Analysis



Henry Ford was a genius and if not father of the automobile per se, he was arguably father of the automotive industry. As usually accompanies genius, Ford was a little wacky in some regards and some of his beliefs about ethnic groups and how to control the behavior of workers not just on, but off the job, certainly give one pause.

In the past month I have had the opportunity to present to and spend time with two different groups of 25 successful, independent lumber & material dealers. These suppliers have weathered the storm and although bruised and battered are still alive. In each one of their markets, significant competitors have been fed through the proverbial chipper and are no more. These survivors are smart, savvy business people. I was impressed by their dedication and knowledge, both of their operations and about how builders work.

Both my grandfathers were self-made men who did well during the Great Depression and retired quite comfortably, if not wealthy by today’s standards. Each began with an 8th grade education and nothing backing them up but grit and determination, and each feeling graced by having survived serious crashes on Indian motorcycles. My mother’s dad started as a packing boy at General Electric in Youngstown, Ohio at age 15 and retired at age 65 as plant general superintendent. Fifty years of service with one company. Just imagine. He had a lot of plaques on the wall thanking “E.

You know that phenomenon where you hear a reasonable sounding, logical guy armed with facts that presents an convincing analysis of a problem and his solution and you think, “You know, he’s right” … and then you hear another logical guy armed with facts that presents a totally contrary analysis of the identical problem and a completely different solution and you think, “Whoa, wait a minute … HE is right … I think … maybe.” So now you don’t know who to believe and then it occurs to you that had you heard just ONE of these two guys, you’d be in his camp, probably quoting him to your friends,

Lean savings that go direct to the trades don’t reduce the builder’s costs, right?

If this is your belief, there is no greater obstacle to becoming truly Lean. I once heard a purchasing manager say in regard to the many extra trips the lumber company was making on the builder’s behalf, “So what? Those are his costs and they don’t count for us.” If you are hoping to crack the code on Lean, you have to acknowledge that a dollar is a dollar is a dollar, and no matter where it falls, it is important and it counts.

Probably the simultaneously most understandable yet least valid excuse for not launching a Lean implementation is that your staff is overloaded and has no time. I hear it constantly so let's just say it, "No one has enough time or people today!" That's the nature of a housing recession. It’s a given.

As a dedicated practitioner of Lean process and methods, one of the more aggravating things I sometimes hear is a builder bragging about how they are obviously “Lean” because they have gone through three, five, or seven rounds of rebids. Everyone had to do rebids during the past five years of the housing recession. After all, customers have in effect rebid the builders continually. Because foreclosures and short-sales still make up a significant part of the market, that means that the rebidding from the consumer end continues.

Todd Hallett and I are working with a fantastic smaller builder in California this week. They really “get it” and are very open to input from all of their suppliers and trades. They build very good looking homes at affordable prices and are highly sensitive to anything that would “dumb down the house” or hurt the visual appeal in any way.

I am finishing up my September column for Professional Builder based on a list of the 10 biggest myths of Lean Building, and I just wrote about one of the most aggravating — the idea that Lean process savings don’t count like saving in sticks and bricks.

As I write this week’s blog on a plane from Detroit to Vegas, I happened upon an article in the Delta in-flight magazine about healthy eating and guess what? All the things we know about eating eggs and egg yolks, common knowledge learned during the 80’s and 90’s that persists to this day – are flat out wrong. Eggs do NOT raise your cholesterol. They are, in fact, a virtually perfect food, full of protein and raising HDL (good cholesterol) reducing LDL (bad cholesterol) and helping keep a steady blood glucose level.

If you knew that were losing at least $5K per unit due to one single item of waste in your houses, would you do anything about it? How about $10K? The money is there, inarguable and undeniable, and we have the proof, yet a tiny percentage of builders understand it, let alone try to correct it. Even worse than that, most are afraid to confront it.

A discussion erupted this month on the LeanBuilding Group on Linked In about how do you define value to the customer? One of our members was assailing builders who go cheap, installing ubiquitous “builder grade” products. I replied that there are fine lines sometimes. One person's better value can be another's substandard. Not so long ago, vinyl siding was considered almost universally a cheap product. That is rarely the case now though.

Twenty years ago, there was a project in Denver where the foundations began moving, to the point that several new homes had to be taken completely down. In the milder cases, the builder had to sink caissons next to the foundation as deep as 40 feet to stabilize them. The problem was expansive soils.

It’s hard to say who has taken the “a la carte” mentality to the most absurd level, the airlines or the rental car companies. Pay for food, pay for sodas, pay for bags, and one of the discount airlines is now charging for both checked bags and overhead storage.  This is beyond the pale. If you show up at the gate with your briefcase or backpack and a roll-a-board, you are paying $45 to take it on with you, but “only” $40 if you check it. Add that $80 - $90 round trip to the cheaper fare and the deal becomes no deal.

While making sales presentations to three of our four most recent prospective clients, we were hired on the spot – three times!  On the first two occasions, we did not have our start-up paperwork and consulting agreements on hand and ready to go.  We had become conditioned over the past three years to home builders requesting a proposal, mulling it over ad nausea, requesting more information, etc.  Even proven, time-tested, high return investments were being delayed for ‘safety sake.’  Many older-school builders were totally focused on reactive, ‘

“I hear and I forget. I see and I remember. I do and I understand.” — Confucius

I just finished a day in Australia, working with suppliers and trades in one-hour Lean meetings. Guess what? If not for the accent, local terminology, and slang, you’d never know the Aussies from the 60 U.S. and Canadian homebuilders and their more than 1,500 suppliers and trades my team has worked with over the past four years. Their issues are the same: schedules, coordinating deliveries, sequencing trades, communication, PO processing, plans, specifications, etc. And virtually everything, just like back home, is eminently fixable given some good process and the will to change.

For more than 20 years, I have traveled the U.S. and Canada almost weekly. One-hundred nights or more in hotel rooms is not so much fun, but meeting the people and learning about the myriad of methods used to both build homes and manage companies is a continual challenge that more than compensates. Helping these same people become more profitable has paid the bills and put four kids through college, and I’ve made more friends in more places than anyone I know. (This became more important than I ever could have imagined when I need a new kidney awhile back.

Want an excellent book to read? Try Dov Seidman’s “How: Why How We Do Anything Means Everything... in Business (and in Life).”

This book wonderfully describes how products and services can easily be copied by competitors. The only “thing” that the competition cannot copy is human behavior — how you do what you do. As such, Seidman theorizes that the only way to consistently outperform the competition is to out-behave the competition. 

Hoping for something provocative to read on a long trip, I picked up a book of short essays by Kurt Vonnegut. I have always felt an unwarranted kinship to him simply because I recall going to Vonnegut Hardware in Indianapolis as a kid with my dad, where Kurt worked summers growing up.

In his controversial novels of the ’70s and ’80s, Vonnegut had a talent for penetrating to the heart of an issue in irreverent ways — so poignant that you feel like laughing and crying at the same time. He is the closest thing to Mark Twain since, well, Mark Twain.

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