Online relationships between builders and suppliers are finally catching up with the rest of the world. Here's how it's working for one company. By Charles Wardell
Two years ago, the notion of building suppliers using e-commerce with their customers was mostly talk and hype. Today, it's saving builders time and money and providing dealers with loyal customers.
One of the best examples of where this trend is going is Ply Mart, a 34-year-old, privately held building supplier based in Norcross, Ga. For the past year, Ply Mart's home builder customers have been able to use the Web to manage all aspects of their accounts, as well as to order materials. And Ply Mart is planning even more services.
Builders have quickly embraced Ply Mart's online offerings. Sherrie Hagenhoff, an accountant with Dan-Ric Homes in LaGrange, Ga., says it saves her about 20 hours per month.
Before, she had to key every paper invoice for the 150 homes Dan-Ric builds each year into her computer. Now, she logs on to a secure Web site, checks invoices against P.O. numbers, and has the money transferred from Dan-Ric's bank account to Ply Mart's. The entire process takes three hours instead of three days.
Of course, such capabilities are old news in other industries, but building suppliers haven't been known for their technical prowess. In a national survey conducted five years ago, four of five builders called the Web a viable medium for buying and selling building products, but less than a third of dealers, wholesalers, and manufacturers thought the same.
Photo: Stuart Bradford
Three years later, things hadn't improved much. In a survey done in 2000 by ProSales, one of our sister publications, the nation's 400 largest suppliers named "developing an e-commerce strategy" as one of the 10 greatest opportunities facing the industry--as well as the most difficult. Few dealers had an e-commerce strategy.
But the past two years have seen great strides. In a ProSales survey conducted in February and March of last year, 37 percent of dealers said they were using some type of e-commerce. While that could include anything from comprehensive systems like Ply Mart's to simple e-mail ordering, it's a sign that dealers are getting serious about joining the 21st century.
E-commerce's biggest impact could be less as a cost saver and more as a way to strengthen relationships between builders and suppliers. This was clear to judges of ProSales' first annual Excellence Awards, which the magazine announced in November of last year--and which included an information technology and e-commerce category.
"What moved me was that companies connecting with builders through their Web sites are the ones that are excelling. Period," says judge Chris Rader, of Rader Solutions, a Houston-based computer consulting firm that works with construction supply companies. E-commerce is merely one sign of a commitment to helping builders do their business, alongside things like guaranteed delivery times. "The bottom line is that connection with the customer," says Rader.
Ply Mart's main online customer connection is its Express system, which lets builders such as Dan-Ric manage their accounts. Getting builders to use it has meant putting a priority on ease of use. "Builders will use technology, but you have to make sure they're comfortable with it," says Ply Mart e-business manager Sandy McKibbin.
The system displays bills and statements online in pdf format, so they're identical to what the builder would get in the mail. Builders can also customize how they view data online.
If they want a P.O. number next to each invoice number, they can configure their account to put it there. They can search by invoice number, date range, P.O. number, or order number.
The database goes back three and a half years and counting. "It's a powerful tool for someone who wants to build a house they built back in 1999," says McKibbin.
The historical data have other uses, as well. "If a homeowner calls to say he ran a lawn mower into the side of the house and dented the siding, we can immediately look up the color and type of siding that has to be replaced," says Hagenhoff.
Betty Cassady, office manager for South-Tree Enterprises, a Tyrone, Ga., company that builds 20 homes per year, likes the fact that she can place an order and then immediately confirm that Ply Mart correctly recorded it. "If you have to wait a month for the invoice to come in, you tend to forget," she says.
Ply Mart has made a quick return on investment, a fact that could make online systems attractive to other dealers. McKibbin estimates the cost to create it at around $225,000. But it reduces the amount of invoices the company must send out by 3,000 to 4,000 per month. At $2 per invoice, that's an annual savings of up to $96,000.
McKibbin says almost 300 builders are using the system to view invoices, while an additional 112 have signed up to pay online from April to October. "That screams at me that people want this," he says.
And builders are asking for more. Hagenhoff wants more choices in how to view invoices. For instance, she wants the ability to see the current month's statement, which the current system doesn't allow. Cassady wants the Express system to tie into South-Tree's BuildSoft accounting system.
McKibbin says the system is being constantly updated. It will soon map directly to Quick Books--60 percent of Ply Mart's contractors use that program. BuildSoft will follow soon after, as will the ability to see monthly views.
While Ply Mart's Express system is a work in progress, it has already strengthened customer loyalty. "It has created more serious, positive relationships between contractors and us because they know that we're paying attention to the front and back end of building houses," says Bill Hosius, Ply Mart's vice president. "We're acknowledging that they have people who have to keep books."
Hosius says that use of the company's electronic catalog is also growing. Chuck Ogletree from South-Tree uses it to order most of the standard items that Ply Mart sells, especially framing lumber. "I can order material and be out of the office at 7 a.m. and on my way to checking on jobs," he says.
And as soon as an invoice gets posted online, he can check to see that it matches the P.O. If it doesn't, he can easily check the numbers to see what's wrong.
The catalog is more than an ordering system. Builders can go to Ply Mart's site and build a catalog for their own Web site or for an individual job. Customers can then view the catalog online.
But the catalog hasn't caught on as quickly as the Express system. For instance, when Ogletree first started using it, he wondered whether Ply Mart would treat an online order as seriously as a phoned-in order. It has. "They've been real good about calling me back within an hour if there's any questions," he says.
Photo: Stuart Bradford
And the system has helped make deliveries more accurate. "I can type delivery instructions into the order. That way, when the driver pulls up to the house, he will know exactly where to deliver the deck package."
Getting used to the system was a bit of a learning curve, says Ogletree, who took some time to get used to hunting online for materials. But Ply Mart worked with him to build templates that match the way he builds.
"Now, when I call up the deck template, everything we ever use to build a deck is there," he says. Completing an order is a matter of entering quantities.
While he's not sure the system saves him much time, it does make him more organized. In the past, when Ogletree needed to order materials from the field, he would call the supplier on his cell phone.
"Now, I'll call the office and have the secretary do it," he says. That way, the transaction is part of the system. "Anything that I can order online I will."
And the system has made Ogletree one of Ply Mart's most loyal customers. "If a salesperson from another supplier approaches me, the first thing I do is ask if they have online ordering. If they don't, I usually don't call them back."
Comments like that could prompt other suppliers to take Web-based systems more seriously. "I would say in the next few years, having an online catalog and Express quotes will be as common as having an ad in the phone book," predicts Hosius.