Commercial procurement within the electrical industry can be a complex and multifaceted process. Contractors specify material components that often need to be sourced from a variety of suppliers. While some contractors are actively using technology to help manage these activities, primarily price quotes and purchase orders, this technology is often disconnected, requiring manual handoffs of information from one phase of the workflow to the next, which is time-consuming and can lead to errors. This prevalent gap in information flow is contributing to fractured processes that continue to be an inhibitor in the advancement of productivity throughout the supply chain.
There are several reasons for the lack of digitization. First, contractors are using software from multiple vendors and standard integration is often limited or not available between systems. This lack of integration creates silos that inhibit information flow causing downstream inefficiencies for contractor project teams.
Second, information flow is further inhibited when a common data environment is not used. Creating quotes and orders using a bill of materials generated from a fully managed material database means contractors and their suppliers can rely on standardized product information including material codes, descriptions, and prices to streamline their workflow. This allows for accurate and speedy material sourcing, reduces confusion or errors in procurement, and boosts accounts payable tracking capabilities. However, it is more common than not for contractors to track purchase orders without material codes. 60% of respondents claim this to be the case in an industry survey of mechanical, electrical, and plumbing (MEP) contractors in North America on systems integration and information flow in the procure-to-pay process conducted by Trimble Viewpoint in collaboration with Carnegie Mellon University.
Last, computer-to-computer information exchange between contractors and suppliers is minimal. This is a major challenge for many contractors who are often forced to use multiple methods for requesting pricing or sending purchase orders. It wouldn’t be unusual to go out for three quotes and then enter the information three different ways, creating inefficiency and friction. In the same study mentioned above, 61% of MEP contractor respondents attest to using manual or generic tools (e.g., Excel) for the request-for-quote process. This can be attributed to a lack of a common data environment facilitating the exchange of information, as mentioned above, compounded by other firm-level operating factors. When suppliers and contractors establish system-to-system connectivity driven by common data and integrated systems, they can start to establish a truly digital workflow to reduce friction in the materials procurement process.
A digitized approach to material sourcing can deliver rich opportunities for improvements in efficiency and data collection for critical reporting and tracking functions for both contractors and their suppliers. By harnessing the power of a common data environment, connected systems, and electronic information exchange with their suppliers, electrical contractors can achieve more seamless connected construction processes that will improve information flow and simultaneously boost supply chain productivity.
Meredith Olsen is senior product marketing manager — MEPcontent at Trimble, Inc. For more information, visit www.mep.trimble.com.
