The International Builders' Show is a mecca for the building industry, but it's also a gold mine for a products editor. Instead of walking the show floor by myself, this year in Las Vegas I am set to shadow a builder to find out what builders think about when they research products and how they decide what products to purchase for their homes.
My builder subject is Mark O. Lords of Essex Junction, Vt.–based The Snyder Cos., an outfit that in 1996 was named America's Best Builder by the NAHB and Builder. As executive vice president, Lords is considered one of the smartest men in the business, so who better to follow at the show than him?
Floor Show Lords' main purpose at the show was finding new back-office software, but he was also on the lookout for new products that are hot in his market such as stone and ceramic tile, home entertainment systems, and convection microwave ovens. He spends his time looking at some of the latest from GE and products from Viking Range, an available upgrade in his homes.
Given its breadth of products, the show can be daunting for a purchasing manager looking for new stuff. But Lords is no mere purchasing manager and The Snyder Cos. does not follow the typical builder purchasing model where one individual approves all product decisions. It did at one time—until Lords realized that there was a problem.
“One day, I walked into the purchasing manager's office at Christmas time and piled high in the corner were bottles of wine, baskets, gifts, jackets, and anything you could think of,” he says, sitting in a lounge at the Las Vegas Convention Center. “I looked at that and said to myself, ‘This is not independent. One guy is controlling the pricing of the entire company and all a supplier, manufacturer, contractor, or trade partner has to do is befriend this guy, and they're going to get the work.'”
A New Plan The ability to purchase products and services efficiently and economically is one of the most important elements to a company's financial health. The system you use to make those purchasing decisions, then, is key. From Lords' perspective, his company's system was flawed. In the absence of competitive pricing the company ended up paying too much for products and services. In addition, decisions were not well researched.
Dumping the old system, The Snyder Cos., which built 66 condo units and 59 primarily move-up, single-family homes in 2003, created a committee whose primary purpose is to approve all purchasing decisions related to materials, products, and subcontractors. Made up of members from all departments, the committee is headed by a chairman, whose only job is to gather information for a panel to consider.
The committee operates with a variety of procedures for different types of issues, but it always makes decisions with input from all members. For example, the sales department believes that a product is terrible and needs to be changed, while customer service vouches for the supplier's professionalism and praises its response when there is a problem. The committee will direct both departments to investigate products and bring back recommendations. The two departments will bring in products, perhaps invite suppliers to come in and make a presentation. Committee members then deliberate.
Purchasing Power Lords says the 15-year-old program is beneficial to the company as well as its trade partners involved. “From the point of view of the suppliers and the trade partners, they get consistency,” he says. “They know the process has high integrity and that they have to compete based on service and pricing. They also know that they are not going to lose an account because the competition's brother married the purchasing manager or something dumb like that.”
From the company's perspective, it gets quality. “It's more time in a meeting, but it means better products and better services,” says Lords. The company also saves money, such as when it recently decided to streamline its carpet installation and purchasing.
“Previously we bought carpet from a supplier and hired a trade to install it,” Lords says. “The new way lowered the price by giving all the work to one company, eliminated one purchase order, eliminated one scheduling function, and increased reliability of service by being a larger customer to the single-source trade partner.” Lords continues, “We always thought we were smarter by buying separately and hiring the install. Turns out we were wrong—combining the two functions saves time, money, and headaches.”
Fair And Balanced But the committee does not make decisions based solely on price; it tries to choose the best contractors and products, not the least expensive. “You want service as well as price,” Lords says. “We clearly pay higher prices in some instances because we know we are going to get better service and we could save money somewhere else.”
For instance, the company has carpenters who trim out the whole house, but it thinks it can split the function into two parts—one crew to do the kitchen and railings and another to do the rest of the house. “We can get it done in two less days because they will work at the same time and also provide better quality by paying a little bit more to hire a crackerjack carpenter to do kitchens and railings,” Lords explains. “We haven't pulled the trigger on it yet, but we are looking at it.”
The purchasing committee operates under a democratic system that allows any member to make a product recommendation. Lords was at the show looking for a few possibilities. He is not making product recommendations on blind faith, though; instead, he prefers to let his buyers dictate what products are hot. “I'm looking for stuff that consumers are beginning to talk about when they come into our models,” he says, standing at the GE booth. “If I can start offering these products as a standard or an upgrade, then I am ahead of my competitor.” The purchasing committee his company has set up has gone a long way toward that goal.
To learn more about The Snyder Cos., go to www.builderonline.com and click on “The Magazines” tab and then “Builder Article Links.”
THE BOTTOM LINE Company: The Snyder Cos., Essex Junction, Vt.
Goal: Form a democratic committee to make objective product, labor, and materials purchasing decisions.
Product Pointers Mark O. Lords offers these tips for effective purchasing.
Learn more about markets featured in this article: Burlington, VT.