When Pulte recognised the early warning signs of supply disruption due to the emerging pandemic, a surprisingly simple approach helped the firm map its inventory
Home is where the heart is – and creating a welcoming and secure environment is at the core of PulteGroup, the third-largest homebuilder in the US. The company helps customers tailor their new home, selecting everything from the type of community they wish to live in to the size of house, the view aspects, and interior furnishings and finishings. These customised details, which range from budget to bespoke, depend on a network of global suppliers, to ensure the end results match the designed plans as well as the agreed budget.
In February 2020, Pulte national director of strategic sourcing, Brian Jamison, spied trouble when the national media reported the rapid spreading of the coronavirus. With homes on order needing hundreds of products, including luxury glass pieces from Italy, granite and quartz countertops from Spain and, of course, electronics including microwaves, for which components were almost exclusively manufactured in China, Jamison launched an urgent risk analysis.
Delays for distributors
In US homebuilding, supply chains flow from manufacturers through one to three step distributors, each of which adds a layer of inventory obscurity. “We rely on a web of distribution centres for supply. Production homebuilders typically communicate planned construction volumes to manufacturers and distribution partners who, in turn, maintain inventory levels they can quickly balance through distribution hubs around the country. As needed, distributors can easily ship product from nearby states allowing supply and demand to balance typically within a few weeks or months,” he explains.
“In February 2020, I stated there were 45-60 days of supply within the US and another 90 days already inbound on the Pacific Ocean, so this was not a ‘stop, drop and roll’ notification. Unfortunately, what was not known is that Chinese exports were already diminished and the resupply in transit at the time was closer to 30-45 days of supply.”
Choose the right mapping tools
The level of data and mapping in the homebuilding sector is relatively unsophisticated, says Jamison. After pivoting resources to supply chain mapping, he found that existing software tools were not only limited, but they required a long lead time to onboard all parties – a luxury they didn’t have. The ideal solution would be a holistic tool that could filter and aggregate data for quick, actionable communications.
As Jamison says, “Quickly adapting to challenges brought about by the pandemic meant going old school, which meant using Excel. We quickly built a framework with a high degree of filters to track everything from the manufacturer, product type, country of origin, port of entry, domestic distribution, and manufacturing by city and state.
“The tool allowed us to track the potential supply chain impact as cities or countries worldwide began to close, quarantine, or shelter in place. Many of the manufacturers we tracked by city and country of origin as their products are globally sourced. We added more detail to the manufacturing locations and distribution centres. Eventually, we also gained greater visibility into critical third-party suppliers.”
Following the initial setup response in March 2020, weekly supply chain updates were taking place and Excel became “the backbone of our risk analysis” at Pulte. Being widely available and understood, it meant instead of tech training, the team could focus on strategic tasks, such as monitoring the ports of entry. “We knew if we lost the Port of Los Angeles, California, the potential impact on residential new construction could be catastrophic. A considerable portion of the Chinese imports process through Los Angeles and supply chain distribution builds from that port of entry,” says Jamison.
Having to redirect products through another port would not only increase costs, but likely add delays through insufficient transport and distribution. Then in the third week of March, shelter in place ordinances – or lockdowns – rolled out from a few counties to almost the entire west coast of California, threatening the western ports’ ability to function. Using the spreadsheet tool, the team identified cities, states and product risk, and communicated with manufacturers. “This quick analysis allowed us to gauge the quantity of products in the supply chain and estimate the number of days before a product gap would occur and communicate within our organisation,” says Jamison.
Basic can be best
Instead of scrambling to push through an expensive tech investment, Pulte’s decision to use a known tool paid off – and still is. “Recently, we used the tool to identify US and Mexico border blockages on appliances and HVAC [heating and ventilation] systems. It quickly prepares us for meaningful, facilitative conversations with our manufacturers to provide actionable reporting through the organisation. We see the opportunity for a software solution, but for now, a low-tech tool without a learning curve is working well.”