Moen has a room full of plaques and trophies honoring its service and products, but lately the supplier of faucets and fixtures has had to work harder to earn them.
Sometimes that pressure starts wars–or at least builds bad blood–between suppliers and their customers. Other times, in best-case scenarios, both buyers and sellers take the high road after realizing they must work together to make survival more likely. Such was the case with Moen and Beazer Homes USA. And Moen vice president of strategic accounts Brian Grenfell has a new plaque for the company's case to commemorate building a successful partnership between the two.
"Beazer Homes 2007 National Account Supplier of the Year," Grenfell reads from the plaque. "Hereby recognized for their outstanding performance in the areas of quality, service, price, selection, and delivery.
"This is our second year in a row; we were kind of a repeat winner," Grenfell says. "We have been Beazer's exclusive supplier for faucets for a while now–at least 10 years."
But like most marriages, there are potential rough patches, which–in the most recent case–are market driven.
"You couldn't pick a worse time for our raw materials to be going up," explains Grenfell. "We couldn't have had copper go up five years ago. It had to wait and go up right when [the builders] are struggling."
Add to that challenge the fact that long-term incentives are often tied to volume. "It's been a challenge for everybody," Grenfell notes.
Yet Moen was able to successfully work with Beazer in one of its big supply chain initiatives over the past two years: eliminating SKUs.
"It was a pretty extensive process," says Grenfell. "They basically took our whole book, which could be 4,000 SKUs, down to 160 or 170." While that number may still seem high, remember that a house can have five or six different SKUs just by virtue of different fixtures being required in different rooms.
"They [Moen] were very helpful," says Tony Callahan, Beazer's senior vice president of national purchasing, planning, and design. Moen helped Beazer pick product for a logical upgrade path and then attended a national meeting where the SKU management team presented its work to representatives from each operating division at the National Purchasing & Design Studio meeting, showing Beazer-specific faucets and explaining why they were chosen. "They helped us determine the upgrade options that people are looking for ... and eliminate the less popular ones," Callahan says.
SKU reduction for Beazer meant more than simplifying, according to Callahan. By using the exact same faucets in homes all across the country, it helps the company compare installed prices nationwide more accurately.
"You have that same house being built in multiple markets with the same faucets," says Callahan. "You know everything is the same; why is one plumber's costs so different from the other? ... It's a tool for negotiation."
Helping Beazer narrow the number of SKUs it offers wasn't something that helped Moen or helped reduce costs, says Grenfell. "For us, because of our leading share position, whether Beazer buys 150 or 15 or 500 SKUs, it's not going to move the needle," he explains. "It's truly about the simplicity [of the] process for them. For the manufacturer, from our perspective, there's no value."
Except insofar as it helped create a satisfied customer who might not even consider straying to another brand. And it's nice to work for builders who are willing to work with materials suppliers as a team and honor those who do a good job. Most builders will say they support team building, but when the rubber hits the road, many peel off to take care of their own best interests and start hammering for price cuts with no consideration of the fact that suppliers also have to earn a profit or they will go out of business.
"We do a lot of business in the top 50 [builders] approaching 70 percent share," says Grenfell. Probably more than half of those builders honor their best suppliers with awards of some type. "For the most part, they do believe that [working together is the best approach]," Grenfell adds. "Beazer, especially, has kind of demonstrated that."