Inventory levels in the construction and lumber and building materials (LBM) industries have declined 20%, with unfilled orders rising nine out of ten months throughout 2023, according to US Census data.
Despite inventory shortages, demand for materials is increasing, stimulated by the Infrastructure Investment and Jobs Act, which injected $1.2 trillion into the sector.
Difficulties lie not in the demand for construction projects but in the industry’s ability to fulfill them. Backlogs, persistent labor shortages, and escalating material costs pose major obstacles for LBMs looking to meet orders and increase turnaround times.
To overcome issues on the inventory side, suppliers have been strategically reevaluating their inventory management practices. Warehouse management software (WMS) is vital in addressing supply inefficiencies, helping ensure that existing inventory is well-managed and delivered accurately.
The benefits of WMS extend not only to managing the inventory but also to the workforce that supports these critical processes.
This article dissects inventory challenges and explores WMS as a practical and effective solution.
Both internal and external factors are testing the building supply industry's resilience.
First, the onset of the COVID-19 pandemic triggered a severe drawdown in inventories, with the effects lingering well into 2022. In 2023 this continued, leading to historic highs in unfilled orders.
Meanwhile, demand for materials continues to rise—the volume of private commercial construction increased by approximately 6.7% in 2023 compared to 2022.
In 2021, the Infrastructure Investment and Jobs Act earmarked $1.2 trillion for construction projects to spur civil and infrastructure spending. This injection of money further stretched an already dwindling supply, putting even more pressure on building supply businesses to manage inventory efficiently and accurately.
Demand issues affect everyone in the industry: suppliers and yards, landscapers delivering materials for private and public projects, and pro dealers who connect builders and contractors with the products they need.
Labor shortages and persistently high costs compound these challenges.
The construction industry has been grappling with a dwindling labor force, with the median age among construction workers creeping toward the mid-40s. This has far-reaching consequences, including project delays, slower order fulfillment, and higher workplace injury.
Among external economic factors, inflation reached a 40-year high in 2022, affecting everything from building supply prices to labor costs. Today, building supply costs remain 37% higher than pre-pandemic levels.
Effective inventory management is instrumental in balancing supply chain disruptions, fluctuating market demands, and the need for cost efficiency.
Three key solutions can make a difference:
Robotic and automation adoption in warehousing is rising in response to workforce shortages.
However, the building supplies sector has been traditionally slow to respond to cutting-edge technologies. A study by Zebra Technologies found that 77% of warehouse operators recognized the need to modernize their operations but were slow to implement new solutions.
This is changing, and automated warehouses are becoming cheaper and easier to implement. Investing in automated technologies now will provide a solid platform for the future.
Predictive analytics helps companies forecast and respond to fluctuating demand. This improves processing speeds and turnaround times.
Again, the intent to adopt such technology is there, but only 30% of respondents in the 2019 MHI Industry Report use predictive analytics, despite approximately 59% of managers believing in its effectiveness.
Rising labor costs and worker shortages impact businesses’ ability to fulfill and deliver orders.
The US Department of Labor's Bureau of Labor Statistics reported a 23% increase in labor rates for stock and fulfillment workers over five years, with the mean hourly wage reaching $18.39.
This is compounded by a shortage of younger, technically skilled workers.
As Forest Service Senior Research Forester and Project Leader Jeffrey Prestemon explains of the lumber industry, “Because work in the wood products industry is becoming more mechanized, the workforce now needs to be more technically competent and highly trained.”
Technological solutions optimize workplaces for existing workers and attract new, skilled talent.
The journey to enhancing inventory management starts in the warehouse, which is where Epicor WMS comes into play.
Epicor WMS is a digital solution designed to optimize and manage warehouse operations. It manages processes like inventory tracking, order fulfillment, and storage optimization. The software helps provide real-time data on inventory levels, enabling efficient resource allocation and minimizing errors.
Epicor WMS integrates with other business systems, enhancing overall operational visibility and decision-making.
WMS technology is vital in modernizing warehouse operations, improving accuracy, and increasing productivity—all critical factors in overcoming inventory challenges.
Here’s how WMS can benefit your business:
Cloud-enabled WMS systems like Epicor WMS have been shown to improve inventory accuracy to over 95%. They use barcode and wireless technology to guide warehouse staff through their daily activities, thus reducing errors.
By helping ensure that inventory levels are accurately tracked and managed, WMS minimizes the risks of stockouts and overstocking. This applies to everyone in the building supply chain, from yards to distribution centers.
WMS users report significant time savings from using the software. Dodson Wholesale Lumber, for example, increased productivity by 50% after implementing Epicor WMS.
Before implementing WMS, the Dodson team had to perform a manual stock count, which required closing the business on a Saturday. With Epicor WMS, they no longer have to carry out a weekly or even year-end stock count, thanks to real-time inventory stats.
Another essential benefit of WMS is reducing human error through automation. From pick-and-pack operations to parcel labeling, WMS can automate manual processes, flag mistakes, and prevent costly errors.
Automation improves shipping accuracy and accelerates order processing times, enabling building supply companies to address increasing and fluctuating demand. Paired with Epicor enterprise resource planning (ERP) software, Epicor WMS helps businesses reduce shipping errors by 90%.
Epicor WMS solutions include intuitive, easy-to-understand reporting features, allowing warehouse managers to make informed decisions.
Reporting tools offer intelligence into fulfillment and stocktaking. Access to detailed and accurate reports enables better resource allocation and operational planning.
Modern WMS solutions are increasingly cloud-based, offering flexibility and scalability. They can easily integrate with other systems, including ERP. Integration allows for real-time inventory tracking across systems, improving inventory accuracy.
Warehouse managers can access systems from anywhere and quickly adapt to changing customer demands and operational needs.
Effective inventory management is foundational in creating a more resilient building material industry. The benefits extend to everyone, from lumber and material yards to landscapers, pro dealers, and distributors.
By enhancing inventory accuracy, optimizing productivity, reducing errors, and creating data visibility across systems, warehouse management systems empower businesses to transform uncertainties into opportunities for growth.
You can achieve these goals and more with Epicor WMS, an advanced software solution designed to keep your inventory precise and under control. Transform how you manage your warehouse and unlock new levels of efficiency and accuracy today. Contact us for a demo.
