I know something about the mail you received this morning. It included a letter, a flyer or an e-mail from someone who wants to tell you about the latest construction portal. It is going to transform the way you run your business, save you vast quantities of money and improve your efficiency beyond recognition. (The sender will also be hoping you will help to make them an e-millionaire, but they probably won’t mention that.)
You cannot fail to notice that construction is the latest target for bright, sharp-suited young things with fistfuls of venture capital, just longing to sell us e-commerce solutions for all our business problems. They will have a really whizzy web address, a business plan they would love to describe – but not show – to you, and a set of products that are almost certainly “under development”.
You might assume from the above that I am an IT-hating, unreconstructed Luddite, but I promise you I am typing this column on my laptop, having just picked up my e-mails. I also think e-commerce has a tremendous amount to offer construction, both as a procurement tool and as a way of sharing information, but I also think it is essential that we take a long, hard look at the products on offer before embracing the e-revolution.
Take on-line shopping outlets, known as exchanges. They offer some real advantages: access to a much wider supplier base, instant communication, electronic order processing and so on. But do not overlook the problems. You might have a contractual remedy in place if an air-handling unit from China does not meet the spec, for instance, but that will not help you to dispose of it once it arrives on site or to acquire a more suitable replacement.
On the subject of imports, remember to allow plenty of time for the transport of materials and include in your calculations any freight costs. Not insuperable, I know, but not to be ignored either.
Egan vs e-commerce
Construction is the latest target for bright, sharp-suited young things with fistfuls of venture capital
Then there’s partnering. If you are committed to partnering with your supply chain, building up long-term relationships and generally behaving in a way that would bring tears of joy to Sir John Egan’s eyes, do you really want to buy a product on a price-only basis from the Internet – the biggest market you can find? There might not be a big market for what you want to buy. With perhaps only five major cladding suppliers in Europe, you don’t need an exchange for them – you can just e-mail your requirements. Contractors buying construction products are not the same as supermarkets buying tinned tomatoes, but some of the sharp-suited young things do not seem to have realised that yet.
This does not mean that electronic procurement is not a good idea – anyone who has bought a book from Amazon.co.uk knows how efficient it can be – but it does mean that the systems need to be adapted to this industry’s needs, so that they can cater to the priorities of construction users.
For that reason, I think the portals now being developed by the industry itself – such as the initiatives being taken by some of the major contractors – have a greater chance of success, as they will start from this industry’s point of view, rather than adapting a generic product.
I know some buyers in construction companies go pale at the prospect of e-commerce, but I think it will make their skills more, not less, valuable to their employers. There may be some clerical jobs at risk, but anyone involved in the strategic aspects of procurement will continue to be absolutely vital. Quality control, co-ordination and managing a diverse supply base will continue to require the sort of expertise that can only be supplied by human beings. And I, for one, find that rather reassuring.
The Construction Confederation represents more than 5000 companies, many of them smaller businesses, so e-commerce is a key issue for it at the moment. Smaller companies are often highly creative in their use of IT – restricted staff resources may mean they depend on it even more than larger organisations – so they could be the biggest beneficiaries of a really efficient electronic procurement and information system.
Jennie Price is chief executive of the Construction Confederation.