The Construction Materials Industry is a major area of wholesale
distribution. Suppliers of raw materials used by construction firms when
building commercial and residential properties are included in the
construction materials industry. This includes basic materials such as
brick, stone, concrete, and cement, as well as wood, lumber, wood
paneling, and millwork products. Roofing, guttering, and insulation
products are also available from distributors.
There is a secondary market for sector-related products such as
glasswork; wire and fencing are also available. With such a diverse range
of products in the construction materials industry, wholesale distributors
must exercise strict stock control in order to remain profitable. The
construction and building materials supplier is frequently difficult to track
because it is entirely dependent on building industry trends.
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While the market's future appears
bright, the industry is highly
competitive, and distributors in
this sector face a unique set of
challenges:
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The demand for construction materials is rarely constant. Seasonality has an
impact on the construction materials industry, with the summer months seeing the
majority of outdoor construction activity. Other, more economic factors influence
the industry as well; interest rates influence the cost of mortgages and loans, so
periods of high-interest rates will stifle construction investment.
Because of the wide variety of products supplied to the construction industry,
wholesale suppliers of building products must be sensitive to changes in market
demand. Overstocking supplies for deteriorating markets can lead to inventory
obsolescence, and failing to identify and capitalize on emerging market trends can
lead to market share loss. Inventory control monitoring that is efficient and
effective is critical to managing cyclical demand in the construction materials
industry.
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Demand for various products will frequently fluctuate within established and emerging markets. Consumer
preferences can shift as quickly as the wind direction, and even minor changes in hardwood flooring trends
can devastate a distributor's inventory plan and forecast. Changes like these can be costly if a distributor is
caught carrying a large quantity of product that is no longer in line with the style or desires of the consumer.
Another emerging trend is the push for sustainability in the construction industry; new products such as solar
panels and super-efficient triple-glazed windows are seeing increased demand from environmentally
conscious consumers.
The challenge for building material suppliers is to identify popular trends before the competition. High-level
communication with builders about market trends is critical for developing industry insight. Even having
technology in place to alert inventory purchasers of shifts in demand can provide a wholesale distributor with
a competitive advantage and keep their business relevant.
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Because wholesale suppliers to the construction industry are one
step removed from end users, extra time and analysis are required
to stay ahead of the curve when identifying new products to stock or
products that may become obsolete. Smart demand forecasting
tools, such as rzbm, can assist in making this management easier
and more sustainable. Inventory optimization is critical in this
industry, but it is dependent on having a real-time stock control
system.
Because the unit costs of some construction products are high,
strategies such as ABC analysis of inventory stock levels can aid in
preventing stock outages or overstocking. In-depth weekly and
monthly analysis should be performed to manage the industry's
cyclical nature by forecasting and procuring using historical data.
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Here are some guidelines for distributors in this industry to increase and maintain market share:
Keeping an eye on emerging and declining markets
It is critical for building product suppliers to have contacts at all levels of the trade in order to identify
opportunities for growth in new markets. Knowledge of investment areas in large-scale building projects
can assist suppliers in developing a strategy to capitalize on these opportunities.
Similarly, understanding declining trends in current markets can assist suppliers in reducing their focus
in those areas, and understanding what areas are declining can provide insight into what new areas will
emerge, allowing distributors to find and retain new customers in areas of high investment. To continue
with the example of environmental sustainability, identifying a decrease in demand for incandescent light
bulbs indicates a logical prediction of a demand for a different type of light bulb – such as LED or
halogen lights.
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Having an inventory management system or software in place to
analyze data from previous sales history and purchasing trends
assists distributors in keeping track of seasonality and demand
shifts. Suppliers who understand seasonality are better
positioned to establish lean purchasing habits to mitigate the risk
of excess inventory of low-demand products. Using real-time
data gives suppliers more leeway to reduce stocking levels
before quiet periods, freeing up capital held in inventory and
moving stock to where it is needed in the distribution channel.
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The best way to stay ahead of the competition and maintain industry relevance is to be constantly prepared
and forward-thinking rather than reacting to market changes late. The best way to stay prepared indefinitely
is to optimize your business and warehouse locations.
This article highlighted a few aspects that should be kept in mind in order to remain competitive in the
industry, as well as a couple of benefits that can be gained by optimizing processes. If you are particularly
interested in learning more about how your company can benefit from optimized inventory operations,
please contact us.
Reference: https://penzu.com/public/5bb6223b
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Address : Rubaiya Zueaid Bldg Matl Co. L.L.C.
Al Maktoum Street, Deira
Dubai, United Arab Emirates
Email Id : online@rzbmco.com
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Contact No : +971 42216819
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