How Building Products Can Reach, Markets Faster, More Profitably

May 15, 2004 · by Richard D. Voreis

Achieving [these] goals above will also allow building product manufacturers to more effectively serve their customers, architects and general contractors.

During the past two years, I have had many discussions with building product manufacturers concerning their future. What repeatedly comes up is how building products can get to market faster and more profitably to serve the needs of architects and owners.

There is a general consensus that modernization, increased computer use and other forms of electronic data interchanges (EDI) offer the best hope to improve the bottom line. It also enhances customer satisfaction and communication.

Top 10 Goals to Improve Profitability

1. Enhance communications throughout the order-manufacturing process.
2. Replace paper with electronic data in all possible applications.
3. Generate faster estimates with fewer errors.
4. Improve take-off for bill of materials.
5. Automate shop drawings.
6. Enter orders quickly, and with maximum accuracy.
7. Track orders during manufacturing processes.
8. Improve quality of finished product.
9. Reduce fabrication errors.
10. Automate manufacturing processes to lessen manual work.

Most businesses today are interested in lowering their costs, improving their efficiency, therefore enhancing profits. Achieving the goals above will also allow building product manufacturers to more effectively serve their customers, architects and general contractors. Being easier to do business with is a big plus, too.

Tradition Prevails

As I look back on my three generations in the construction and building products industry, many of the order-generating, order-processing and manufacturing systems remain unchanged since when I began my career. Unfortunately, the industry has not benefited from computer automation to the same degree as other industries. The need is pressing and the software is available. It’s now possible to automate manufacturers from the front end to the back end of their business and much of the same technology is also available to subcontractors. What I’m talking about involves seamless order processing starting with customers and integrated technology that transfers data from the order file, all the way through to the manufacturing processes.

New Technology

The integration of the manufacturer’s product lines with the addition of user-friendly software is designed to enhance the flow of order and project information between the respective parties. Customers, the sales organization and manufacturing personnel all have the same platform to ensure harmonious communication. The customers (i.e. subcontractors) use this technology such as computerized estimating to generate orders and automated shop drawings to process construction documents. Next, the same software is also used in order-processing and manufacturing functions at the manufacturer’s plant. The entire system is integrated. Although this technology is only beginning in this industry, there are successful models already.

In cases where this technology has been implemented, both the subcontractor’s and manufacturer’s costs have gone down. Order processing time has been reduced and take-off as well as fabrication errors have been almost entirely eliminated. Manufacturing quality has dramatically improved along with on-time delivery. This is not a dream or a prediction, because I’ve seen it work with both customers and manufacturers. It’s impressive.

Let’s examine in detail the process flow chart, from the initial to final phase sequence, starting with the subcontractor and ending with the manufacturer shipping the finished product out the door. The example I’m using is from the fenestration industry; including entrances, windows, curtain walls, etc.

Order Capturing

The take-off from the architectural plans and specs is done by the subcontractor (the same take-off functions could be performed by the manufacturer, but for this example we’ll start with their customer). By take-off I mean the customer enters the building elevations, product types and accessories in a simple line drawing format.

Then software does the application engineering as it processes the products, etc. Within a few seconds an estimate is generated which includes the requested products, fabrication costs, installation labor, tax, mark-up and all costs that go into making up a subcontractor’s bid to a general contractor. Next an automated proposal to the general contractor on the subcontractor’s letterhead is printed and ready to mail or fax.

Shop Drawings

If the subcontractor is successful in closing the contract with the GC, shop drawings can be generated from the estimating file, again in seconds. CAD shop drawings can take from a few seconds to a few minutes to generate without requiring additional information.

Purchase Orders

When the shop drawings are approved by the architect and general contractor, a purchase order is generated to the material suppliers—all on the letterhead of the subcontractor, addressed to each separate material supplier.

Order Entry

Purchase orders can be generated in the traditional paper hard-copy format and mailed or faxed to the material supplier. Or they can be e-mailed to the material suppliers via automated online order entry.

Order Status

Traditionally, the subcontractor would call the manufacturer for the order status, but the new e-commerce technology means the customer can use the automated process to check order status independently. And by using the Internet, the order status can be accessed 24/7.

Order Processing

By e-mailing the estimating file or CAD shop drawings to the manufacturer the manufacturer can enter the order, perform the automated take-off to generate the bill of materials. Bill of materials are automatically generated along with drawings for shop fabricators. All of this is accomplished without having to re-enter the information sent by their customer. The computer takes the data that has accumulated throughout the order processing cycle and manipulates it for whatever function needed.

The same processes that a manufacturer requires to fabricate products can also be made available to the subcontractor. Either way, it’s easier and quicker!

Manufacturing

The bill of materials can be automatically downloaded to the manufacturing shop floor to manual workstations or to computerized fabrication equipment using an electronic data interface.
On the shop floor, computer-generated product labels and bar coding control the production process. At the same time, in-process inventory control functions allow the manufacturer to replenish inventory or use left-over materials for other orders.

Process Flow Snapshot
Let’s summarize totally integrated two-way e-Commerce communications between subcontractors and their material suppliers:
Take-Off
Application Engineering
Estimating
Shop Drawings
Order Entry
Order Status
Material Optimization
Bill of Materials
Manufacturing

Software Providers

Software companies have this technology in place. Of course, some programs are better than others. As mentioned previously, my experience has shown reality is here today and that this technology is not a dream or a prediction. With respect to the aluminum fenestration industry, the DeMichele Group of Mesa, AZ has developed, enhanced and proven their software with hundreds of subcontractors and manufacturers for more than 15 years. I’d highly recommend this company.

I’d also like to offer a few words of caution on the subject of selecting a software provider. Make sure your selection is based on a successful track record that covers several years in business. And insist on receiving a list of subcontractor and manufacturer customers. Talking to a few of the users is a must, too.

Finally, if you are asked to pay an upfront development fee, make sure it’s tied to the successful development of the database and that the project completion timeframe is identified before the start of the project. If the database development does not meet your needs, or if the project extends beyond the stipulated completion date, it’s not unreasonable for you to expect the full return of your investment. Make sure the contract covers these important considerations.

What’s Next

I’m very excited about the opportunities available in this industry to take us away from the “old fashioned” ways of working to instead make profitability and improved service a reality. The list of profitability goals I mentioned at the start of this article also comprises a list of potential solutions that are already available today to reduce costs, speed order processing, reduce errors and seamlessly link to the manufacturing functions. Perhaps the best corollary benefit is a vastly improved relationship between product manufacturers, subcontractors, general contractors and architects

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