Supply Chain Challenges — Six Steps to Minimize Disruptions

June 2, 2023

Supply Chain Challenges — Six Steps to Minimize Disruptions

It has now been more than three years since the onset of the COVID-19 global pandemic, but the construction industry is continuing to deal with the rippling effects of supply chain disruptions the pandemic caused. The global supply chain remains fragile, making construction projects more complex and uncertain.

According to a 2022 GlobalData survey, more than three-quarters (78 percent) of contractors in North America said they have been moderately or severely impacted by supply chain disruptions. This has raised concerns about limited availability of materials and supplies needed for construction projects this year.


What’s Causing the Disruptions?

There are many causes of supply chain disruptions. For starters, soaring global shipping costs and an ongoing backlog of domestic freight operations are resulting in shortages of many construction materials that were easy to source before 2020, such as lumber, steel, and copper. These now often feature long lead times if they can be sourced at all.

Volatile energy costs are also exacerbating supply chain issues, which has an impact on logistics. For example, the logistics of transporting materials remain challenging due to rising fuel prices and ongoing driver shortages. The American Trucking Association recently reported a shortage of 80,000 truck drivers, which it expects to double to 160,000 by 2030.

Geopolitical instability is also playing a role in supply chain disruptions. For example, Russia and Ukraine are both major producers of copper and other metals—their ongoing conflict is resulting in shortages and prices increases. Import prices for some building materials are rising faster than export prices due to factors like higher U.S. tariffs on Canadian softwood lumber.

And despite the U.S.’s lifting of the national COVID-19 emergency declaration in April, the construction industry continues to grapple with the effects of pandemic policies on supply chains, especially outside of the U.S. This includes labor shortages as many contractors are still struggling to bring skilled workers back to jobsites.

Associated Builders and Contractors, a national construction trade association, estimates that 1.2 million construction workers will leave the industry in search of new careers. The industry will need to hire nearly 600,000 workers this year to meet pent-up demand.


Impact is Ongoing

Some industry experts predict that supply chain disruptions will continue to impact the construction industry through 2023 and beyond. Here are a few strategies that can help you minimize the impact of these disruptions on your projects:

  1. Consider using substitute materials. If substitute building materials of equal or near-equal quality and price are available quickly, using these instead of originally intended materials can help projects stay on schedule and on budget.
  2. Communicate early with suppliers. The sooner you communicate with suppliers about your material needs, the better your chances may be of getting what you need when you need it and avoid costly project delays.
  3. Source materials locally when they’re available. If they have the materials you need, local suppliers can get them to your jobsites quicker than suppliers who are out of the area.
  4. Order materials with long lead times as soon as possible. This requires careful long-term planning on the part of project managers, who should work closely with partners up and down the supply chain to lock in costs and delivery windows for critical materials early in the project life cycle.
  5. Collaborate with engineers and architects. Work closely during the design phase to try to avoid choosing materials that might be difficult to procure when the time comes.
  6. Be flexible with project scheduling. Some phases of a construction project that usually start early might need to be pushed out to coincide with anticipated material delivery dates.


No Room for Error

There’s no question that disruptions in material supply chains add another layer of complexity to construction projects, leaving contractors with little room for error. Following these suggestions can help you minimize the effects of supply chain disruptions on your projects.

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