Digital transformation tsunami

The digital transformation is now focusing on construction procurement. It has happened in Banking, Business to Consumer markets and the change is rapid. Large established businesses that did not embrace this change have been laid waste.

Three elements are fundamental to the process of procurement in the following order:

  1. Discovery
  2. Price
  3. Availability

Discovery

A product or service cannot be brought if the consumer cannot find it.

In the digital age products are now being marketed to the consumer by analysing behaviour online, what is being search, form where and which products have been purchased. Marketing is then engaged through emails, web advertising and product placement in content the consumer views, like News sites. All this activity is conducted by machine algorithms working off the collected data. This is the current state but what when the consumer is a machine?

When machines search for products they use data to form a specification, to process that specification a sellers’ systems will have to broadcast they have a service that can be queried, support the format of the specification and then provide a digital response which the consumer system can act on.

The Construction products market has seen the rise of information portals where products can be discovered through limited search engines and mostly browsing content. However, these portals are designed for human consumers, offering product literature and modelling components which ironically contain data. Redirection to the manufacturer web site fosters the human interaction to generate sales leads.

When a machine selects they will analyse the response data. If the response is incorrect they are excluded from further interaction. If the machine uses a portal, then the manufacturer is reliant on what they provided and if they didn’t provide data then what ever was harvested by 3rd party portal will be used. The risk is that this data is not complete, and discovery is not in the control of the manufacturer, so choices will be biased.

Web search engines catalogue sources for human consumers. They collate data by crawling and scraping web sites reading the meta data in page view headers, this is an intensive process and requires large storage and processing. They also employ cognitive technology which does an interpretation of different media like photos and video to recognise text, objects and people. However, none of this helps in the selection of products by specification.

It is possible to use HyperCAT, a specification of a catalogue format in XML that like the “robot.txt” tells a crawler how to look through the site. It is used to expose endpoints, these can be api request calls which may return live dynamic data or even static data/content such as the api documentation.

To enable HyperCAT a site would have a default endpoint call “https://[web site domain]/hypercat”

Web API’s (application programmers’ interface) are the methods for machine to machine communication at the data layer. Standardising on method names and keys (attribute names) provide the means to query a source. The response must be in a standard that can be processed by the querying machine.

Web API’s can be programmed as public anonymous access or authorised. Typically, the anonymous query might include a full specification query but limit detail in the response, and maybe invite registration to get authorised access. Authorised access would be a trusted relationship that can respond with different content response, protecting sensitive data dependant on the user. For example, a specifier’s access may not include availability or price but a procurer would.

Price

Once a suitable product has been identified by specification the price can be determined. Price in the construction procurement is not based on unit price but on a sliding scale of quantity. Pricing services exist but are limited to whose content they contain, and prices are region specific. These services do not consider any “special” arrangement for discounting that buyers may have with certain suppliers. They are however very popular in the electrical services market and aimed at the SME mass market.

For best price, contractors need to look at product procurement across the projects they are undertaking, to provide a total quantity over set period. This creates a better negotiating position which in turn secures better certainty of production requirements for the manufacturer. With digital design models it is possible to generate quantities. BIM is maturing to a degree that enables accurate quantities to be extracted covering items by unit, linear length, area and volume. The push for digital handover data, in the form of COBie IFC, to drive a building owners FM system has started to change the way BIM is used. The handcrafted Quantity Schedules can now be generated from the model using the industry standard data exchange format IFC or from the BIM authoring applications if they support 3rd party plugins the choice is now more open.

Availability

All projects will have a start and end time, and all products will be in a system. Where that system is in the construction process can now determine when to deliver the products. The seller system can now negotiate for a price based on the amount of business proposed over years rather than for a specific project.

Transformation from analogue to digital

All manufacturers have data about their products, it is and has been used to promote and inform through marketing channels. Think of this as analogue information, Data sheets, adverts and product web sites. The consumer rarely gets data from these sources except from the few who have developed modelling objects for use in design applications.

International standards for handover data have driven a workflow requiring data to be added to building models (BIM) but failed to recognise the issues of who and if models get updated from generic objects to manufacturer specific.

The international standard (BuildingSMART) base class data schema already exists for all products, materials, assemblies and components. However, the industry has become confused with the detailed data sets. Are they defined? approved? and usable? And this has become a blocker to getting the basics in place. Most data requirements are no more than what is contractually and legally required for the Building Log book, Health and Safety File, and if requested, O&M manuals.

Fear of data being available to competitors is one of those red herrings where lack of knowledge of data services clearly demonstrates how the technology provides control over who, what and when data is available. Contrast this to BIM components and electronic documentation which is untraceable and freely available to any competitor.

Technology and Standards are in place for any manufacturer to move from analogue to digital.

Any transformation will require managing existing channels whilst developing the new ones. The analogue channel can now be serviced by the digital one. Replacing costly labour-intensive authoring and moving to automation. The web site is now no longer a series of static pages but are dynamically created from the digital data sources. New interactive technologies can be employed to create engaging media using 360 product views, and 360 photosphere VR. Virtual or Real case studies become immersive from where the consumer has the brand subliminally reinforced.

3d assembly models can further enhance the users experience for what are sometimes mundane presentations of important products. All this is instant ROI and the preparation for the next stage of transformation when the machine becomes the consumer.

Winners and Losers

Amazon started in 1994 by Jeff Bezos as an online bookstore and is now the in every internet enabled household. As his business grew the establish businesses tried to sue and slow him down whilst they tried to wrestle control, they were bigger but lacked in-sight and the ability to adapt. A recent study concluded that Amazon was now the preferred place people searched for products rather than a search engine. Amazon favours “prime” customers and re-sellers so consumers are not necessarily getting the best price, delivery or service. Amazon achieved success by responding to the needs of the consumer not that of the supplier. It is now in control of both, which is what happens when industries resist change.

In the construction industry the consumer is not a person but a business, so it will be harder for a single amazon clone to thrive but not multiple ones which will be procurement lead. Large and medium sized contractors are accessing systems that tell them the quantity and when it’s needed. Next, they will move to working with selected suppliers who they can negotiate automatically with. They will not wait for those manufacturers who are slow to organise as that will affect base line profit but favour and reward those who are setup.

The technology already exists, it is being implemented, it does need data, it is a race, there will be losers.

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