Partnering Strategies

OVERVIEW:

TrueNorth's BST^A process -- the Builder/Supplier/Trade Alliance, utilizes a "Builder of Choice" strategy to pursue three primary goals:

• Insure a dependable supply of the best labor and materials
• Provide for continual improvement of product and processes
• Enable the management and control of costs

BST^A is based on the understanding that to achieve long-term business success, we must become the "Builder of Choice" for the very best suppliers and contractors in each of our markets. In short, the builder has to be the company which suppliers and contractors - and the employees of those firms -- want most to work with. Further, BST^A recognizes that this level of business partnership is only achieved by building a relationship based on mutual trust, whereby all parties see their own prosperity as dependent upon the success of all others in the partnership. Only through relationships at this level, do builders begin to tap the brainpower of the 95% of the people who do the work of the firm - yet are not employed directly by the builder.

Most firms in the building industry choose to ignore this issue, moving blindly ahead. As proof, out of 200 seminars offered at a recent NAHB convention, not one dealt directly with either the vanishing labor pool or with supply chain management. Not surprising, of the eight companies giving acceptance speeches for the various category awards for "America's Best Builder," only one acknowledged the dedication and support of our supplier & contractors, without whom we could not do business. The others simply take it for granted that their suppliers and trades will always be there. This "commoditization" of labor and supply, whereby trades are viewed no different than a generic stack of 3/4 CDX plywood, is a serious strategic error, but with an important message for astute builders. In fact, resolving to do things differently can provide a builder with a distinct competitive advantage.

Consider some key statistics. From 1990 to 2000, the number of 18-39 year olds in this country decreased by 12 million. From 2,000 to 2010, that number will decrease by an additional 3 million. Look at your building sites. Who builds the homes? 90% of the workers are 18-39 year olds. Add to that the fact that vocational training is falling out of favor as a legitimate career choice in this country, and you have a problem of monumental proportions. What's the only solution? With labor supply shrinking in both quantity and quality, we must engage in a proactive, rather than reactive strategy of supplier / contractor development. If we achieve this, as the labor market shrinks, we can still attract more than our fair share of the pool.

There are many components to this strategy and while implementation requires a focus on details, there are a few simple points upon which it is built. First and foremost is the establishment of a culture of trust, dignity, respect and clear, consistent communication. We hear it time and time again. In all our dealings with suppliers & contractors, it is required that we be honest and forthright. This is not an opinion or an option - a fact that continually escapes many builders. Integrity in all business dealings has become table stakes for beginning to build a successful partnership.

Such a culture necessarily requires strong leadership from senior management flowing down through a well-trained, professional field operations corps. There are many essential background elements required as well, including strong support staff in areas such as estimating, purchasing, accounts payable, effective information systems and efficient product design & development. When all of these elements come together, we begin to build a process that can support the type of working relationships required in the BST^A.

Given the enabling culture as described above, the more practical day-to-day needs of the Suppliers & Contractors can be summed up in four simple statements gathered from nearly 50 BST^A workshops across the country. What every supplier & contractor wants and needs are:

1. Accurate, up-to-date plans and specs
2. Reliable, predictable schedules
3. A more even, dependable flow of production.
4. To always be treated with dignity & respect

If there is ever any question of what an operation needs to do to fix their production problems, attract the best suppliers & contractors and retain them, the solution is both as simple - and as difficult - as outlined above. Build the culture, provide the systems and meet the four requirements. Ten years ago, this was considered a fantasy. Now, we have seen so many success stories in this industry, that the process and results are inarguable.

The origins of the BST^A process began in 1990 with a dedicated team from one builder deciding to focus on the increasing problem of attracting top trades in a shrinking labor pool. This work evolved into three specific BST^A workshops, all based on the same model. There is a one-day workshop for owners & principals of suppliers & trades, introducing them to the partnering concept and gathering feedback for use with the builder's management team. There is a two-day workshop for the "extended" builder management team, whereby the basis for BST^A is created at the local operating level. Finally, a one-half day overview version workshop is available for basic introduction to the process for all other employees of builders, suppliers & trades. It is important to note that our considerable implementation experience demonstrates that this process fails when it is seen as a "construction only" strategy and workshop participations is limited to construction personnel. For BST^A to flourish, all departments and all levels must participate and gain buy-in the process as an operational strategy for doing business.

We have learned, however, that only a small handful of organizations are prepared to jump directly into BST^A. If the builder's personnel are not properly prepared, the material in BST^A training will sound hollow at best, and at worst, hypocritical. It sets up for the suppliers and trades, as well as the builder's employees, a vision of a new world of cooperation, of people working together collaboratively to improve their companies. If the builder is not truly prepared to move forward during the first few months following the workshops, participants end up disappointed and disillusioned from unmet expectations. Thus as preparation for BST^A, we recommend our Quality Essentials I, II & III training for all employees (described in attachments.)

Another important element of the process, whether or not the builder is ready for the BST^A workshops, is obtaining reliable feedback from suppliers and trades. To facilitate this, TrueNorth has developed the TradePOINT feedback system. Created jointly with NRS Corporation, this survey has been implemented all across the country and tested extensively. It provides direct feedback fro supplier/trade to the builder on processes and practices, helping the builder to get upstream to the source of quality, productivity and profit. The builder can compare scores in each of 6 major feedback categories to both national and local norms, to determine priorities for action planning and intervention. (See separate write-up on the TradePOINT feedback system attached for more detailed information.)

BST^A TRAINING SEQUENCE: