost of logistics is in the last mile, delivery management is an obvious choice, so it’s not surprising that delivery software is being considered by so many distributors. Boosting efficiency and reducing cost in the last mile has an outsized effect on the entire organization—and it can even help solve one of the biggest problems in distribution, the shortages of yard workers and drivers.

There are many choices for delivery management software with different degrees of sophistication and capabilities. Distributors should think carefully not just about managing the deliveries they’ll make next week or next month, but how their choice will fit into a comprehensive tech stack that will allow them to compete effectively.

Integration:

Even if you currently have no other tech, looking ahead to how your last mile delivery software will work with other platforms common in the industry is crucial. The next steps of digitalization will likely involve implementing  enterprise resource planning (ERP), warehouse management (WMS) and fleet management (FMS). Your last mile software should integrate smoothly with industry leading platforms and have a robust API backed up by a stellar engineering staff capable of developing any non-standard integrations (such as a payment gateway for CODs) you may need in the future.

Scalability:

On-premises last mile solutions are falling out of favor, in part because their ability to grow with a business is limited by the computing power installed on site. Cloud-based platforms have the capacity to grow with the business, but only if they have access to an adequate number of servers. When evaluating the software, it’s important to have the vendor show you how it handles large routing problems—hundreds or thousands of stops—in real time.

AI and ML:

Artificial intelligence and machine learning (ML) are the tech buzzwords of the decade. However, not all AI is created equal. It’s easy for a software vendor to add a little programming to their product and say it’s now “AI enabled.” Optimizing delivery routes is a difficult math problem that requires more than a few snippets of code. The more variables the software is able to consider when planning routes the more accurate its delivery windows and the better its optimization. It should be able to factor in the capabilities of each individual service unit: Not just capacity but also features such as lift gate, forklift or crane. It should also consider the historical performance of each crew, their speed and which ones are qualified for specific types of deliveries or installs. And it should allow your route planners to simultaneously optimize for a variety of parameters, such as miles driven, total cost to deliver and cost per delivery.

Proof of Delivery: 

Robust proof of delivery is essential in building supplies distribution. With multiple subs working at a site, you may receive orders from more than one. What gets delivered and who signs for it matter. The ability to scan materials onto and off of your trucks, along with photos, time- and geo-stamps and signatures will help prevent payment disputes.  

Rapid rerouting for hotshots: 

Next day and day-of orders are the bane of building supply distribution. While off-site fabrication of building components could reduce the need for fast delivery over time, the reality is that building sites run on tight schedules, and when the drawings don’t match what was ordered, or what’s being built, it’s important to get materials fast to stay on track. Your last mile software needs to be able to reroute in seconds, not hours, without losing efficiency and increasing costs.

Click and collect: 

It’s 6:15 am and there’s already a line at the contractor counter of your retail location. The subs standing in line aren’t the problem: The problem is the ones who never came in because they knew they’d lose time on the site waiting to get that thing they need to get their job done today. Allowing customers to buy online and then pick up at your location can tame the morning rush and boost sales. Even if you haven’t yet implemented an online ordering system, you probably will soon. Your last mile software should accept those orders automatically, send the buyer a confirmed pickup time that optimizes your warehouse and parking lot capacities, queue the orders for warehouse workers to accurately get the right materials to the right spot for pickup, and provide robust proof of delivery with time stamps, photos of the goods and the license plate of the vehicle, and a signature.

Evolve or die. That’s the imperative all businesses face, but it’s especially true for building supplies distributors. Years of doing it the same way have given way to fierce competition that’s likely to get even more savage. Arming your organization with the right tech tools is the best way to fight back.

For more information about how to select the right last mile software for your organization, contact one of our advisors to learn how we can help.