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Coronavirus pandemic causes supply shortages in the construction industry

The construction market has reopened following government advice, however, without a consistent supply of materials, the industry is seeing a loss in productivity. 

The pandemic means that building materials such as plaster, bricks, and concrete are in short supply, forcing construction firms to use their existing stock in the short-term. This poses a significant threat to the long-term sustainability of the industry, as supplies dwindle and firms are not able to receive the equipment they need to meet demand.

The sector has been on hold during the pandemic, causing a backlog of work. In order to clear this backlog, as well as plan for future work, construction companies must closely monitor short-term and long-term demand, and inventory, in order to accommodate production loss.

Supply chain disruption

In addition to the building supplies required, the access to personal protection equipment (PPE) is a necessity for many tasks with hazardous materials. In particular, the aviation, power and transmission, highway and rail sectors will likely to be impacted the most, as face masks are essential for these industries to continue. Before COVID-19, PPE mostly included hi-vis jackets, helmets, boots, glasses, and gloves. Now most people include face masks within this category and they have become extremely difficult to source unless linked to essential NHS work.

The Builders Merchants Federation’s (BMF) useful tool for construction organisations has regular updated lists of its members’ current status. Currently there are 75% of suppliers that are partially open and only 25% fully open.

The 75% that are operating on a reduced service will see many businesses ordering the same high demand products and without the full use of the suppliers, the competition to source equipment will see some organisations struggle with demand.

The supply chain industry is prepared for smooth, continuous demand for products and has run very efficiently in this way. It is not prepared for the sudden spikes in demand we have seen during the pandemic. This has highlighted the fragility of supply chains and adjustments will need to be made in order to future proof businesses to be agile and flexible enough to meet fluctuating demand.

The impact on distributors

In addition to product shortages, distributors are such an integral element of the supply chain that they directly affect the flow of products to construction sites. Some distributors are now only supplying to essential projects, which is impacting the allocation of various products to sites deemed as non-essential.

The shortages in the sector will likely mean an increase in costs as businesses look to local and regional suppliers. However, there are many benefits to utilising local suppliers, such as shorter lead times, reduced risk, more environmentally friendly, and reduced need for intermediaries.

In addition, technology such as AI, automation, and blockchain has the ability to innovate supply chains following the pandemic. Technological advancement has been vital during the COVID-19 crisis, with all industries working on improving their practices at such a speed that they have transformed themselves to almost fully digital operations. This brings many advantages by itself, but will also be used throughout supply chains to improve traceability and visibility.

It will be interesting to see what the construction industry will look like in a post-COVID world, and how supply chains have adapted to maintain sustainability for the future.