Large builders seeking ways to improve purchasing practices are turning to a new breed of senior-level managers whose backgrounds extend beyond purchasing and even home building.
In 2002, as it was absorbing two acquisitions and revving its expansion engine, Technical Olympic USA (TOUSA) tapped Ed Wohlwender to take command of a new post, as senior vice president of supply management. The position was created as part of a broader strategic vision of TOUSA's chief executive, Antonio Mon, to support construction across the country with a more integrated approach to materials purchasing. The goal has been to manage the elements that drive costs across the entire supply chain, focusing on the “total cost of ownership” including warranties, delivery, scheduling, and skilled labor.
“It's critical for everyone [suppliers, distributors, and contractors] to have a line of sight toward the home buyer, and the builder must manage the entire process,” said Wohlwender.
Wohlwender brings a unique perspective to that process and to collective efforts of TOUSA's purchasing team. A West Point alumnus with an MBA from Xavier University, the 44-year-old Wohlwender spent eight years managing production scheduling and logistics for Sara Lee's $1.4 billion Hillshire Farm division, two years with Ernst & Young's Mid-Market supply chain consulting group, and two years with Standard Register, a documents management firm.
Since he's come on board, TOUSA's purchasing managers across its 14 divisions have divided up into product category teams with a new focus on selecting vendor partners and aggressively pursuing corporate purchasing deals with suppliers. This selection process is also influenced by the technical expertise offered by the company's building sciences and product development staffs headed, respectively, by vice presidents Mike Beckett and Jeff Lothian, whom Wohlwender works with closely. Wohlwender notes that because the divisions have a better understanding of the total supply chain process, it's easier to win across-the-board internal acceptance of these agreements.
TOUSA is also now resolving disputes with suppliers over costs, distribution, or labor with the help of a program called “Job Ready/Job Complete” that monitors its contractors' performance. Through each step of the construction process, contractors fill out a check list that gets posted on a Web site. Having facts at its disposal helps TOUSA “take the ‘personality' out of our discussions with vendors,” said Wohlwender.
The focus on supply chain management has been important in TOUSA's ability to handle a 21 percent increase in closings in 2003, to 6,135 units.