How A One-Stop Shop For Construction Materials Is Helping The Industry Evolve
While most industries from bookstores to taxis have adopted more convenient operating models centered around customers getting what they need with a push of a button, construction is one of the last dinosaurs.
When developers purchase materials for their latest projects, they do not simply place items in a virtual cart and have them delivered the next day. Instead, they enter into established supply chains, setting off lines of communication between a seemingly endless list of general contractors, subcontractors, retailers, distributors, manufacturing reps and so on.
All of these intermediaries act as middlemen and receive a cut, effectively raising the costs of goods and inadvertently introducing delays.
Mega Supply Pro Senior Vice President of Procurement Steven Levin believes the construction industry is ready to enter the era of modern one-stop sourcing by partnering with sourcing and logistics providers that work directly with manufacturers. He is certain that developers can facilitate this leap into the 21st century by embracing a one-source model for purchasing materials and finishes and delivering them to job sites.
Levin spoke with Bisnow about the flaws in the traditional multi-step purchasing process, and how a manufacturer-direct wholesaler can solve them.
Bisnow: What is the biggest problem with purchasing construction materials?
Levin: The traditional process of purchasing materials is a logistical and financial nightmare, and every developer will agree with me on this. It's a complex system with countless moving parts and an integrated food chain where each participant requires a markup to operate.
It's been like this for ages, and many professionals in the industry simply accept it as a fact, because that's what they are used to. For an average multifamily project, the current sourcing process can take up to 14 months from the time materials are specified, with materials often ending up costing double or triple that of the original manufacturer's price.
Bisnow: What needs to change?
Levin: In short, the construction materials purchasing process needs to be simplified and streamlined, and we're the disrupters consolidating it into a quick and efficient action package with a customer-focused approach, an infinite range of products, portfolio of logistical solutions and a total absence of headaches.
Today, the industry environment is more competitive than ever. Turnaround times are shorter, thanks to technology, and tenants are more educated and know how to cross-reference value with quality and style. When Mega Supply Pro was first founded, we were following the traditional reseller model, purchasing from second- and third-party resellers rather than manufacturers. But after a while, we began to realize there had to be a better way.
We spent two years interviewing our customers to better understand their needs. We asked questions about difficulties they were having with their current suppliers, whether or not they were always able to source finishes they thought were best for the project and inquired about their priorities in relationships with resellers and manufacturer reps.
We discovered that customers spent an unreasonable amount of time waiting for materials and dealing with multiple middlemen. It was often challenging to get info about where their orders were and when they could expect the goods to be delivered.
Another common complaint had to do with suppliers not having the time to listen to and assist their customers in selecting the right products for their needs or to educate them about new products and relevant technologies constantly emerging in global markets.
The conclusion was that by getting all of their building and finishing materials from one source, developers can save time, streamline logistics and eliminate third-party markups — all to dramatically lower project costs.
Bisnow: How can the traditional process impact the quality of the final product?
Levin: For decades, the construction industry has been held back by a minimal selection of products, courtesy of the big-box retailers, who had monopolized the industry with a narrow, rarely updated selection that benefits their bottom line. This led to a homogeneous and dull construction landscape.
Aside from constrained product selection, inherent in the traditional process are numerous delays and middlemen markups, which often results in projects going over their budgets. When this happens, developers have to introduce drastic cuts and make cost-saving substitutions, leading to a lower-quality end product.
Bisnow: How can construction purchasing be improved?
Levin: To improve construction purchasing, the focus of the initial approach must be shifted from the product to the customer. We start by working to understand who our customer is, what they like and where they come from stylistically. We dissect their design vision by listening to their preferences and discussing options until we see that they’re content with the direction of the aesthetics and function. Then, we will price whatever they've already worked on with their architect and designers, as well as provide up to five alternative options for each spec.
Once the selections are finalized, we consolidate offer terms for all building materials and finishes from a huge range of manufacturers under one roof, eliminating the multi-step, multi-tier supply process, saving time, money and greatly reducing waste in the purchasing phases. We also completely take over the logistical operations at no extra cost, guaranteeing timely deliveries and peak project efficiency. All questions about order statuses, product features, regulatory compliance and anything else can be answered at any time by a personal account manager.
In the past, developers would spend days touring showrooms and calling general contractors in search of a wider range of materials. Today, our clients are presented with material options from a virtually infinite selection of vendors for every need and budget, in the form of a clear pricing schedule, with many alternative options.
We are proud to be the one-stop shop that gives developers a chance to build what they really want without compromise or logistical setbacks.
This feature was produced in collaboration between Bisnow Branded Content and Mega Supply Pro. Bisnow news staff was not involved in the production of this content.