This concept is to set-up a ‘materials procurement system’
based on an ‘extranet’ facility (not yet available ?) accessible by
participants from the construction industry. For the purpose of this concept
the participants are building material suppliers (bricks, pipes, doors,
toilets, etc) and builders who require these materials.
The present system of ‘materials procurement’ is time
consuming inefficient and costly whilst not necessarily providing value for
money in the product, proper information, etc.
The idea is that builders ‘inject’ onto the extranet their
material requirement(s) (this could be a single item, several items the same or
a complete list of materials of all kinds), and when it/they are required
on-site.
Material fanuacturers/suppliers, etc (all over the country
and perhaps Europe or globally) can access this request if it falls within
their scope and offer a price for the product (or some of the products) to be
delivered on the required delivery date or alternatives.
If the builder finds the price etc. acceptable, the order
can be placed on-line and delivery to his ‘site’ expected on the agreed date (not
before and not after).
Equally the supplier can submit invoices directly
utilising the extranet.
SEL would secure the transactions based on an industry
universal debit/credit system with in-built ‘time to pay’ period established
between the individual participants; a plus for the suppliers.
The costs of this ‘business’ are basically ‘set-up’ costs
and the ‘running-costs’ only associated with a continual vigil over
participation, expansion, etc., and a subscription to the ‘extranet’ facility (OR
this could be the extranet facility which would recover income from other
users).
Income would be generated by a percentage ‘take’ of the
transactions and fees for transmission of information (ie advertising,
technical literature (eg British Standards, etc)) to participants who are ‘members’
of the facility based on bytes downloaded.
Suppliers would be able to submit ‘web-sites’ of their
stock materials, etc which would be made available to the ‘builders’ (eg This
weeks offers, etc) from which builders may wish to purchase to ‘stock’ but this
obviates the purpose of the facility. The builder should not need stock and/or
a yard to store them in.
The ‘product’ is a service within the construction
industry to provide materials ‘just in time’ and at the most competitive prices
including delivery to site.
The market is producers/suppliers of building materials
and components on the one hand and builders on the other.
Most building materials are
specified by designers or regulation and therefore the criteria, sight, sound,
smell, taste and touch will not come into play. Information such as weight,
fixing, etc is required but dose not affect the choice unless the job allows a
choice; not normal.
95% of a builders’ requirements are familiar
and well known to him (bricks, screws, wood, etc) and he is completely
confident that if the product conforms to a relevant standard or the required
specification, they will suit his requirements. This imposes a certain amount
of honesty on the part of the supplier in not passing goods on which do not
conform or conform to a lesser standard/specification. Although there is
recourse at law, the delays to a project can be great in financial terms.
The remaining 5% of familiarity can be dispelled by the provision of proper and sufficient information for installation, etc provided by the supplier as accessory to the price offer; a feature not available instantly at the local builders merchants.
This may be a stumbling block, builders are
not at the top of the tree when it comes to IT. Our prospective clients fall
into the following wide spread of groups :-
a) Experimenters – builders/suppliers who like to try new things.
b) Convenience buyers - these are builders who have limited time or knowledge of the market.
c) Habit-bound die-hards - these are builders who do not like to change or try new things. They tend to visit the same merchants.
d) Value shoppers – there are builders for whom value (not necessarily cheapest) is the most important characteristic.
e) Ethical shoppers – perhaps a growing number of builders and their clients place a high value on ethics and promote a strong ethical policy. At present this attitude can not be available at the local merchants.
Product characteristic and
familiarity/confidence would suggest a likelihood that this venture has a high chance
of success. The problems are associated with builders and suppliers acceptance
of such a system.
Suppliers can be easier to
persuade, as they recognise that trading in the same area with their
competitors can produce a better price and greater turn-over. They also have in
place e-systems within their own organisations.
Builders on the other hand; we
would be looking to bring on board initially groups a), d) and e), who are wanting
better procurement efficiency, availability, delivery when promised and the
associated reductions in costs within their offices and on-site.
Reach
is limited to the number of merchants locally (about three) and richness is limited
to the stock they carry nominally increased by their direct access to
manufacturers, etc.
a)
A builder has a limited number of merchants available
within his operating area; limited mainly due to delivery radius.
b)
Merchants stock only a limited amount of materials, etc most
of which secures him the best margins whilst competing in the local market
place.
The proposed system will
provide a large number of builders (nationwide) with access to a diversity of
suppliers and delivery modes (eg. Next day, exact day, etc so that other
facilities can be arranged). We blow out the local builders merchants who at
present are the middle-men; the intermediators.
This is an increase in both
richness and reach over the present day-to-day system.
The
proposals are similar to ANX (lets call it UKBUILDX) utilising EDI providing re-intermediation with an O-2-O set-up which will rely on
participation from suppliers and builders.