How diversifying products helps avoid supply chain issues

How diversifying products helps avoid supply chain issues

The past few years have proven how volatile the supply chain is for the construction industry.

As soon as supply production begins to settle for some materials, others become harder to come by. Factors like ongoing labor shortages and the impacts of war on imports and exports add another layer of uncertainty.

Predicting material availability around these disruptions is difficult, if not impossible.

Still, builders need to have materials and supplies on hand. Otherwise, they risk stalled projects, last minute change orders and costly overruns. One way to counteract these challenges? Buying your construction materials as a group.

What is a group purchasing organization?

In many industries, large companies experience more purchasing power than smaller ones. They’re better equipped to weather supply chain disruptions compared to smaller competitors.

That’s because larger businesses usually have more capital on hand – and more room for a buffer – if supply shifts or prices increases. Some suppliers even favor larger companies because of their ability to place high volume orders.

Group purchasing organizations (GPOs) mimic this type of supply-and-demand relationship. In the construction industry, a GPO is a network of home builder members, like CBUSA. Together, this network generates more purchasing power than they would alone.

Suppliers still enjoy high volume sales. Meanwhile, builders benefit from money savings like better pricing and rebate programs. They also can enjoy access to top vendors, countless rebate programs and diverse product offerings.

Why is product diversification important for improved project management?

Diversifying product offerings is especially helpful in times of supply chain volatility.

Difficulties with the supply chain have led to entire product lines being nearly impossible for builders to get their hands on. As demand grows and supply drops, prices for products can quickly become outside of what a builder’s budget allows.

Group purchasing memberships work to establish many relationships with high quality brand partners. At CBUSA, partners are vetted for reputation, quality and delivery performance.

What does that mean? Options.

With trusted brand partners to choose from, builders can:

  • Access alternative products if they experience a shortage.
  • Try out new products or brands.
  • Switch orders based on timely rebate programs.
  • Reduce risk of bulk purchasing as a sole purchaser.
  • Test out new consumer trends.
  • Improve procurement strategies.

While GPO members have the option to purchase with outside vendors, it’s usually better for a builder’s bottom line to use network suppliers, even if those decisions are made slowly over time. CBUSA even runs cost comparisons for builders to estimate cost savings when switching to a preferred brand partner.

Improve resource allocation with guaranteed supplies

Resource allocation is the process of dividing available resources across a project’s scope. It’s often thought of when planning and assigning tasks to different stakeholders throughout the project.

One of the first steps in effective resource allocation is to know what resources are available. That includes staff, subcontractors, budget and supplies. If a supply isn’t available, work can’t be planned around it. Otherwise, subcontractors could show up for an assignment — only to find the materials needed aren’t even on site.

Remember to plan and assign resources around available supplies and materials. An easy-to-use project management software can accomplish this for you.

The software works by factoring in supplies, change orders, schedules and tasks to keep builders on track throughout a project. By securing your supplies through a GPO, builders can better plan resources, knowing delivery can be counted on. In turn, project managers can keep the entire project running smoothly. Combined, those efforts support timely project completion.

GPO membership next steps

Being a part of a GPO gives builders more than just a community to network with. It can mean real product cost savings and secure project timelines, while competitors are left scrambling for alternatives when supplies go astray.

If you’re not already a member of a GPO, consider applying to joining one.

If you’re already a GPO member, remember to take advantage of all the benefits the membership has to offer you. That includes taking advantage of different suppliers and product offerings from brand partners.

CBUSA’s partnerships include dozens of top brands, including:

  • DuPont performance building solutions
  • Electrolux premium appliances.
  • Ferguson plumbing supplies, HVAC products and building supplies.
  • Kohler fixtures, HVAC and commercial materials.
  • Generac generators and power systems.
  • JennAir high-end home and kitchen appliances.

Read the full list of brand partnerships.

About The Author

Deborah Trecek