A system language that allows housebuilders to send and receive accurate orders and invoices would result in lower costs for all. John Miller explains how it will work
Each year, residential developers build thousands of houses and, in so doing, process many more invoices and supply orders. These orders are created using internal computer systems which either print them for posting or, usually, fax them directly to suppliers. The suppliers then have to manually re-key the data from the faxed order, which can result in lost faxes, missing or miskeyed data.
In a similar way, suppliers generate invoices directly from their computer system and post them to housebuilders. These have to be opened, sorted into batches, entered onto the ledgers and scanned into the document management system, so they can be viewed and approved online. So, both the housebuilder and its suppliers are handling paper and re-keying data that is already on the other party’s computer systems. This is costly and time consuming.
The traditional solution to this problem is to use electronic data interchange. This has worked well in the retail and automotive manufacturing sectors. But it is expensive to use and relies on everything having a unique part number agreed by all parties.
The need for flexibility
In housebuilding, many of the items ordered are specified not by issuing a detailed bill of quantities but by obtaining a quotation against a working drawing. Orders may need to be changed during the building process to accommodate the purchaser’s preferences.
Although some suppliers are large companies with sophisticated internal systems, others are smaller specialist companies with unsophisticated systems.
There have already been some electronic trading initiatives between housebuilders and their suppliers. But each of these pairings uses its own unique, non-transferable standards. If this trend continues, systems would have to produce orders in different formats to each supplier and handle a multitude of different invoice formats.
Expensive trading hubs
A number of e-commerce companies offer “trading hubs” that contain a range of facilities from conversion of document formats to reverse auctions and complete back-office systems. Their business models, of course, include substantial charges for their services, some even proposing a 2% levy on the value of a transaction itself.
What is needed, then, for housebuilders to trade electronically is a set of standards that are cost effective, universally used, supported by software suppliers and not beholden to any powerful third party.
The eBuild-XML initiative is intended to satisfy all these objectives. The XML language allows users to tailor documents by creating any number of data entry fields. It is compatible with all standard systems in use as well as with earlier revisions. Documents are transmitted using standard e-mail. Most importantly, if the receiving party does not have an automated ledger system, they can be viewed as an e-mail and printed out.
The initiative has the support of a number of leading UK housebuilders and several of their largest suppliers. It also has the backing of the largest suppliers of back-office systems to housebuilders, and is based on those produced by the Business Application Software Developers Association.
Lower labour costs; accurate, easily retrievable records; and efficient, timely delivery of materials will flow from this initiative.
