For the expansion-hungry builders of recent years, first came the acquisitions, now comes the push to integrate into cohesive corporate wholes. Acquisitions can happen in months. Integration can take years—or never happen at all.
Two years ago Standard Pacific Homes decided it wanted to better integrate purchasing among its divisions to take advantage of the buying power large national builders have, while still giving divisions the power to customize purchases for their unique markets.
And the 1Standard Initiative—with the motto “one growing company working together in a common way”—was born.
“We wanted to buy better, utilizing our size, which is pretty basic, but we haven't focused on it until now,” says Scott Hearty, the company's vice president of regional purchasing. “We have 26 divisions, and they had been buying independently. Purchasing managers rarely spoke and each division had the autonomy to operate independently. We are now communicating more: Divisions are buying together, enhancing their purchasing skills and employing better tools and technology to help work more efficiently.”
The 1Standard Initiative has three goals:
Standard Pacific spent last year working on the first goal. It started by generating a list of all the suppliers all the divisions were using for HVAC, plumbing, appliances, paint, roof tile, fireplaces, insulation, lighting fixtures, windows, engineered lumber, as well as other products. Then it asked those suppliers to make proposals for national deals, meeting with them in person to negotiate price locks and reductions, improved incentives, and price protection. Next, there were meetings with local divisions, educating them about the various chosen suppliers. “We helped guide them into a more consolidated supply chain,” Hearty says.
Divisions are still allowed to choose among suppliers. “This is not a one-size-fits-all, for every division,” says Luis Solis, president and managing partner of Symbius Corp., which Standard Pacific has worked with for two years to help it with its integration process. “1Standard is looking to source and buy nationally yet have total local flexibility. That's a real trick.”
This year, the company is continuing the supplier review process with providers of finish products, including cabinets, countertops, and flooring, where there is enough volume to create regional or multi-regional partnerships.