It was rebate tracking that gained HomeSphere a toehold in the builder supply chain management market. Builders, looking for ways to cut home building costs, seized onto the company's programs that track and negotiate rebates, boosting HomeSphere's business by 30 percent yearly over the past few years.
Even as product manufacturers and materials suppliers tend to reward scale in their purchase agreements with larger home builders, recouping the money-back deals that come with high-quantity purchases is a task that gives many big home builders fits. To take advantage of a rebate, it falls to the home builder to know precisely what they buy and to pursue the manufacturer for the money on each unit bought.
It Adds Up
The biggest builders use HomeSphere's AllTrack Web-based service to track and collect the volume rebate discounts they already had negotiated with suppliers. Standard Pacific Corp., John Laing Homes, and Orleans Homebuilders, among others, are subscribers. For smaller builders, lacking the heft to negotiate the biggest rebates, HomeSphere offers basic rate interface (BRI), pre-negotiated rebates for materials from BRI's supplier partners. More than 1,000 builders are signed up for this deal.
"The average negotiated rebate is about $740 per house," says Jim Waldrop, a former Pulte Homes executive and founder of HomeSphere. "While that's the average, some of them range as high as $3,000 to $4,000 a house. Most of those rebates are never even filed for, let alone collected."
There's a reason for that. To secure an agreed-upon rebate, the builder has to show where the materials ended up. HomeSphere's software is capable of tracking that.
REBATES and MORE
Yet, Waldrop sees the company's rebate services as only the first in a series of potential technology solutions that better link manufacturers, distributors, and builders. "My vision for this company is far more than rebates," says Waldrop. The rebate programs have given the company critical mass to introduce other services, he says.
Recently, HomeSphere introduced a material take-off service (MTO) that uses technology and on-site visits to analyze exactly how much of every material is used to build a particular house plan. The objective is to cut down on waste and to create a foundation for future supply chain services, such as potential collaborative buying. "The savings there can be as much as $3,000 to $5,000 a house," Waldrop says. He is piloting the services with one of the top 20 builders and negotiating with two others.
As the company moves to sharpen its focus on products that improve supply chain connections, HomeSphere recently sold BuildSoft (a system that handles accounting, job costing, and other basic back-office services for small builders) and Builder 360 (a similar back-office software product for medium to bigger builders) to Toronto-based Constellation Home Builder Systems, a software provider for the North American home building industry.
"The reason we sold those products was primarily that the core part of our [supply-chain] business was growing at such a rapid pace," he says. Waldrop's mission is to develop seamless information sharing between the many links of builders' supply chains. "I always knew if there was a way to connect in a friction-free information environment, the constituents who play in the home-building business that, sooner or later, we will be able to improve the supply chain," Waldrop says.