Talk with most building products manufacturers and they will tell you how busy they are, how demand is exceeding their capacity, and how long the lead times have become. They will also tell you, when asked, their revenues and profits are at record levels. What building products manufacturers will not tell you is they are missing extended delivery dates, ignoring service requests, and losing orders and customers. Building products manufacturers are failing.
We are experiencing a housing boom – both in new construction and remodeling. Demand is outpacing supply. Prices are up. We have been here before, but what is unique this time around are the ever-changing reasons for building products manufacturers not to fulfill their promises.
First, we were being told the reason for the extended lead times and missed delivery dates was because of COVID preventing the labor force from returning to work. This seemed reasonable so extending the lead times by two to four times the standard delivery times was tolerated. Besides, we were told to expect these exceptional lead times to be temporary once there was an approved vaccine.
Next, it was material shortages due to trade tariffs and trucking due to the limited number of drivers. A two-week cold snap in Texas was blamed for the several different types of materials shortages. The number of reasons building products manufacturers fail to supply their builders as promised continues to grow. What the building products manufacturers failed to recognize is the implications to the builders.
It Gets Worse
Builders understand labor issues. They have been working with them for years. Builders establish ways and means to overcome them as long as their suppliers are true to their word and delivery quality products on time and complete. It is when building products manufacturers fail to hold up their end of the bargain that loyalty, relationships, and brands are compromised, and builders have to look elsewhere to protect their business and fulfill their promises.
Talk to Me
“I would have never known our order was delayed if I had not called you,” is a common refrain from builders today as building products manufacturers fail to communicate with their customers.
A builder works diligently to carefully orchestrate a schedule of team members and subcontractors with the materials being delivered to create an intricate flow that assures a safe, effective, and efficient project from breaking ground to handing the keys to the new homeowner. This planned flow is even more important when remodeling a home with the homeowners on-site. When lead times are extended, the builder can adjust his/her workflow to accommodate these planned inconveniences. When products are not delivered as promised, this intricate schedule is severely disrupted.
Consider the high demand for the subcontractors. Once the scheduled project is delayed, they move on to the next project. The builder must then reschedule all the work to accommodate the delay of the single product. This will potentially affect all subcontractors throughout the project. During a typical season, builders are daft at making these running changes. During a BOOM, building products manufacturers not communicating regularly with their builder customers is a potential project killer and certainly a relationship changer.
Builders are increasingly switching building products manufacturers suppliers. New suppliers that have been asking for a chance to bid on projects with builders are getting calls and projects that they would not have received before. Builders are working the internet hard for new building products manufacturers and ordering products they have never used before because they are available, and their project plan is being supported with proper communications.
We wish we could say poor communications is limited to product delivery. Unfortunately, it includes customer service. Builders are reporting their local manufacturer reps are not being responsive to assist with new orders or for troubleshooting. Job site visits are non-existent. Even the socially distanced ones. Many builders are reaching out to the corporate offices for answers which can be equally as disappointing in both results and supporting a relationship with the company through their reps. Once again, here is the opportunity and often the need to switch suppliers.
A Call to Arms
There are several big challenges the construction industry is facing as outlined here. Better communication is possibly the easiest one to address. Builders can manage their suppliers, labor, pricing, and projects when they have current information. The answer for building products manufacturers is providing order tracking and customer service in real time online. The technology is available – see Amazon or Esty. While at it, they should add online ordering and order history to provide their customers with the modern experience they desire and deserve. Marvin Ellison, CEO of Lowe’s Home Improvement, recently shared their commitment to making this happen this year – 2021 – in response to their customers. A few years ago, we worked with several leading distributors to learn of their efforts to add these capabilities in anticipation of this evolution.
While building products manufacturers begin adding these features to your business, please direct your sales and customer service teams to return to proactive communications with your builders to provide them the up-to-date information they need to succeed. We assure you this one short term effort will strengthen your relationship for the long term. As one building products manufacturer shared with me “It will be difficult to recognize our sales leaders this year since the demand is high and they are simply taking orders.” We suggest adding an element of customer satisfaction measurement will likely be a significant differentiator.
Failure to recognize the simple truths outlined in this post and the steps recommended to address them is knowingly putting your business at risk. Strong quarterly reports and promising year end profits will give way to lost customers and brand reputation. If you decide to move forward to make the changes your business needs to provide real time communications and customer retention efforts in place, we can help you.
None of what we are hearing, experiencing, and sharing with you here is a fad or a passing trend. The demand will continue. NAHB is forecasting the need for 4 million additional homes over the next few years. Waiting will only deepen the problems you may be experiencing. Building products manufacturers and their partners must make changes today or risk failing.
Note: No products were harmed in the writing of this post. If you want to learn which brands we used to research this post, drop us a line.
Author Shawn Draper has spent his entire career of more than thirty years working in the construction industry with national building products manufacturers serving the nation’s leading builders, remodelers, architects, and designers through housing booms and crisis.