By Tom Smith. It wasn't long ago when a Centex Homes administrator would print out a purchase order, fax it to one of the company's vendors, then call to notify the supplier the order was on its way. If the fax made it through, the order would get processed; that's if the process didn't break down, requiring the supplier to call back and ask for another fax. Then, if that same vendor wanted to review past purchase orders for information on pricing, discounts, and quantities ordered, the two sides would have to spend time on the phone manually working through the purchase order's history.
That was then, this is now.
Purchase orders are automatically moved from the company's estimating and purchasing system to a freshly minted Web portal called Build With Centex (www.buildwithcentex.com), which allows individual vendors to view information that's only applicable to them. The vendor, in turn, can re-examine a particular job, review past purchase orders, and download them into the vendor's internal systems. No printing, no faxes, no phone calls. More importantly: No delays.
"This enables vendors to get their information faster and more accurately, and it allows them to know when things change," said Jerry Brady, director of business solutions for Centex Homes, the Dallas-based builder that grossed $5.8 billion in new home sales in 2002. Vendors, in turn, can post their information -- such as details of a volume purchase agreement being offered to Centex -- to the Centex portal.
Build With Centex is an early manifestation of the company's major information technology initiative. The project involves integrating a wide range of internal computer systems and applications. It aims to make interactions with partners more timely, let consumers use the Internet to monitor the building of their homes, and improve internal decision makers' access to information.
Integration was selected as an alternative to the more costly and time-consuming approach of installing a single corporate-wide system, commonly referred to as enterprise resource planning. Brady wouldn't disclose the cost differential between the two approaches but did label it significant.
Several factors convinced Centex officials to opt for systems integration rather than build a new corporate-wide system from scratch. Among them: strong growth in sales and projected future growth, which placed heavy demands on support staff to input and maintain data; increased adoption and use of its core business applications companywide; and a desire to create stronger relationships with customers and partners.
Integration also was a good fit for Centex because the company operates on a highly decentralized basis -- and sought to get more mileage out of the investments it already had in business applications.
"Builders can't simply say, 'I'm going to start from scratch,'" said Tom Reiman, president of The Broadband Group, a Sacramento, Calif., consulting firm specializing in developing technology master plans for home developments. "It's too great an investment in infrastructure, content, and connectivity."
Following a series of tests during a four-month period, Centex, in early April, began rolling out Build With Centex to its vendors nationwide. In addition to making its estimating and purchasing system available, another system that's integrated into the portal is the company's Schedule-Builder application, which defines all the tasks associated with a particular project. Through the portal, vendors can bid for work on Centex projects.
Scaling back manual labor is an important benefit. "This [positively] impacts our support costs involved in working to get houses built," Centex's Brady said.
Central to Growth
That reduction is important in the context of broader market and economic conditions. Having thrived in the boom years, Centex says it is striving to find new ways to improve operating margins as the sluggish economic conditions continue to challenge top line growth rates.
Late last year, CEO Andrew Hannigan told Big Builder the company aims to grow its top line 15 percent to 20 percent this year and said the company will seek margin enhancement through the use of technology in a variety of functional areas.
Application integration should support those objectives. "As we grow, we'd like to use integration as a way to not add overhead at the same rate as today by leveraging the power and efficiency of integration technology," Brady said.
Other business-to-business functions that can now take place on an automated basis include: electronic funds transfers (EFT) to vendors; the company's internal financial accounting system issues; and EFT requests to the Federal Reserve, which then deposits the monies into the vendor's bank. Centex's internal system will separately send remittance advice informing the vendor that payment has been made.
Another of the major new functions available since Centex embarked on its application integration project is a Web page that lets customers check on the status of a home as it is being built. That page taps into Centex's Schedule-Builder application to gather data -- including tasks that have been completed. It also gives the customer access to community, school system, and other information. The page stores data that is useful throughout the homeownership lifecycle. For example, if warranty work is needed after the purchase, requests for that work can be made through the Web site, Brady explained.
"They're making the whole process easier for the customer to contemplate the reality of their purchase," said Reiman.
One of Centex's early objectives with integration was to reduce the amount of data re-entry throughout the company. Now, with integrated systems, more than 1 million transactions per month are being handled automatically, without the need for re-keying. Daily construction status reports are available to all the functional areas within a division, such as sales, accounting, and design centers.
Centex appears to be staking out a leadership position in the use of the Web's capabilities. "I've seen them understand the value of technology and of technical integration of a Web-based interface with customers," Reiman said. "In that way, they're exceeding other builders."
Now that it has the software components in place to facilitate integration of applications across the company, Centex will look for ways to make its data more accessible both internally and with partners and customers, Brady said.
One market watcher said that's a smart approach, because better data -- and better access to data -- is critical to making timely decisions in a fast-changing market.
"When it comes to new product development or applying existing product to new developments, builders are more and more feeling the challenge to control the bottom line and expand the top line," said Mike Rinner, senior analyst at The Genesis Group, an Englewood, Colo.-based new housing market research and analysis firm.
"All these things require good information and to the extent that information can be integrated and available throughout the company, that makes things easier."