Supply chains may be in for shake up if these five construction procurement trends take hold.

Procurement is where big decisions get made and paid for. High-quality procurement practices are central to running a profitable project, but it’s an area of the construction sector facing considerable change.

Procurement teams will need to get on top of new technologies, master taxes and could find themselves essential to reputation management. We’ve highlighted five trends for procurement professionals to follow.

1. Taxes and tariffs
The introduction of VAT to Saudi Arabia and the UAE at the start of 2018 has been something new for purchasing teams. It gets more complex given VAT can impact contracts that pre-date its introduction, but whose products or services arrive after. Understanding the tax system will allow companies to adjust their fees to account for the tax and the cost of its collection.

Also on the horizon is the threat of global trade tariffs. At first these seem distant from the regional construction industry. But tariffs and counter-tariffs levied against raw materials could quickly see additional costs enter the international supply chain. Procurement teams will have to be alert to the origins of a product and its component parts.

2. Blockchain
The technology behind Bitcoin and other crypto currencies may not seem an obvious consideration for the construction sector. But blockchain is about transactions and those needn’t be limited to the financial services sector. The rise of blockchain will create new opportunities for procurement teams to improve the traceability and security of their transactions.

The technology’s application could lead to full transparency on any physical purchase, right down to its raw materials. Such applications are very much at the early stages, but could secure supply chains and provide end-to-end transparency of physical transactions.

3. Value, not cost
The construction sector frequently focuses on the cost of something, not the value it provides. As the regional market matures, there is a shift toward looking at products and services in the context of their operational value, not just their capital cost.

Influenced by new environmental regulations, which demand greater performance from the built environment, buying decisions based on value have become a necessity. In order to find this value, purchasing teams need to work closely with their technical colleagues to gain a deep understanding of the products and services on the market.

4. Responsible sourcing
The idea of responsible sourcing is one readily associated with consumer brands, but is just as important for businesses. Procurement teams can take on the role of the consumer in lobbying for supply chain transparency. They can then pass their confidence in purchases on to their clients and end-users.

This pressures the entire supply chain to take measure each transaction against high ethical standards. It also puts procurement teams on the frontline of managing their organisation’s reputation. From there they must ensure they are dealing with credible providers. As other industries have shown, this can be incredibly challenging. Getting it right means extracting detailed information directly from each supplier.

5. Digital procurement
Digital procurement is another aspect of the evolving impact of digital technologies. When successfully implemented companies can buy better products, for less, while reducing operational costs. Some think the gains for the construction industry could be greater than in any other sector. The scale of change from traditional construction procurement practices would be huge, since construction is one of the least digital industries around. To achieve the predicted benefits the industry will have to push digitisation deep into the supply chain. While it will be challenging, tight margins and compressed construction programmes make it necessary too.

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The Big 5 is the construction event providing leading-edge innovation, knowledge, and business opportunities for industry players around the world to connect, grow, and succeed.

Taking place annually in Dubai since 1979, the event has launched hundreds of thousands of products boosting the expansion of emerging markets. It has facilitated partnerships, advanced knowledge and industry best practices, while serving as the gateway for international companies to access the Middle East, Africa and South Asia regions.

The Big 5 covers the full construction cycle; not only does it showcase products across dedicated sectors, it also runs alongside nine specialised events enabling industry professionals to source building solutions from around the globe for every stage of the construction projects: The Big 5 Heavy, Middle East Concrete, Windows, Doors & Facades Event, Gulf Glass, HVAC R Expo, The Big 5 Solar, Middle East Stone, the Urban Design & Landscape Expo, and FM Expo.

The event includes high-level summits, practical seminars, CPD-certified workshops, and The Big 5 Impact Awards to foster collaboration, support best practices, and provide effective solutions to today’s industry challenges.

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dmg events organises more than 80 events across 25 countries, attracting over 425,000 attendees and delegates every year. The company’s portfolio of products includes many industry-leading events in the energy, construction, hospitality & design, coatings and transportation sectors. ADIPEC, The Big 5, Gastech, EGYPS, The Hotel Show and INDEX are the company’s flagship events. For more information visit www.dmgevents.com.

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