The UK construction industry took a hit last year. In September, PwC predicted there would be an overall real spend contraction in the sector of -2.1% for 2024. But it’s not all bad news – it also estimated the sector would “return to a growth rate of 2.9% in 2025, overcoming headwinds linked to sustained high interest rates and investor caution”. So, we could see a significant increase in demand as the year goes on. But swings in predictions and several potential cuts to interest rates this year epitomise a market that remains uncertain and unpredictable.
Either way, the need to swiftly adjust prices and inventory levels to optimise performance and hit goals like On-Time In-Full (OTIF) is crucial for business success. For building materials suppliers in particular, optimising quotes to get good margins and ensuring inventory is in the right place at the right time can make all the difference in overcoming supply chain challenges and variable demand.
Getting inventory to the right place at the right time
Unlike running out of food in a restaurant, where customers can order other items off the menu, not having crucial materials for a construction project can bring development to a standstill. But because of this, organisations can end up holding too much stock in some locations to mitigate this risk, or holding too little at other locations without the ability to move it swiftly to where it needs to be.
Consequently, such an inefficient inventory management system can create added risks: too much stock generates waste from unused materials and higher storage/operational costs, too little leads to supply chain delays and missed sales opportunities, and both aspects impact profitability.
So, the question arises: how can you ensure you always have the right materials at the right sites? The key factor? Real-time visibility of inventory levels across your network. This enables you to order, balance and forecast stock levels throughout your network to ensure optimal stock levels at each location with high OTIF performance. And that’s made possible using AI.
A(I) dynamic approach
The supply chain disruptions in recent years have made ordering the right levels of products and materials increasingly challenging. What’s more, high inflation and low economic growth have also contributed to a market with fluctuating demand, making it harder to predict how much stock to hold for potential construction projects.
But the latest AI inventory optimisation platforms use AI to offer dynamic inventory capabilities. Through these platforms, manufacturers can accurately forecast demand, with AI analysing data like inventory, sales, service and availability – alongside the costs of holding too much stock – to build ideal inventory levels at each location. This includes harnessing stock replenishment capabilities, with AI analysing data across the network to match quantities of stock with demand and free up working capital tied up in slow-moving stock.
In a construction context, for example, AI-generated insights might show that one manufacturing site has sufficient materials to meet customer orders, but that another site only three miles away is low on stock. So, instead of the low-stocked site producing or buying more stock, transferring a certain quantity between the sites or making the delivery from the better-stocked location could be a cost-efficient and effective alternative.
Of course, from bad weather disrupting deliveries and sales to new materials needed for an influx of orders, there are so many variables that can impact inventory levels. That’s why AI is so beneficial in analysing a vast range of factors across a vast array of systems and providing supply chain managers with the information needed to make accurate, data-driven decisions.
Securing the best quote
The costs of materials and services, alongside demand, can fluctuate throughout the year, so material quote prices should do the same.
But pricing lists can remain stagnant for months, with teams reliant on spreadsheets. What’s more, potential clients want quotes delivered quickly, tailored to their needs. Again, trying to work out the right quote can be a complex and time-consuming activity. Not only that, but with quotas to hit or pressure to secure business, companies might over-discount, or price the service too high. All of this risks losing business to competitors.
The optimal price, however, will win new business without leaving money on the table. AI can automatically provide companies with recommendations for optimal price recommendations, including list pricing and quotes. By digesting data from across the company and balancing complex manufacturing demand with business KPIs, technology can preserve margins while also driving revenue.
This dynamic pricing, coupled with the financial and performance gains made from keeping optimal stock levels, allows these companies to offer far more competitive, tailored and flexible quotes.
Empowering manufacturing teams to stock smarter and build better
As we begin 2025, for now, predictions of growth in the sector from last year stand in contrast to an economic landscape still struggling to recover. Hopefully this takes a turn for the better and, along with it, demand for construction. But such uncertainty simply points to the need for tools to optimise inventory levels and quotes to best protect business and profits.
Using AI, building materials suppliers can maximise their margins while avoiding stockouts, cost overruns and lost deals. It provides a dynamic strategy for both inventory and pricing – and that’s vital in such a volatile landscape.
By maintaining optimal stock levels and providing the optimal pricing in every instance,manufacturers are primed to consistently meet sales targets and service level agreements with their customers. By using AI to stock smarter, they can build better.
- AI in Supply Chain
- Collaboration & Optimization