Purchasing doesn't have the flair of a great new urban design or the “wow” factor of the latest home theater setup, but builders who pay attention to this meat-and-potatoes issue understand that the payoff goes right to the bottom line.
Chuck Shinn, president of the Lee Evans Group, a consulting firm based in Littleton, Colo., says builders with as little as $5 million to $10 million in revenue really need to think about hiring a purchasing agent or estimator. Shinn says a good purchasing person can add three to eight percentage points to the company's bottom line.
“Most builders don't have a plan of action for making purchasing decisions,” says Shinn. “They're too anxious to make the deal, and they leave money on the table.''
But that may change. Builder sensed that purchasing was a hot-button issue, and our survey results confirmed our hunch: Out of 15 potential business topics, controlling purchasing costs ranked third among our group behind controlling insurance costs and finding qualified subcontractors. Acquiring land and improving customer service ranked fourth and fifth.
Not content just to write a regular feature based on the survey results, Builder wanted to dedicate most of this month's issue to this important topic. So we sent our entire reporting staff out into the field to learn firsthand how builders consolidate suppliers, pool purchasing power, streamline jobsites, and deploy computer and options selections systems—all in the name of controlling purchasing costs.
Read on, and we'll share our analysis of the survey in the form of seven trends and tips, plus stories on how some of your colleagues found new and creative ways to modernize their antiquated purchasing processes. It's not easy, but for companies that make the commitment, it's powerful stuff.