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.
Like many building products suppliers, Moen is caught in the big squeeze between escalating costs for raw materials and pressure from its market-challenged customers to take smaller margins.
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 need to work together to make survival more likely. Such was the case with Moen and Beazer Homes USA. And Brian Grenfell, Moen's vice president of strategic accounts, 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 read 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," added Grenfell. "We were kind of a repeat winner. We've been Beazer's exclusive supplier for faucets for a while now, at least 10 years."
But, like most marriages, there were rough patches--in the most recent case, market driven.
"You couldn't pick a worse time for our raw materials to be going up," said Grenfell. "We couldn't have had copper go up five years ago. It had to wait and go up right when they [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 said.
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," said 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 a house can have five or six different SKUs just by virtue of different fixtures being required in different rooms.
"Eliminating SKUs for Beazer really does nothing to improve price by volume," said 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. It's truly about the simplicity [of the] process for them. For the manufacturer, from our perspective, there's no value."
What does have value for Moen is builders who are willing to work together with materials suppliers as a team and honor those who do a good job. Most builders will say they are support team-building, but when the rubber hits the road, many peal off to take care of their own best interests and start hammering for price cuts with no consideration of the fact that suppliers have to earn a profit, too, or else they'll be out of business.
"We do a lot of business in the top 50 [builders], approaching 70% share," said Grenfell. Of those, approximately half or more honor their best suppliers with awards of some type.
"For the most part, they do believe that [working together is the best approach]," Grenfell said. "Beazer, especially, has kind of demonstrated that."