How One Company Is Using Wireless Technology To Revolutionize a True Brick-and-Mortar Industry
How One Company Is Using Wireless Technology To Revolutionize a True Brick-and-Mortar Industry
By: Michael Holigan
Mar. 16, 2001 11:02 AM
Almost 1 million homes will be built in the United States this year. And in most cases, the story will be the same - missed deadlines, supplies delivered too late or too early, mistakes when placing orders. The list goes on and on. As a result, homebuilders face a never-ending challenge of coordinating construction schedules of suppliers, contractors, subcontractors, and inspectors. They know that each delay, mistake, or miscommunication will cut into their profits.
While the rest of the world has been hurtling at cyberspeed into the Internet era, the construction industry has largely remained locked to its past. In fact, with the exception of indoor plumbing and central heating, homes are constructed today in much the same manner they were 100 years ago. Walk into a contractor's office and you'll likely see a desk piled with work orders, reports, schedules, invoices, bank statements, bills, and other scraps of paper. There will probably be a wipe-board on the wall that looks as if someone was trying to break the DNA code. If there is a computer, it is probably an older model and covered with "post-it notes."
One reason that the construction industry has been slow to embrace technology is that until recently, the products developed for their business were too cumbersome for the contractor to use as he or she moved from building site to building site.
Another reason the products were not welcomed is that technology companies that didn't understand the building industry were the ones that created them. As a result, most of the products died a quick death or, if they survived, it was as if they were on life support. Of course, that isn't a problem unique to the construction industry. The Internet landscape is littered with the bodies of companies that created great technology only to discover they didn't understand the market they had designed the products to reach.
That all began to change for the construction industry within the last year, as advances in wireless technology, coupled with the increasing popularity of PDAs, created exciting new opportunities for mobile communications. Our company, MH2Technologies, has played an important role in driving that change through the introduction of the industry's most popular management, scheduling, and procurement system. The path we took to develop a system that will be used in the construction of more than 10% of all homes built this year is one that may provide insight for technology providers interested in capitalizing on other undeveloped markets.
Having spent most of my life in the construction business as a homebuilder and as host of the national television program Your New House, I had tested a lot of products over the past few years, and it was no surprise to me that most of them dramatically missed the boat. It was obvious that the people creating the technology did not understand the construction industry.
After building 5,000 homes over the last 10 years, at MH2 we understood how business gets done both in the office and in the field. As a result, we focused on creating solutions for specific business needs. We realized that any wireless product developed for the industry had to meet the following criteria:
Having our own superintendents and office managers as beta testers helped us move through the revision process very quickly. Being that builders in each market generally know one other, it wasn't long before word spread about what we were doing. Other builders started to call and ask about how they could get our MH2Build system.
The demand was so great, in fact, that we shut down our home building operations almost overnight in order to focus on technology. It was a wise decision. Already, MH2Build will be used in the construction of more than 100,000 of the homes built this year. And the number is growing daily.
Developed by builders for builders, the MH2 system was designed to significantly streamline and enhance the management of the conventional time-intensive, paper-centric process for overseeing the construction process and the purchasing of building materials.
Our patent-pending technology has created a tool that allows builders and contractors to develop job schedules, order and track delivery of materials, communicate to subcontractors, and calculate lead times and project durations from any location at any time. And it all happens over the Internet with the option of using wireless technology.
The system provides numerous advantages to all parties involved in the purchasing and inventory process. Builders, contractors, subcontractors, and even commercial builders and contractors benefit from:
The system's features also include the ability to track and schedule labor and materials from the field and real-time viewing of construction schedules - complete with daily task assignments and progress reports. Builders no longer have to prepare, fax, and coordinate spreadsheets for weekly reporting. Instead, contractors can create and share real-time gant charts anytime, anywhere, via the Internet. This feature alone eliminates the double-entry of data and reduces the number of face-to-face meetings.
Builders and subcontractors access the system via the Internet. They can document their building plans and preferred manufacturers and distributors, and be up and running in a couple of hours. Ultimately, the system enables builders to achieve better return on their capital investment, while increasing customer satisfaction.
For that reason it was no surprise that the nation's leading builders quickly embraced this new technology. And colleges, universities, and even high schools are teaching it as part of their construction management curriculum.
The result for builders is better control over every aspect of their businesses - from purchasing materials to managing multiple job sites. And, more important, it gives them greater control over their bottom lines.
In the past, for example, a drywall supplier was faxed a purchase order from the builder, and a schedule of when the drywall would be needed at the construction site. Assuming the supplier kept his or her schedule, the drywall was delivered, whether the builder was ready for it or not. Or, a builder might order materials only to learn - when they weren't delivered on time - that the products were on back order.
The MH2Build system also informs the builder when to place that order for the drywall, wirelessly. The supplier can track the progress of construction and know whether to hold shipment or not. Or, the contractor is notified immediately if the product is on back order so he or she can choose another vendor and not fall behind. The schedule is updated instantaneously and available to everyone on the team over the Internet.
As it turns out, the construction industry was ready to embrace wireless technology as long as it delivered true value. We had barely introduced our product for home builders when commercial builders contacted us. But rather than follow the typical "e-conomy" model of being first-to-market, we kept this significant market waiting.
We had launched MH2Build with single-family builders, but we always had commercial and multifamily builders in mind. We knew that large construction projects present scheduling and communications challenges you don't find when building single-family homes - the phases are different, the way you complete tasks is different, and your span of control can be spread over multiple miles and projects.
But our background is in single-family homes, so we wanted to study the commercial side of the industry before we proposed any solutions. When we finally released a commercial version earlier this year, it was the result of months of on-site visits and conversations with the country's top commercial and multifamily builders.
In addition, we also have created solutions for other segments of the construction industry. MH2Supply is a product that allows suppliers to communicate with builders and contractors. The result: within weeks of the launch, dealers and suppliers with combined sales of over $4 billion signed on for this system.
And we have also created a financial product, MH2Finance, that allows builders and finance companies to handle all aspects of their relationship.
In all, we created four individual technology platforms (scheduling, inspection, procurement, and exchange) that are integrated to build total solutions for the homebuilding industry:
A report on the industry by Goldman Sachs pointed out the advantage of this strategy: "It is a specialized, focused product that lures in users (contractors) with an easy-to-use interface and wireless PDA...(the company) went out to hear what builders wanted and built a system that reflects that needŠ(it is) a perfect example of a micro solution that has differentiated itself sufficiently to stand up to the pressures of a competitive environmentŠ what differentiates MH2's system from its competitors is its functionality. It is essentially the front-end for back-end platforms that already exist."
What's next? Our MH2 products have tremendous potential outside the home building industry. There are dozens of other industries out there that have technologies that were forced on them by "first-to-market" thinking. These industries are waiting for someone to develop a wireless application based on a true understanding of their needs. MH2 is already getting involved in those businesses the same way we took on the construction industry. But that's where our story is to be continued for another time.
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