When Ron Alberts started as the director of purchasing at Village Homes, a 566-unit home builder based in Englewood, Colo., nearly three years ago, he saw a lot of open holes—not the least of which were incomplete window installations by his supplier, Home Lumber, a local, six-location subsidiary of Redmond, Wash.–based Lanoga Corp.
At the time, and for reasons Alberts could only speculate, Village Homes' superintendents reported that only two of every 10 homes had all of their windows in place following the installer's first visit to the job. Today, complete first-time installations stand at 80 percent and climbing, and Alberts knows precisely why: “If you look at an issue or a problem without assigning blame, but rather to root out the problem together, you get better,” he says.
While uncovering the reasons why so many homes had open holes was crucial to solving that particular problem, the investigative process (and resulting success) was symptomatic of a new business relationship forged between Home Lumber and Village Homes during that time. Having developed a mutual complacency and almost reluctant reliance during an 18-year stint in their respective roles, the two companies are now true partners, with success stories all over the organizational chart and new initiatives that promise to reap even more value. “Once partnerships start working, they feed on themselves,” says Alberts.
Increasingly, dealers are recognizing the benefits of partnering with—rather than simply supplying products to—their pro customers. Efforts, including extensive and fully staffed showrooms and design centers, online and in-store contractor referral services and company profiles for homeowners' reference, co-op advertising and model home programs of brand-name products, and installed sales by the dealer, have resulted in closer ties (though some say nooses) with pros.
As noble and profitable as these programs can be for builder and dealer alike, few so-called “partnering opportunities,” in fact, create a truly interactive relationship in which the dealer and builder are in lockstep to solve a problem, serve a market niche, or promote themselves to their mutual benefit. “Developing the kind of partnership we [now] have with Village Homes transcends the typical supplier-builder relationship beyond the executive and sales-purchasing levels,” says Jerry Ellefson, a marketing and special projects executive at Home Lumber who spearheaded the dealer's renewed effort with Village Homes.
That's certainly a lofty goal, and one that requires total commitment and mutual understanding at all levels of both companies to have a chance at success. But there are smaller examples, too, of builders and dealers coming together to address an issue or leverage their respective strengths and, in the process, forge valuable partnerships that boost both bottom lines.
Top to Bottom Line Faced with increasing competition from regional and national home builders in the Denver market, locally based Village Homes needed to take costs and time out of its production cycle, and Alberts' first stop on the ledger was Home Lumber. “They are such a big part of what we purchase that we had to find a way to take advantage of that,” he says.
Ellefson, who started at Home Lumber about the same time Alberts began at Village Homes, also saw the holes and the opportunities in their relationship. “We were both overlooking inefficiencies and lack of processes that made our jobs harder,” he says, including an incompatible purchase order exchange and lack of accountability in the field, among others. “When Ron and I looked at it, we saw a strong relationship at the executive level, but less so farther down in our organizations.”
The first order of business, then, was to match and establish connections between people throughout their respective companies, eschewing the “single point of contact” theory so many dealers and builders claim to crave. “Home Lumber does so many things for us that it's more efficient to connect one-to-one at different places [in the company],” says Alberts. Lumber takeoffs, for instance, are best managed through the builder's estimating department, while bids are shuttled through purchasing. “Third-party conversations breed confusion and inaccuracy. We wanted people to go right to the source.”
Having established the matchups within their respective organizations, Alberts and Ellefson formed joint task forces to address specific issues and problems, from data exchange to the window installations, with the key being open communication and mutual trust. “We both went into it with our eyes wide open, not defensive, and agreed to focus on solutions instead of finger-pointing,” says Alberts.