The urgent phone call to the building materials manufacturer came as yet another hurricane was churning its way toward landfall during the record storm season of 2017.
On the line was a procurement person for a big-box home products retailer, wondering if the manufacturer, which produces doors, windows and other home construction materials, could, on extremely short notice, fill an order to meet what the retailer was projecting to be a 400-percent spike in demand for a particular product in the wake of the impending storm.
Because the company had invested in an integrated digital supply chain management solution, it had the ability to take a change order up until 3 pm one day and deliver on the order the following day. So in this case, armed with data-driven software tools that afforded it real-time visibility into production at the mill level, as well as inventory at the warehouse level, and transportation capacity across multiple modes, the manufacturer could give the big-box chain, one of its biggest retail clients, options for covering the expected short-term spike in demand.
Hurricanes, floods, wildfires — 2017’s unprecedented climatic upheaval provided one powerful reminder after another, not only of the costly and often tragic realities wrought by climate change, but also of the growing importance dynamic, end-to-end supply-chain tools have in helping building materials manufacturers get key products to market quickly, when and where they are needed. From a strategic standpoint, this quick-strike, adjust-on-the-fly capability is a differentiator for building materials manufacturers on a number of levels, both in the context of a disaster and in the normal course of business:
- It gives manufacturers the means to meet major surges in demand in the wake of a disaster. Recent estimates suggest that Hurricane Harvey destroyed a minimum of 100,000 homes in the Houston-Beaumont, Texas, area. That translates into some $1.8 billion in new demand for lumber, windows, roofing, insulation, wallboard and siding, the research and consulting firm Principia estimates. What’s more, buyers in the area searched for steel building suppliers 1,700% more often and plywood and drywall suppliers 400% more often than they had pre-Harvey, according to the Thomas Index Report, which tracks manufacturing industry trends. Factor in recovery efforts from hurricanes Irma, Nate and Maria, and from wildfires in Northern California, and the disaster-fueled surge in demand for building materials could be unprecedented.
- On a day-in, day-out basis, digital supply chain management solutions are giving manufacturers the ability to get more of the right types of building materials, more expeditiously, and more cost-effectively, to markets that need them, whether in response to a disaster or not. For example, demand-side tools give manufacturers access to real-time retail point-of-sale data so they can adjust production, replenishment and other supply chain requirements accordingly.
- It solidifies and deepens trusted relationships with supply-chain partners such as the aforementioned big-box retailer.
- It allows manufacturers to emerge from behind the scenes to play a genuine — and more visible — role in helping communities rebuild. Key players at ground zero of a recovery effort see the manufacturer’s name on the materials they’re using to rebuild, creating instant good will for the company. What’s more, a building materials manufacturer can use its real-time supply chain insight to help spread the word within disaster-impacted communities (via social media, etc.) about which recovery materials are available, where and when.
In the first nine months of 2017 alone, the United States experienced 15 billion-dollar weather and climate disasters, one shy of the full-year record set in 2011, according to U.S. government figures. And that was before wildfires in Northern California took a huge toll on life and property. With disasters becoming more frequent, it’s imperative, for reasons related to both the bottom line and corporate citizenship, for building materials manufacturers to arm themselves with tools that improve transparency, efficiency, capacity and responsiveness across the entire supply chain. Here are three areas where those tools can prove particularly valuable in helping manufacturers rise to the occasion:
1. Demand sensing and insight. Today’s breed of demand-sensing digital tools provides data inputs that give manufacturers visibility into exactly which materials are needed, where, right down to the specific store level. This data is vital for demand forecasting throughout the entire lifecycle of a recovery, as product needs move from cement, concrete, roofing and lumber, then later to drywall and finish materials. Look for a platform that has the ability to upload post-disaster demand data from external third-party sources, then provide the manufacturer with a concise picture of how much of which building products are needed, where and when. Outside the context of disaster recovery, this kind of third-party data also can be valuable for lead generation.
2. Production and supply chain management. In disaster recovery, timing is everything. Say, for example, a manufacturer has a maintenance shutdown planned at one of its mills, when its production-management software provides advance notification that a major storm is imminent. Using tools embedded in the software, the manufacturer can potentially adapt its production plans and reschedule the maintenance to position itself to meet an expected increase in demand. Meanwhile, other tools can provide visibility into available inventory at specific warehouses. These sorts of features can help avert supply shortages and resulting price spikes.
3. Transportation management. As large a component as transportation represents in the cost of getting building materials to market (think bulky high-volume materials such as glass wool and rock wool insulation), it’s critical that manufacturers have tools to efficiently manage transportation across multiple channels. Is over-the-road trucking, rail or even shipping vessel the most cost-effective and expeditious way to get a particular product to a disaster recovery area? What if trucking capacity into an area is seriously constrained by FEMA’s needs? Having robust transportation management tools that provide real-time visibility into multi-modal capacity gives manufacturers options. In the case of the aforementioned building materials manufacturer, for example, it enabled the company to identify trucking capacity to bring not only its own products but those of a competing company into a disaster area. Having real-time visibility into trucking capacity during a disaster also allows manufacturers to identify potential backhaul opportunities where they can aid in removing debris from an area while bringing down their own costs in the process.
Having dynamic digital tools like these enables building materials manufacturers to answer the call in times of disaster, and to more efficiently manage the intricacies of a complex supply chain during the regular course of business.
Folkert Haag is global lead, Building Materials, for SAP.
