Construction supply chain: Five ways AI can help merchants and manufacturers

Navigating the volatility with AI

While it’s refreshing to see some positivity across the industry driven by an increase in demand, the volatility and unpredictability of recent years should still be front of mind for businesses in construction supply chain. We’ve seen many examples of businesses expanding when demand is high only to have to readjust, with firms increasing their capacity and availability, only to struggle with a product surplus further down the line.

Businesses need to think carefully before they make any serious moves in terms of increasing production, with artificial intelligence (AI) now playing a key role in helping to get a better handle on forecasting, providing better long-term visibility. While volatility will always be prevalent in the sector, AI is a great way to sense check what’s happening now, what will likely happen in the future and — crucially — allows you to be agile enough to change and pivot should the picture change.

Let’s take a look at five ways AI is making a difference across different areas of construction supply chain.

What to make

Production planning is a difficult balancing act. Manufacturers need to produce the right materials at the right time without overcommitting resources which get wasted or underproducing and missing sales. Traditional planning systems only work at a broad level, making it hard to respond to real demand shifts in an agile way. 

However, AI uses demand forecasts, capacity constraints and inventory data to create smarter, more efficient schedules that removes the guesswork and provides real-time insights on what to produce and when. AI generates tailored weekly or daily production plans, ensuring resources are used effectively across all sites. It also helps businesses plan months ahead, aligning raw material procurement with demand. 

By balancing priorities across sales, procurement and logistics, AI streamlines workflows and improves service levels. This avoids costly overproduction and leads to reduced inefficiencies, smoother operations and the ability to pivot quickly when market conditions change.

What to hold

Holding too much finished inventory ties up valuable working capital, while too little leads to missed sales, supply bottlenecks and delays. Striking the right balance is difficult, especially when demand fluctuates in a volatile market. AI forecasting helps businesses determine the ideal stock levels by factoring in factors like seasonality, sales trends and real-time market conditions — instead of relying on static models, businesses can now adjust in real time to stay efficient.

By optimizing stock levels, businesses avoid unnecessary storage costs and reduce excess stock that eats into cash flow. AI helps ensure inventory is held only where and when it’s needed, keeping operations agile and responsive to market changes.

What to allocate

Once stock is produced, it needs to be in the right place at the right time. AI has the ability to distribute inventory dynamically across depots, branches and distribution centers based on demand forecasts, historical data and location-specific needs.

Instead of reacting to shortages, AI anticipates demand surges and shifts inventory proactively. This prevents regional stockouts, improves overall service levels and keeps supply chains running smoothly without unnecessary delays. Plus, it plays a key role in delivering an optimal customer experience, with customers able to get hold of the products they need, when they need them, from the most convenient location — which keeps them from drifting towards your competitors.

What to charge

As confidence returns, demand increases, with many businesses looking to adjust pricing strategies accordingly. However, pricing in the construction supply chain is often inconsistent, leading to lost margins and missed opportunities. 

AI can analyze customer demand, competitor pricing and historical sales to recommend the right price, first time, ensuring businesses stay competitive without undercutting their own value. It’s particularly useful in areas like quote pricing.

It helps by analyzing past sales data and market conditions to generate fast, accurate quotes that are designed to find that ‘sweet spot’ between maximizing margin whilst having the highest likelihood of winning the deal. 

This reduces the time sales teams spend on manual pricing decisions (which can be laborious), improving conversion rates and protecting margins. By automating and optimizing pricing, businesses can respond quickly to market shifts while maintaining profitability.

What next?

The rise of agentic AI

Increases in national insurance means that labor costs are rising and workforce expansion is becoming less viable. Businesses need to find smarter ways to do more with the teams they already have — and this is where a new era of agentic AI will come into its own. Agentic AI deploys ‘agents’ to handle tasks, automating workflows, reducing inefficiencies and increasing productivity without adding headcount.

However, unlike traditional automation, agentic AI doesn’t just follow preset rules. It proactively learns from data, makes intelligent decisions and continuously optimizes processes. Whether it’s managing stock movements, adjusting production schedules or fine-tuning pricing strategies, agentic AI helps businesses stay agile, reduce operational costs and improve service levels with fewer manual interventions required from staff.

AI for construction supply chain: why now?

The building materials industry is evolving rapidly, with economic shifts and rising competition driving the need for smarter decision making. AI empowers businesses to work smarter, not harder — reducing costs, improving margins and enhancing the overall customer experience. Peak customers are seeing some incredible results with AI, including…

• Speedy Hire: 4% inventory savings, 8% more demand
• Eurocell: £1.86m in inventory released, 6.7% increase in availability
• Heidelberg Materials: 2% quote price conversion increase, 10,000+ hours saved

Explore these success stories in more detail via the links below.