Over the past year, inflation has continued to shape the construction supply chain — not with the shockwaves of 2022–2023, but through more measured, persistent pressure. While the dramatic spikes have tapered, the procurement environment remains complex, and the lessons learned during this period are reshaping how distributors source, price, and manage raw materials in 2025.
Here’s what the last 12 months have taught us about how inflation continues to influence raw material procurement — and how industry leaders are adapting.
1. Cost Stability Is Relative — and Fragile
After historic volatility in prior years, 2024 brought a leveling out of some key material prices — but not a return to pre-pandemic norms.
What We Learned:
Price moderation occurred in lumber, steel, and copper — but levels remained 30–50% higher than 2019 averages
Any global disruption (e.g., conflict, shipping issues) still triggers immediate price and availability impacts
Forward-buying strategies offer value, but flexibility remains essential
Takeaway:
Procurement plans must remain nimble and data-driven, even in periods of relative price calm.
2. Long-Term Supplier Relationships Have Proven Critical
In a tight pricing and availability environment, distributors leaned heavily on suppliers that could offer predictability, communication, and shared risk.
What We Learned:
Strategic supplier partnerships allowed for better lead time visibility and pricing transparency
Exclusive or preferred agreements helped secure access to high-demand SKUs
Suppliers that invested in joint forecasting and digital collaboration created stronger alignment
Takeaway:
Vendor selection based on performance, not just price, is now a core procurement strategy.
3. Indexed and Flexible Pricing Structures Became the Norm
Fixed-price contracts fell out of favor in volatile categories. Over the past year, most distributors moved toward index-linked or dynamic pricing models.
What We Learned:
Many suppliers now adjust pricing quarterly or monthly based on commodity indexes
Cost-plus models allowed for more accurate margin management amid fluctuations
Customers have become more accepting of transparent, formula-driven price adjustments
Takeaway:
Inflation has forced a new pricing culture — one built on shared visibility and flexibility.
4. Risk Mitigation Took Center Stage
Distributors learned that price isn’t the only exposure point — availability, transit time, and order execution risk are just as critical.
What We Learned:
Dual-sourcing and regional diversification strategies reduced exposure to global shocks
Increased use of domestic suppliers where possible, even at a premium
Greater focus on supplier scorecards and performance tracking
Takeaway:
Risk management in procurement now means balancing cost, certainty, and continuity.
5. Demand Forecasting Tools Became More Essential
Inflation’s unpredictability made historical averages unreliable. Over the past 12 months, more distributors adopted AI-enhanced forecasting and demand planning tools.
What We Learned:
Systems that integrated project data, seasonality, and lead times improved accuracy
Procurement teams worked more closely with sales and operations to align forecasts
Better demand visibility reduced overbuying and dead inventory
Takeaway:
Smarter forecasting has become a competitive advantage — not just an efficiency tool.
6. Working Capital Management Is Now a Strategic Priority
Inflation increased not only purchase costs but also the cost of holding inventory, especially with rising interest rates and tighter cash flow.
What We Learned:
Distributors optimized reorder points and embraced more just-in-time replenishment
Inventory turns became a key metric in evaluating procurement performance
Finance and procurement collaboration became tighter than ever
Takeaway:
Balancing inventory availability and capital efficiency is now central to procurement success.
7. Customers Expect More Transparency and Support
Contractors and builders faced inflation-related pressures too — and turned to suppliers for more than just materials.
What We Learned:
Distributors that communicated early and clearly about pricing or availability changes gained trust
Providing documentation, alternatives, and cost breakdowns became a value-add
Procurement decisions began to influence customer retention and sales performance
Takeaway:
Procurement teams now play a role in customer experience and brand loyalty.
Conclusion
Over the last 12 months, inflation has evolved from a crisis event into a constant variable — and procurement strategies have evolved with it. Distributors that embraced flexibility, transparency, and smarter planning have not only weathered the storm, but positioned themselves for long-term stability and growth.
The biggest lesson? Procurement is no longer a back-office function — it’s a strategic driver of resilience and competitive advantage in a volatile construction landscape.
