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Supply Chain Connections

Glen Singer
This blog will discuss how builders and manufactures can derive mutual benefits from forging in-depth relationships and by developing a continued dialogue on issues and opportunities facing both. It will identify the “gaps” that exist today between the two entities and explore how to close these gaps in such a way that each will benefit. It will also expose “real life” builder and manufacturer relationship successes as well as failures.

Thursday, March 6, 2008

Wait a Minute, You Are Forgetting Someone

Mar 6 2008 7:23AM | Permalink | Email this | Comments (1) |
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I have sat in on several “How to Survive the Market” discussions and seminars and they have been extremely helpful to the builders who participated in them. One of the main messages to builders is to call together their “key” trade contractors and suppliers and explain the state of each builder’s business condition. Shoot straight with them; let them know the condition of your sales, backlog, inventory and cost position. Ask your trade contractors and suppliers look for ways to reduce their costs and to pass on some of the savings to you, the builder.

This is all excellent advice for the builder as it has proven to work for both the builder and the trade contractors and local suppliers, and it should be followed. However, the process I just described leaves out one important player in the supply chain, the building material manufacturer. The manufacturer can play an important role in this process too. Perhaps the manufacturer can provide price protection for a longer period of time, enhance payment terms, provide incentives on upgraded products, provide “just-in-time” delivery of their products, and conduct sales training for the builder’s sales team and much more.

Keep in mind that the entire supply chain is a stake holder in the builder’s business and each member has a responsibility and a right to participate in the builder’s survival strategy.

Reader Comments


at 3/9/2008 2:24:45 PM, thecontractorsside said:
The economic forecasts sound more grim than they actually are. Dire predictions of downturn in the construction trades are just that. Dire predictions. The construction trade is not big enough to service the market, but competition is stiff. The current supply of adequate housing is now twenty years behind the demand in California. In Arizona, Colorado, Nevada, and Utah it appears that the slowdown has taken hold, but in this case what you see is not based on fact. An expanding population, from birthrate and influx, puts the lie to the emotional noise coming from the news services. Dropping prices mean just that...dropping prices. Some would call it a market correction, but this name has nothing to do with the truth. In fact, the slowdown is merely a pause while big money grabs whatever it can from frightened or over-indebted people. How does this affect the building business? The jobs don't move at the same velocity as they did just six months past, but they still move. The competition is a bit tougher, but the market winnows out the ones who can't outlast the emotional decisions of the buyers. The construction situation should begin to move again around August or September of 2008, far enough ahead of the elections to relax the tension and unease of the market. If a business friendly party takes the election in November, the upturn will continue. Add to this the loosening money and lower interest rates, and construction will take off, and the contruction companies and individuals that weathered the hiccup in the business climate will be ready to take advantage of a growing market. A modest inspection of history says that prior to an election business is usually good because those in office like to stay in office, so it benefits them to ensure a rosy economy in the private sector. Today, the members of the construction industry, from big builders down to the individual tradesmen, has a golden opportunity to address the way commerce is handled by improving the accountability of all concerned. Contractors are already regulated to a great degree by the BBB and by the licensing boards, but what about the clients? How are they regulated? In fact they are not...except by word of mouth, and in a large city that's like yelling from a fast moving train. How about suppliers who short order, back order, or just plain show up late? What about architects or engineers or inspectors who make life miserable due to lack of experience or just plain meaness? Ever try to complain about them. Might as well kiss the profit good bye because they can ruin you. As long as you have a few free moments in the business lull, why not take some action to help clean up the business? Go to thecontractorsside.com and get involved with letting your complaints be known. State your case, and let the rest of the business know about those who stand in the way of your profit or even in the way of your pay. You are not poisoning the well. If the person your complaining about did you wrong, they already poisoned that well, and if you don't speak up, you're letting them get away with it...and whoever comes behind you drinks the same poison. If they didn't complain, they're letting you drink from that well. Speak up, sign up, give someone a heads-up, and maybe they're giving you a heads-up on your next job. Go to thecontractorsside.com and help the business, others, and yourself at the same time.

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