Supply Chain Sourcing: A View From The Inside
Most people outside of the commercial construction industry don’t know – or understand – the intricacies behind sourcing the supplies and materials needed to complete a masonry project. There are many moving parts that must be accounted for, in addition to the never ending market fluctuations that can spring unexpected price hikes for required materials. Procurement is a game of estimations, always subject to the next round of supplies and material needed to get the job across the finish line.
To get an inside look at all that goes into procurement and supply chain sourcing, we interviewed Mike Miller, Phoenix Masonry’s assistant project manager. Below, he shares his thoughts on this often overlooked, but critical, process at Phoenix Masonry.
How would you describe your role with the company?
“Prior to my onsite duties for various projects, I work closely with the team on job estimates. Once we send our figures to the contractors, I continue functioning as a chief negotiator on the bid. We look for ways to communicate what we need in terms of materials and labor to complete a project, then look for further efficiencies that can make our bid more competitive. Once the bid has been finalized and awarded, my role becomes that of a project manager – following through on our requirements to remain in compliance with what we’ve promised. This includes lining up qualified subcontractors and sourcing the required supplies and materials such as brick, stone, or stucco – whatever the particular job calls for.”
What’s causing the current challenges for supply chain sourcing?
“Many people think the supply chain disruptions and material shortages are caused by the pandemic, but that’s not really the case. Of course, the pandemic is responsible for higher supply and labor costs. But in reality, it’s the fluctuating economy and its effect on supply and demand. The economy has really bounced back in the last couple of years and some parts of the country are booming right now. That’s what really shorts us on materials – availability. Now that the interest rate hikes have cooled things a bit, we may return to some normalcy. But I’ll give you one specific example – right now, the state of Texas accounts for 40% of all the brick supplies in the U.S. The housing market down there can’t keep up with demand and it’s tightened up the supply everywhere else. This drives the price up – sometimes drastically. Before, we could get a truckload for around $2,500, but it’s now $5,000.”
How do you mitigate the effects of shortages in supply and labor?
“Really, it comes down to contacts we’ve established and an understanding of the market. You’ve got to know where materials are manufactured and convince them to let us have what we need to get our projects done. As the inflation slows down and the economy cools off, things will ease up eventually. But until then, we sometimes have to ‘bite the bullet.’ In the end, there’s really no substitute for experience. We’ve got some great teams here, great foremen and project managers. All of them have the know-how that can source what we need and get it here when we need it.”