Every two years, Big Builder magazine conducts an extensive survey exploring a range of critical issues facing big builder executives. The findings of our most recent inquiry are being published for the first time in the pages of this special issue report.
This year, we sought to examine how big builders expect to continue their remarkable rate of annual growth. And in this report, we explore a range of topics relating to the way big builders purchase products and how the purchasing process is evolving to keep up with the growth.
Our report is based not only on the detailed responses of more than 400 top home building executives (among 1,800 surveyed last fall—one-third of whom build more than 1,000 homes a year), but also on interviews directly with builders and suppliers engaged in the business of getting products into new homes.
Among the highlights of our findings:
Big builders expect to expand aggressively not only into new geographic markets in 2004, but also by refining their products to move into new demographic segments;
Roughly one in five big builders expects to expand operations to construct new multifamily for-sale homes;
Big builders report that a little more than 11 percent of the sales price of new homes built in 2003, on average, came from option and upgrade sales. That translates into roughly $32 billion in upgrade sales, by our estimates;
One-third of builders say they believe that proportion will increase this year;
A broad majority of builders say they believe the way to boost option and upgrade sales is to increase their investment in design centers and sales support programs. Many will look to suppliers for more help;
There is a new and growing mandate among big builders to develop and enforce centrally managed national account programs;
Complicating that mandate for builders and suppliers is that subcontractors and distributors are still actively engaged in the selection, delivery, and invoicing of a large portion of new-home materials;
Partly in response, big builders have started to hire supply chain management experts from outside the building industry to examine and streamline the overall costs of buying, installing, and servicing products;
Suppliers, meanwhile, continue to struggle with how best to satisfy builders in their efforts to sell and service at both the national and local level;
We also examine what drives purchasing decisions in a dozen major product categories. All this and more can be found in our special report, “Supply Chain Initiatives.”
Editor's Note: This special mid-month report was made possible by Whirlpool Corp., with our thanks. Whirlpool had no influence or control over its content.