Navigating Risk Management in Today’s Construction Industry
Navigating Risk Management in Today’s Construction Industry
Today, we continue with guest writer Andy Fanter in his article on “Navigating Risk Management in Today’s Construction Industry.”
The construction industry is changing fast, and so is how we handle risk. Andy Fanter dives into this shift, pointing out a generational gap that’s reshaping things. While older folks were more into taking risks, the younger crowd is playing it safe. This cautious vibe, mixed with dealership consolidation and financial conservatism over the last 15 years, has made sales of new and used equipment more complex and frustrating.
Fanter stresses the importance of planning ahead and assessing risks to reduce headaches across departments. His approach to managing sales risks at equipment dealerships involves pinpointing the best-selling products and boosting orders to meet demand, much like Starbucks expanding its product lineup. Using data analytics, dealerships can better understand market trends, which can help keep customers happy and grow market share.
A standout example of this shift is the parts department losing market share—from over 80% in the 1970s to just 40% in 2020. Fanter blames this drop on poor dealer performance and tracking, showing how crucial parts and service are for customer satisfaction and profits. He believes focusing on these areas, rather than just equipment sales, is key to staying competitive.
Fanter also calls for fresh thinking and risk-taking from industry leaders. Despite tech advances, productivity is lagging, so a new perspective is needed. He suggests looking into the underused subscription service model for machinery as a possible game-changer.
Sharing personal experience, Fanter highlights the need for resilience amid criticism and the challenges of business consolidation. He stresses strong communication and relationships, suggesting more sales reps to handle increasing traffic and road construction issues. A friend’s success story supports this, where hiring more staff improved sales.
Technology and data analysis are crucial for understanding sales trends and optimizing revenue with strategic pricing. Fanter critiques manufacturers for past price hikes that hurt margins, advocating for analytics to boost dealer transactions and customer retention. He even suggests creative distribution methods, like drop boxes for inventory, to overcome dealer pushback. By focusing on dealership profit drivers and continuous evaluation, businesses can adapt to changing environments. This adaptability is also relevant to the electric vehicle sector and the environmental concerns surrounding lithium batteries, pushing companies to use dealer data for sustainable growth.
The pandemic has brought back in-person meetings and revamped training programs with voice recognition tech. An engaging teaching method has students defining key management concepts and tackling questions about ignorance, stupidity, and insanity in management, emphasizing the risks of stagnation and the need to stay adaptable.
Fanter also touches on job issues related to new U.S. computer chip plants and the nuclear energy revival, along with challenges in clean energy regulations and high energy loss during transmission. Economic signs show a rise in housing permits, driven by young adults wanting customizable new homes. This trend encourages builders to offer flexible options, ultimately benefiting the equipment industry as single-family homes increase.
In summary, Andy Fanter’s insights offer a clear guide for navigating the new era of risk management in construction. By adopting innovative strategies, using technology, and building resilience, businesses can thrive amid change and uncertainty. As the industry evolves, so must our approach to risk, ensuring we’re not just ready for the future but actively shaping it.