Is your Ready Mix Concrete ERP (RMC-ERP) a leaky bucket?
- December 6, 2013
- Posted by: cemblog
- Category: Construction
Most contractors are paying too much for their concrete.
Ready Mix Concrete ERP (RMC – ERP) poses a completely unique set of problems for most general contractors. First, there’s the matter of reconciling blanket purchase orders against partial deliveries. Then, if the contractor is issuing progressive billing to the client, another level of reconciliation is needed. Then, if the contractor has multiple projects going on at the same time…you can see the opportunity for error and overpayment , maybe even double payment sometimes
Another side of RMC that often results in overpayment can be found in the purchasing process. Most Ready Mix Concrete ERP is either purchased with concrete and labor lumped together. Or, the concrete and labor are separate line items on the purchase order. Breaking-out these two components usually results in a cost savings, because suppliers must account for both items in their bid. But there’s another component of the RMC mix that doesn’t receive as much attention, and that’s the admixtures!
Watch out for the admixtures!
Admixtures are the ingredients in concrete other than sand/gravel, Portland cement, and water.. Producers use admixtures primarily to reduce the cost of concrete construction. But admixtures also change the chemical composition of the concrete to embody certain properties, making the concrete heavier/lighter, harder/softer, slower/faster curing, etc., etc. When the admixture costs are hidden in the provider’s concrete costs – contractors often end up paying more for the pour.
The contractor’s ability to negotiate the admixture component in the cement purchase order will often result in better quality concrete, at lower costs.
The solution is in the software.
Luckily, there’s Ready Mix ERP software out there designed to assist the estimating, bidding, tracking, reconciling and billing, of RMC (plus, many of the other challenges faced by contractors today). Providers of this kind of software range from small VARs who offer industry –specific solutions to large international firms that provide ERP solutions that can be tailored to a given industry with add-on software. Regardless of who provides the ERP solution, you would be wise to make sure the software can automatically factor admixtures into the RMC module. This may seem like a small thing, but if you work with a lot of concrete, it could result in substantial cost savings over the life of the ERP solution.
Here’s a checklist of ERP capabilities every construction company should include in their RFP for ERP software:
General Construction ERP requirements
- Project estimating
- Project bidding
- Project cost accounting with revenue recognition in real time
- Human Capital Management: payroll, Worker’s Comp, union, Certified Payroll, EEOC
- Manage procurement: pricing; ordering, tracking deliveries
- Track material inventories
- Track equipment usage and maintenance costs
- Report key performance metrics for all “Enterprise” users
RMC-specific ERP requirements
- Estimate, Purchase , receive reconcile optional items (admixtures) along with main concrete items
- Summarize & report on concrete purchases for invoice certification ( reconciliation )
- Invoice details with concrete and admixtures as separate line items.
- Maintain trade agreements for different items with various vendors along with effective dates
- Maintain quanity thresholds for partial truck loads and pumping charges
CEM AX Construct harnesses all the power of Microsoft Dynamics AX specifically for the construction industry.
One way to insure a powerful, seamless solution for construction applications, is to use CEM AX Construct on top of the Microsoft Dynamics AX platform. And yes, AX Construct includes a module to automatically factor admixtures into the RMC bidding, reconciling and billing process. But it also does much more, providing an end-to-end solution for every aspect of the construction business. Plus, CEM AX Construct has passed the rigorous CfMD testing needed for certification by Microsoft Dynamics – so when your version of AX is upgraded, the AX Construct software is automatically upgraded as well. So your system can grow as you grow.