It's calm and quiet as I enter Van Metre Cos.' design center in Ashburn, Va., a fast-growing, high-tech corridor on the outskirts of Washington. Today, I'm playing the role of a brand-new owner of the Mosby, an attached townhouse with a base price of $406,990 in Van Metre's nearby Stone Ridge community. Even before I'm approached by Krista Peterson, the design consultant assigned to walk me through my fantasy choices, I'm drawn to a high-style kitchen vignette not 15 feet from the entrance.
I've been here less than two minutes but can already sense how strong the pull toward upgrading can be for a homeowner. And why companies like Burke, Va.–based Van Metre Cos., which sold 541 homes in 2003, opened this slick design center in 2002. The impressive $16 million the builder sold in options last year is starting to make sense. How tempting it must be to stroll among the samples—most of which represent higher-priced options—and say, “I'll take that, and that, and one of those, please.”
All Systems Go It's clear, as we go through the mock process of choosing lighting, plumbing, and all the other aspects of the Mosby, that Van Metre's software system has been designed to save time for the homeowner, and time and money for the builder. At the design center, every choice made by a homeowner is keyed into a computer that's located on a stylish, stand-up desk next to a wall of cabinet-door samples. It uses an Internet-based software system that's been in place since 2002 and was designed by Brian Davidson, senior vice president of Van Metre's new-homes division, with help from a computer specialist.
That computer station is a focal point of the design center, but the software system itself is used by just about everyone in the company. What Davidson calls an “operational” system kicks into gear the day the land development manager creates a home site and continues through the entire home building process, right through to the warranty and customer service ratings.
In fact, it was land development that first brought up the need for a better way to track all the decisions that go into building a house. Managing options became one of the top priorities.
“About three years ago, we realized that we had some land opportunities that were going to allow us to grow our new-homes division,” says Davidson. “We knew we were going to have the sales, but we wanted to make sure that we were efficient and clear on what we were building. We couldn't afford to make mistakes. We wanted to make it easy for everyone involved, to make sure that everyone was on the same page.”
Davidson looked at a variety of off-the-shelf software systems, but decided to go with a system designed specifically for Van Metre. “At the end of the day, none of the off-the-shelf systems would allow us to do things the way we wanted to do them.” Van Metre's system kicks in after an address is established. Its purchasing department basically “builds” the house with the system, entering any area that would have an option associated with it. After the sales department weighs in on pricing, and the contract is locked up, personal information is removed from the contract and it's posted online for Van Metre's superintendents to access. “That's what our supers use to actually build the house,” says Davidson.
He estimates that putting together the company's own, custom system cost about $250,000. Davidson expects the company to recoup that amount by the end of this year. Options will play a crucial role in that cost recovery.
“Options are a huge money maker if they're priced correctly,” says Mark Florence, Van Metre's vice president of purchasing. “The original database took a lot of time and effort because we offer close to 13,000 options. What once took a purchasing team of 10 to do is executed by five people, and that includes all the updating that's done on a quarterly basis.”
At Van Metre, it's the sales team—not the purchasing folks—who has the final say when it comes to pricing options. Initially, a basic markup is applied to each option. It is then turned over to the salesforce, who review it for “reasonableness.”
The database is also used as a tool to drop options that are not selling well and to get better prices from suppliers on things that are especially popular. “Options are a retail operation, so we're continually turning over things that we're selling,” says Davidson. “If we can demonstrate, for example, that 50 percent of our homeowners are upgrading to granite countertops, then we can certainly use that information to get the best deal from our granite suppliers.”
Van Metre's database also helps the builder keep track of options that might be discontinued by suppliers. “Our suppliers usually give us four to six months notice if something is going to be discontinued, so we enter that information into the database and make changes accordingly,” says Davidson. That kind of lead time saves the sort of last-minute surprises that can so often thwart the home-building process. “Generally, we can get what we need to get,” says Davidson.
A Streamlined Operation If I were the real buyer of the Mosby, I would have spent three to four hours at the design center choosing options. Before I headed home, a contract's manager would have reviewed my choices and pointed out any missing areas. That's something that used to take two or three people two to three days to accomplish, says Davidson.
“Now, before the customer leaves the design center, we can run a report to see if anything was missed. Our system really cuts down on mistakes,” he adds. “The computer gives everyone access to the latest and greatest copy of the sales contract and allows us to manage the whole options process. We're able to offer a greater variety of things for our homeowners because we know that we've done well with the pricing and the products. It means we can build what we say we're going to build and offer a lot of products in return. With this system we were able to exceed our expectations tenfold.”
Company: Van Metre Cos., Burke, Va.
Goal: Integrate options purchasing through Internet-based software systems.
Van Metre's purchasing software is part of a company-wide “operational” system. Here are some things the software designers kept in mind when it came to putting together their very own system.