Building & Construction
Challenges that are reshaping the Building Materials Industry
The following major trends are reshaping the building materials industry.
Urban expansion, combined with the overall growth of the world’s population, will continue to drive significant demand for construction and building product companies beyond 2025. This growth comes with important environmental challenges, such as how to sustainably use limited space, provide infrastructure for increased traffic, and satisfy increased water and electricity consumption.
Increasing customer expectations and continuing geopolitical uncertainties add risk along the entire supply chain – from procuring raw materials to production and delivery. Companies will need to flexibly shift resources, production, and financial funds around the globe to make the best use of regulatory and location advantages and meet customers’ changing requirements.
A mind shift is happening among consumers, employees, suppliers, and investors, resulting in businesses needing to consider purpose and sustainability. A circular economy requires a change in the complete supply and production processes from a take-make-use-dispose flow to a circular approach that considers reuse and zero waste.
Building & Construction value drivers
| Achieving customer centricity |
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| Offering small lot sizes and individualization |
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| Running smart factories and digital networks |
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| Operating for purpose |
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Strategic priorities
The strategic priorities of the building materials industry require new capabilities.
In 2025 building materials companies will play a significant role in point-of-sale interactions with end consumers – today, the domain of retail and wholesalers. Sometimes, they will even own the point of sale and interact directly with the end consumer, bypassing third parties. They will be able to maintain “customer-for-life” relationships with a focus on long-term value supported by a 360-degree understanding of customers. This includes a detailed account of requirements and needs and collection and analysis of the ongoing knowledge of how consumers use the products in their daily operations. They will interact with their customers seamlessly and consistently through multiple channels, from the Web to direct and IoT connectivity. And they will communicate regularly with consumers tracking their goods throughout the entire ecosystem.
Tomorrow’s enterprise needs to run in a highly automated fashion to ensure operational efficiency. It also needs to be tightly connected with other players in the network. Companies must execute in an automated manner to achieve operational efficiency and tightly integrate with their supply and demand networks. It will require increased automation throughout all processes, not just on the shop floor. It will include using new technologies such as bots, augmented reality, and machine learning to increase efficiency and promise and deliver orders on time as expected. Capturing the experience of all involved parties (suppliers, employees, and customers) will provide the necessary feedback and build the foundation for change.
You must be prepared to enhance your product and solution portfolio to compete in a world of blurring industry boundaries and new players in well-established industry segments. Construction projects and home remodeling projects are difficult to manage. Building materials companies can ease this by providing additional services beyond traditional products. The supplier-to-customer relationship will convert to a partnership where the building materials company helps its customers excel in their business.
We are moving toward a purpose-driven economy globally. A mind shift is happening across consumers, employees, suppliers, and investors that is incentivizing companies to deliver on their purpose and act responsible in the light of climate change. To succeed in the future, building materials companies will, of course, still need to deliver financial performance, but they will also have to show how they are making a positive contribution to society, preserving the planet and natural habitat. Examples include carpeting and furniture made from 100% recycled materials, modular housing that can be set up on-site quickly and affordably,… Companies will strive for fair labor conditions and minimize waste and their consumption of raw material, water, and energy. Advanced product performance and ease of use will be paired with low environmental impact throughout the product lifecycle.
SAP solution map
Based on the industry priorities we recommend the following solution of SAP:
