AI for builders merchants blog
Portrait of author Mark Perkins
Mark Perkins

Construction Supply Chain Territory Lead

I look after construction at Peak, and I've been in sales for over 15 years. When I'm not working...

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Artificial intelligence for builders’ merchants: laying the foundations for success

By Mark Perkins on April 23, 2019

Modern businesses are embarking on transformation projects to drive growth, optimise processes, improve efficiencies and ensure their futures. 

Innovative B2C retailers are leading by example on this front, with fast-growing, data-powered e-commerce companies leaving the competitors trailing behind in terms of business growth and profit gains. However, this success can be enjoyed across other sectors, too – and a data-first approach to business can significantly benefit those in the builders’ merchants space in particular.

The digitisation of the construction industry is forcing builders’ merchants and suppliers to up their game in terms of how they’re managing their stock and the service they’re offering their customers. Those companies taking the leap of faith and investing in new technologies to help them do this are starting to reap the rewards – and it’s artificial intelligence (AI) that is powering their success.

By AI, we don’t mean robots replacing your workforce or drones handling your deliveries – we’re talking about using clever machine learning techniques to put the vast amount of data every merchant has at their disposal to work.

AI transforms your data into powerful insights that can help you keep your stock levels optimised, improve the way you target and communicate with existing and potential customers, and ultimately drive profit and revenue growth.

What’s happening in merchanting?

With profit margins shrinking and material costs on the rise, there’s no room for error in the increasingly-competitive builders’ merchant space. The current market is clouded by economic and political uncertainty, and the time is now for companies to be taking steps to help future-proof and protect their businesses.

Disruptive and agile businesses are keeping the market’s leading players on their toes, with same-day delivery of parts becoming more commonplace and smaller players turning to e-commerce enhancements in a bid to remain competitive.

Customer loyalty is also less apparent than it is in retail sub-sectors such as fashion or food. If your customer wants a particular product and you’re out of stock, they won’t wait around – they’ll simply go straight to your competitor.

Space in the warehouse is at a premium, with merchants typically handling items with a low space-to-value ratio, and demand is often difficult to predict – particularly for those larger orders associated with big construction jobs

What does this all mean? It means that businesses need to be taking action and striking a balance between predicting demand accurately, optimising space in the warehouse and keeping their customers happy. This is where AI can play a crucial role, and leads directly to business and profit growth, cost reductions and a higher return on capital employed (ROCE). For an example of this in practice, look no further than our case study with hire firm Speedy.


What can AI do?

AI can help you tackle these issues by providing you with a holistic view of your data from across the entire business, from marketing and customer data to stock and asset information.

It quickly becomes a new ‘brain’ at the centre of your business, taking and enhancing data from your existing business systems and turning it into actionable insights tied to business outcomes and objectives, all whilst getting smarter and more effective over time.

AI for business growth

Using AI, marketing and sales teams can gain a clearer view of who to target, when they’re likely to buy, what products they’re interested in and how to reach them. This is where B2B retailers can follow in the footsteps of those high-performing, fast-growing fashion retailers – they’re all using AI to enhance their e-commerce offering and improve the customer experience dramatically. For example, AI could help your builders’ merchants business to accurately predict when your customers are in-market to purchase, what they’re likely to buy and how they’d prefer to be contacted.

AI for supply chain efficiency

AI offers a sophisticated approach to stockholding and asset management. It leverages data from across the business to improve forecasting accuracy, allowing you to have more of what you need when you need it, whilst also freeing up space in your warehouse and on your logistics fleet. Unlike most supply chain management systems, AI doesn’t rely on a “one size fits all” basis – it uses real data to automatically adjust and set stock safety levels, and can track stock levels and space across multiple depots and branches simultaneously.

The results? Well, imagine if you could ensure that you never run out of the products your customers want, but at the same time reduce your inventories and hold optimal assets in order to free up cash. This is all achievable with AI – and the time is now to embrace this powerful technology in order to reap the rewards for your business.

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