Welcome to this new blog series that explores the top challenges facing manufacturers in construction-driven markets, and how to meet them head on.
It is well understood that the construction market is a key driver of the economy. So who’s in this industry? Manufacturers of:
- Architectural and structural metals
- Cement and concrete
- HVAC equipment
- Lighting equipment
- Paint and coatings
- Plastic resin and synthetic fibers
- Switch, connector and other wiring devices
- Windows and doors
- Wood products
While these markets encompass both discrete and process manufacturers, the challenges resulting from the dynamics of today’s construction market impact them equally.
Challenge #1: Demand Tied to the Construction/Housing Market
For manufacturers in the sectors above, demand is directly related to the performance of the construction and housing markets. This makes them vulnerable to fluctuations in those markets, and also presents certain difficulties relating to demand planning. While new housing and commercial construction responds to growth in anticipated demand, that response occurs with a lag that reflects both the time it takes to secure permission for new construction and the time involved in construction itself. Construction activity must therefore be forward-looking.
But this is easier said than done, especially when demand is tied to the level of residential and commercial construction activity, which in turn is driven by interest rates and overall economic conditions. Add in slower construction activity in the winter months, and the fact that prolonged winter weather itself can further impact sales, extending in many cases through the first half of the year. And don’t forget the impact of population migration, business spending and government funding at a local construction level, leading to even greater volatile swings of demand. These seasonal demand fluctuations make it harder for manufacturers to manage cash flows and maintain high asset utilization.
How Microsoft Dynamics AX Can Help
For construction-driven manufacturers, Microsoft Dynamics AX enterprise resource planning (ERP) has a role-tailored user interface that helps drive productivity and business insight through its familiar user experience and connection with business processes. Microsoft Word and Microsoft Excel, familiar and powerful tools that workers already know and use, allow easy access to business data in Microsoft Dynamics AX 2012 to enhance worker productivity and a more flexible Help system provides added support when needed. The solution has powerful functionality for both discrete and process manufacturers. Additionally, for manufacturers who need an integrated customer relationship management (CRM) system, Microsoft offers Dynamics CRM 2013, which runs on the most popular smart phones and tablets, features built in social media capabilities and sports a new, intuitive user interface for easy navigation.
Specifically for demand planning, Dynamics AX has functionality to help respond to rapidly changing conditions, robust production scheduling and planning options and support for a demand driven supply network. For example, the screen on the right shows a demand forecast for drywall, with seasonality considerations for construction materials.
For more information,download our white paper,The Top Challenges Facing Manufacturers in Construction-driven Markets & How to Meet Them Head On
Up next: Challenge #2: How to Handle Volatile Raw Materials Pricing