Strategic stockpiling is a valuable way to overcome logistical challenges for a technical construction project, ensuring that materials are available when needed, reducing delays, and ultimately achieving smoother and more cost-effective project execution. So, why don’t more companies use this method, and why are they scared to implement it? And how can a logistics service provider (LSP) help?
Strategic Stockpiling Support
In the realm of major technical construction projects, effective logistics management is crucial. One strategy that can significantly enhance project efficiency and success is strategic stockpiling. Previously, we discussed what strategic stockpiling is and how it works, then delved into how it can help construction contractors. But if you’re sold on the idea, how do you go about implementing a strategic stockpiling system to take advantage of the benefits it can provide?
While the concept of strategic stockpiling is straightforward, its execution can be complex. If not managed properly, the system can lead to inefficiencies and increased costs. If enacted inadequately, poor on-site logistics negate the benefits of strategic stockpiling, leading to congestion, delays in material handling, and increased transportation costs instead of lower ones. Strategic stockpiling, after all, is about taking on more costs through inventory and warehouse management but offsetting those amounts through efficiency gains on-site and the avoidance of delays and disruptions.
Taking on the additional initial costs but failing to gain productivity as an output on the other end is a hard pill to swallow, but how can a contractor or owner ensure that the risk leads to the reward? Often these implementation pitfalls arise from a lack of clarity in roles between the site team and the supply chain team, resulting in miscommunications and bottlenecks. How can you ensure that suppliers and subcontractors fully understand and adhere to the new logistics plan?
Case Study Insights on the Role of a Logistics Service Provider
Engaging with a logistics service provider (LSP) can help overcome challenges surrounding the implementation of strategic stockpiling approaches. Not only does an LSP bring specialized knowledge of supply chain management to the project, but they also bring their advanced planning systems and enhanced coordination programs. Some LSPs even offer full, end-to-end service, where all of the on-site logistics, including unloading and storing materials, is taken care of.
One case study on a large office building project can highlight the potential challenges of attempting to arrange a strategic stockpiling solution on your own. In this situation, the project leaders aimed to streamline their own logistics, without the help of an LSP, through a central terminal operating as an offsite storage warehouse and logistics hub for the project. The project saw many benefits through the reduction of delivery traffic and minimization of on-site storage, including full cost offsets from increased productivity to cover the added expenses of warehousing, storage, handling, and administration. Where the system broke down, however, was in the company’s ability to thoroughly and consistently operate such a high-performance logistics system with full adherence to its procedures. The system was unfamiliar, and not all stakeholders invested as much in the long-term development of the solution as they could have. So, while the method paid dividends, its operational difficulty took an internal toll.
This is where an LSP comes in. Strategic stockpiling has been shown to work, reaping huge benefits for a major construction project. The trickiness comes from the lack of experience and know-how when managing what can be a new and unknown way of handling transport and material handling. With an expert LSP team on the job, these issues are ironed out immediately, as the LSP integrates directly into the knowledge and labor gaps of a project with meticulous planning, clear communication, and a commitment to supply chain maturity. Instead of construction managers worrying about how to educate and align their stakeholders to fully realize the potential of strategic stockpiling, they can depend on an LSP to lead the way, demonstrating the method smoothly from Day One.
To learn about how Trangistics applies strategic stockpiling methods to new data center builds, click here. To talk about how Trangistics can provide LSP service for your business or project, contact us here.