The year 2016 was an eventful one for home building.
New Firms Focus on Builder Supply Chain Management
Several high-tech companies aimed at improving builders’ supply chain management capabilities have begun operations in the past several months.
Several high-tech companies aimed at improving builders’ supply chain management capabilities have begun operations in the past several months. The curious aspect of this is that some of the top names on Professional Builder’s Giant 400 are investing in more than one of these seemingly competitive ventures.
For instance, in the Research Triangle of North Carolina, BuildNet unites six major providers of builder business management software to create a system of Internet-based, computer-to-computer links tying builders to suppliers, manufacturers and trade contractors. Limited roll-out of the system in several cities is expected this summer. Beazer, Centex, D.R. Horton, Lennar, Pulte, Toll Brothers, and Kaufman and Broad have invested in BuildNet.
However, Centex, D.R. Horton, Lennar, Pulte, and Kaufman and Broad have also invested in HomebuildersXchange, launched by Encore Venture Partners L.P., which is itself a new launch by former D.R. Horton president Rick Beckwitt. This new firm brings the builders into partnership with Internet technology giant Oracle Corp. to offer what they call "the first worldwide home building exchange for online commerce, collaboration and supply chain services."
They say the goal is to make the exchange a primary source for direct and indirect procurement of materials and labor for the founding builders and other home builders from trade contractors, distributors, wholesalers and manufacturers. Oracle will provide the technology and hosting platform. Participants will be able to buy, sell or trade goods and services using standard Web browsers. The exchange would also allow contract and spot buying, online auctioning and reverse auctioning. It’s scheduled to go online this summer.
Meanwhile, just to make things a little more interesting, publicly held Pulte has also joined privately held Colorado Giant Village Homes (No. 82 in this year’s Giant 400 with $173.3 million in 1999 home building revenue) to create US-Build.com, a new San Francisco firm focused on "using the Internet to create a supply chain optimized for the production home building industry."
Both builders will pilot the new system beginning this summer in Denver. Pulte chairman Robert K. Burgess says, "US-Build.com has successfully married a real-world business application -- logistics management for manufacturing -- with the efficiencies that can be harnessed using the Internet."
What’s going on here?
Asked if he felt betrayed because builders who invested in his company also are launching others, BuildNet chairman Keith Brown says, "No. Each of these initiatives is a little different. I think the others will eventually do business with us. They’re just seeding the forest out there to see what will grow."
Certainly there’s that, and also the question of ownership and control of whatever technology eventually dominates supply chain management in home building. Asked why he launched a company that appears to be competitive with BuildNet, Encore Venture president Beckwitt says, "We thought that by working with Oracle we could develop a solution for the industry that provides a more complete package of services."
Pressed on whether the completeness of the package was more important than who owned it, Beckwitt concedes, "Yeah, we want a chance to architect the system and own a significant stake in the firm."