Vendor Summits Build Winning Team, Increase Profits
One of the top business management challenges home builders of all sizes frequently cite is the difficulty in finding and retaining good trade contractors. After all, the quality of the next house is only as good as those working on it or providing materials.
In a booming market coupled with low unemployment, such as the Washington/Baltimore region where we at Caruso Homes are building, a competitive edge rests heavily on the ability to keep the best subcontractors.
Every house we deliver will be touched or impacted by more than 65 other companies. These businesses can contribute significantly to — or take away from — on-time delivery of quality homes, satisfied customers and profits.
Know Your Partners
A first step for builders to build a winning team is to know the goals and expectations of their trade partners. Throughout Caruso’s 20-year history, and in particular, during our rapid growth periods, some of our trade contractors have chosen to grow with us ― and have prospered as a result.
Some, however, chose to remain small and, therefore, could not meet our increased needs. This has necessitated that we find qualified vendors to replace them ― an extremely time-consuming process for builders that is best accomplished on the very front end of projected growth.
Conversely, to meet our need for quality construction, timely delivery and delighted customers, these subcontractors — who have a significant capital outlay — need to know our expectations as a customer and how they and their paper trails can ensure prompt payment.
To be most effective, the trade contractors need to recognize they are our partners in the business. As open communication is critical to any partnership, the key to keeping loyal trade partners is to keep them informed about:
- Company methods and standards
- Scopes of work
- Safety requirements
- Projected workloads and schedules
Invest in Communication
To accomplish this, regular and clear communication with trade partners is critical. Communication with workers in any business is a challenge, but it is particularly difficult in home construction, where the field work may be far from the office and we may be just one among many sources of work for our trade partners.
Most of these partners welcome periodic face time at meetings where they are provided useful information and the opportunity to ask questions and network.
At Caruso Homes, we meet at least semiannually at a company-sponsored “Vendor Summit.”
These summits, which we host at a hotel conference center, cost $3,000-$5,000 each, including materials. We consider them an essential business investment. With smaller groups, the investment might be less.
Vendor Summits Improve Efficiency
The summit is an efficient way for team members to trade information, particularly when a builder works in more than one region and with different groups of vendors.
Attendance may be required or optional, depending upon the issues to be addressed. But most of our vendors have told us that the summits are time well spent and that they rely on these routine updates ― especially information on anticipated construction starts and volume ― so they can be staffed properly to take maximum advantage of work loads.
One important function that the summits fulfill is the opportunity for Caruso staff and the company’s trade partners to put names with faces, fostering positive relationships. Our entire purchasing department attends, so trade partners learn who to contact if they have questions or problems. In addition, Caruso’s purchasing director and vice president for production, CEO and many others address the group.
Prior to our summits, our vendors receive a written invitation and a copy of the proposed agenda. Handouts for the summits cover everything from bid procedures to projections for work volume and timing. Vendors also receive updates on any technology implementation, invoicing and payment methods, safety issues, and changes in policies or procedures. Master contracts with detailed scopes of work can be included as well if they are renewing or changing.
Recent agenda items included:
- Advice on keeping properties free of theft and vandalism
- Variance purchase order policy and procedure
- Punch-out labor policy and procedures
The summit offers time on the agenda for Q&As and for attendees to network after the official agenda concludes.
At our most recent vendor summit, I asked all the Caruso team members to stand. The Caruso employees stood up, but the rest of the room ― all the trade contractors ― remained sitting. I then reminded our partners that even though they don’t work in our administrative offices, they are critical to our success.
As a home builder, you, too, are building a team and should recruit and coach top players and follow winning strategies with the same spirit as any sports coach.
How to Schedule a Vendor Summit
Thinking of scheduling your own vendor summit? Here’s how:
- Vendor summits can be part of a routine or driven by a need to know. For example, if you have new technology, a new system for processing payments or changes in the safety program, or if you anticipate a sudden change in work loads, you probably need to hold a summit.
- Invite attendees a month in advance. Fax or e-mail a reminder a week before. Follow up with a phone call a few days in advance.
- Provide a proposed agenda to attendees in advance.
- Include both trades and suppliers in work-alike groups. Groups of 75-100 work well.
- Morning scheduling is preferable, like 8:00 a.m., instead of the middle of a work day. Serve a light breakfast.
- Fridays, when many businesses are tying up their week’s activities and paper work, seem to work well.
- Avoid the fourth quarter, when builders and trades are trying to finish as many homes as possible before the year’s end.
- Always approach every issue or discussion positively. While you should never single out an individual or group for negative criticism, freely recognize the positive contributions of people and companies during your summits.
David Herzog is president of Caruso Homes, Inc., a Washington, D.C. metropolitan area-based home builder that closed 248 single-family homes in 2005. Caruso Homes is a member of the NAHB Builder 20 Club program, a 2006 America’s Best Builder award winner and has been recognized with numerous other honors. For more information, visit their Web site at www.carusohomes.com.
NAHB Has More Than 250 Resources to Help You Run Your Business More Profitably
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NAHB’s Technology Solutions Directory — an easy-to-use directory that enables builders, remodelers, contractors and other industry professionals to find information on software and IT solutions and services for their businesses — is now online. The directory is sponsored by the Business Management & Information Technology Committee.
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