How Technology and Best Practices Help Builders Manage Their Supply Chain to Outperform in 2018

ThinkstockPhotos 900629074By Felix Vasquez

The (NAHB) and the National Association of Realtors (NAR) project positive economic growth in 2018.  The NAHB expects a 7.9 percent increase in single family housing starts this year. With tax reform in place promising to further historically low unemployment rates and higher wages, we see a great opportunity for builders to perform in 2018.  

However, builders still wrestle with a list of critical issues – discerning homeowners, an on-going labor shortage, additional business management activities, an increase of products to track and manage – creating a productivity/profit dilemma. Builders need to keep their crews working at maximum productivity, while selling what they build at a maximum profits, especially as construction costs are predicted to remain high and even climb in many markets, potentially eroding hard-earned profits.

New technology has been developed to help large and midsized builders address these issues and help them compete more effectively in an ever-changing, hyper-competitive market. 

New developments in cloud computing are making it easier than ever for builders and suppliers to share information and do business in real time.  Almost every high-volume builder and many mid-sized builders have made the move toward cloud-based, on-demand scheduling, collaboration and supply chain management tools to better run their businesses, just as many suppliers and vendors are taking advantage of these developments to integrate business applications directly into their respective networks. Imagine the ability to access key documents anytime, anywhere from a secure library online in the field. The result is simplified communication, planning, scheduling and accounting that speeds up business and reduces errors.

New builder solutions enable projects to be managed easier and executed in far less time. Research conducted by Hyphen Solutions indicates that builders using the latest technology and supply chain management tools can handle up to twice the average load of homes with the same resources, compared to manual methods. This productivity goes straight to the bottom-line, and the ability to automate purchase orders and their processing as well as eliminating the printing of plans, color schemes and other documents can save busy builders approximately $2,000 per home in office costs. 

In addition, supplier apps are helping trade partners finish jobs more efficiently and get paid promptly through new features like lien release. Users enjoy instant messaging and there is record of every update and order, which keeps processes running efficiently, saving all parties both time and money. The good news is both types of solutions can be accessed on a subscription basis via the Internet, allowing real-time information to be accessed by any authorized user with a mobile device, like a pad or laptop. Additionally, providers are now taking an approach that allows suppliers to get all of their job-related information in one place, safely and securely to eliminate multiple ways of accepting orders, training costs, and improving response time to builder changes.

The best practice today in applying technology to the homebuilder supply chain is enabling online, paperless collaboration from the back office to the construction site. According to builders, some of the biggest breakthroughs they realize from the investment in these technologies are being able to manage the workforce more effectively with a better audit trail, to adjusting purchase orders based on product or material availability at the worksite, shortened response times from trade partners, and the ability to reduce cycle times while providing a “one-stop” information resource to all trades.

Through builder user groups these systems are getting even smarter to solve some of the builder’s challenges. New robust ERP systems take automation to new levels. They focus on a greater scope of the builder’s critical operations including accounting, purchasing, and accounting including accounts payable, payroll, tax and a variety of reports.

Felix Vasquez is CEO of Hyphen SolutionsSince March 2002, he has managed the company's strategy to tightly integrate builders with their respective supply chains, and has been instrumental in starting Hyphen's user group, which helps to drive product direction. As CEO, Vasquez is responsible for client and prospective client relationships and keeps a keen eye aware for potential business relationships with industry solution providers. Prior to joining Hyphen, he was most recently vice president and chief information officer for D.R. Horton, Inc., one of America's largest and most geographically diverse home builders. 

 

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