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Megatrends on the path to the future of construction — the need for shorter, reliable supply chains

Megatrends are significant, long-term, and typically interrelated phenomena that evolve gradually. While they have a substantial impact on our future, they do not foretell it. Rather, they serve as a valuable framework for discussion of changes in the world around us, such as decision-making processes or strategic planning. Gaining insights from megatrends helps to both understand and shape our common future.

Markets are changing rapidly and becoming more and more unpredictable. Therefore, companies must be increasingly agile in their supply chains. Overall, the need for shorter supply chains reflects a wider change toward more sustainable, flexible, and efficient operating models in the construction industry.

“The international operating environment has changed significantly in recent years; very high delivery reliability and speed are required from operators, and there are a lot of last-minute changes to orders. Shortening supply chains aims to minimize global political and geographical risks, but this in turn affects efficiency. Increased flexibility improves the level of customer service and thus benefits the end customer as well. Tailoring products to customer needs becomes easier when supply chains are shortened,” commented Karri Kanervo, Senior Supply Chain Manager at Peikko Group.


The benefits of shorter, reliable supply chains

  1. Faster reactivity

The need for shorter supply chains arises as companies reduce their dependence on external suppliers. In particular, the need to be prepared is related to problems with the availability and supply of raw materials. This way, preparation for external factors such as natural disasters, political unrest, or possible disruptions and crises that slow down or stop production is improved. Shorter supply chains also enable a faster response to changes in demand and the market.

Karri explained: “Peikko has a strong tradition in having production of its own—the vast majority of the products we sell are manufactured in our factories in different parts of the world, and this way we manage the supply chain better. This also enables a quick response to customer needs. Thanks to our own manufacturing network, we are better able to regulate freight costs and emissions caused by transportation.”


  1. Reduced environmental impact

The need for transportation and thus emissions decreases when the length of the supply chain can be compressed. This allows the construction industry to move toward more sustainable practices in its operations. Since responsibility is one of the key issues in future business, this can help build customer trust. In a close partnership, satisfying customer needs is essential. Greener options are an answer to the growing demand for more environmentally aware transportation.

“Peikko offers green products manufactured from recycled steel and, in their manufacturing process, both the length of the transport route and the transparency of the supply chain are of considerable importance. We are committed to ensuring that our green products are also transported using environmentally friendly modes of transport,” remarked Jukka Smahl, Peikko’s Supply Chain Manager.


  1. Increased localization

The construction market needs to become more agile by developing local supply chains, and close and long-term partnerships with key suppliers and other partners. Regionalization of the supply chain is a positive economic move, as it is additive and will result in localized business and job growth. On the other hand, it may not always be possible to choose the most economical supplier if we opt for shorter supply chains.

When the supply chain is shortened, cost efficiency increases. Logistics and storage costs decrease when cooperation becomes more efficient, productivity increases, and the need for extra inventories is reduced. Improved total costs also improve the company’s profitability and competitiveness. In addition, the company’s flexibility and responsiveness to market changes increases, which leads to faster and more agile service and increased customer satisfaction.


Challenges and opportunities of data management

The shorter the supply chain, the more it remains under the company’s control. As the supply chain shortens, information management improves, which can create significant opportunities for closer follow-up on deliveries. In a short supply chain, more straightforward communication and a shared data transfer platform enable smoother communication and reduce delivery errors.

Having more information can also lead to challenges. How information in production chains is managed requires computing power and appropriate networks. Not all companies in the construction industry necessarily have this knowhow and the possibility of learning, so the gap between innovation leaders and laggards is widening.

”Shorter supply chains are here to stay. In the future, the management of supply chains will be even more flexible as changed circumstances are driving development,” confirmed Jukka.


Interested in Megatrends? Read our article Megatrends leading the path to the future of construction – Urbanization and Prefabrication



Maailman ja teknologian muutoksilta ei kukaan voi välttyä, Jarmo Matilainen

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