The recent departure of Paul Dodge, Centex Homes' vice president of purchasing and distribution since 1998, calls attention to the increasing volatility of supply-chain management among big builders that, in a growing number of cases, are scaling back and centralizing that function within their operations.
Dodge left Centex at the end of September, and he tells BUILDER that his decision to resign was driven by "changes occurring in the residential construction industry," without elaborating. However, he expressed confidence in Centex's "well developed supply chain" whose goal is to "drive cost reduction and business simplication."
Over the past few years, Centex has been working with the consultant McKinsey & Co. on devising new operational and value engineering strategies that include making greater logistical use of CTX Builder Supply, Centex's captive network of six distribution centers that provides lumber and structural components for more than one-third of the builder's construction. Centex officials told Electrical Wholesaling magazine last year that their company could save between 30 percent and 50 percent by sourcing other products such as lighting fixtures, flooring, nails, countertops, locks, and faucets, from China, which CTX Building Supply would repackage into kits and ship directly to job sites.
Centex isn't alone among big builders that have undergone personnel changes in their supply-chain management, nor is it the only builder that's rethinking how it purchases and receives products. But where Centex has been committing resources to its supply-chain, other big builders are "leaning out" their purchasing departments, mostly through centralization, observes Luis Solis, president of Symbius, a supply-chain consultant based in Bloomfield, Colo. He points specifically to Lennar, whose once strong regional supply chain management structure "has all been cut out," says Solis, whose company has consulted with several large builders as well as building material dealers and distributors. The tragedy, in Solis' estimation, is that builders aren't giving the supply-chain processes they may have adopted only recently enough of a chance to prove their worth. "They are now dismantling something that can take four or five years before it works," he says.