{"id":7233,"date":"2021-11-08T00:00:00","date_gmt":"2021-11-08T00:00:00","guid":{"rendered":"https:\/\/bxglobal.wpengine.com\/us\/how-pro-dealers-can-foster-a-healthy-relationship-with-their-builders-and-manufacturers\/"},"modified":"2022-07-17T21:41:44","modified_gmt":"2022-07-18T01:41:44","slug":"dealers-builders-healthy-relationship","status":"publish","type":"post","link":"https:\/\/www.buildxact.com\/us\/blog\/dealers-builders-healthy-relationship\/","title":{"rendered":"How pro dealers can foster a healthy relationship with their builders and manufacturers"},"content":{"rendered":"<p><em>3 minute read<\/em><\/p>\n<p><span class=\"NormalTextRun SCXW52436374 BCX0\">Price and inventory volatility&nbsp;<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">are&nbsp;<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">causing custom home builders and&nbsp;<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">pro<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">&nbsp;<\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2 SCXW52436374 BCX0\">dealer<\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2 SCXW52436374 BCX0\">s<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">&nbsp;headaches. There is no magic solution, but effective and constant communication between&nbsp;<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">all the parties&nbsp;<\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2 SCXW52436374 BCX0\">involved,<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">&nbsp;<\/span><span class=\"NormalTextRun SCXW52436374 BCX0\">helps.<\/span><\/p>\n<h2><b><span data-contrast=\"auto\">Market Volatility<\/span><\/b><span data-ccp-props=\"{}\">&nbsp;<\/span><\/h2>\n<p><span data-contrast=\"auto\">Price and inventory volatility is causing custom home builders and&nbsp;pro&nbsp;dealers&nbsp;headaches consistently. While there is no magic solution to the problem, effective and constant communication between all parties (builders,&nbsp;pro dealers and clients) will go a long way to a smooth home building process.&nbsp;<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<h2><b><span data-contrast=\"auto\">Builder \u2013&nbsp;Pro-dealer&nbsp;Relationship<\/span><\/b><span data-ccp-props=\"{}\">&nbsp;<\/span><\/h2>\n<p><span data-contrast=\"auto\">The relationship between&nbsp;pro dealers&nbsp;and builders needs to be mutually beneficial.&nbsp;Pro dealers need loyal customers who go to them for their building needs, just like custom home builders need a reliable and knowledgeable&nbsp;pro dealer&nbsp;who provides the required materials at reasonable prices.&nbsp;Pro dealers should be able to give suggestions if the desired materials are not available.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"auto\">When builders search for&nbsp;pro dealers, they should look for ones&nbsp;with healthy relationships with&nbsp;manufacturers.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"auto\">According to&nbsp;<\/span><a href=\"https:\/\/vertexeng.com\/insights\/covid-19-supply-chain-impacts-construction-delays\/\"><span data-contrast=\"none\">Vertex<\/span><\/a><span data-contrast=\"auto\">, an architecture, engineering and construction firm, 22% of 901 respondents said the proper party, whether it was the pro dealers or the contractor, notified them of supply-chain delays. The report also shows 16% experienced project delays or disruptions due to material, equipment and\/o<\/span><span data-contrast=\"auto\">r parts shortage.&nbsp;<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"auto\">Homeowners&nbsp;building their homes do not care why&nbsp;there is a delay in&nbsp;construction;&nbsp;they&nbsp;only&nbsp;care that there is a delay, which could sour the relationship between client&nbsp;and builder. Adding to the supply shortage headache is the housing boom. According to&nbsp;<\/span><a href=\"http:\/\/www.freddiemac.com\/\"><span data-contrast=\"none\">Freddie Mac<\/span><\/a><span data-contrast=\"auto\">, a mortgage loan company, the&nbsp;<\/span><a href=\"http:\/\/www.freddiemac.com\/research\/insight\/20210507_housing_supply.page\"><span data-contrast=\"none\">shortage of&nbsp;building materials and products<\/span><\/a><span data-contrast=\"auto\">&nbsp;in the United States&nbsp;to meet demand has ballooned to 52%. The shortage went from 2.5 million homes in 2018 to 3.8 million in 2020.&nbsp;<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><iframe title=\"Dealers and builders can now collaborate on Buildxact\" width=\"1200\" height=\"675\" src=\"https:\/\/www.youtube.com\/embed\/_eAMq6M6ZDM?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n<h2><b><span data-contrast=\"auto\">Construction demand boom<\/span><\/b><\/h2>\n<p><span data-contrast=\"auto\">It is not always rainbows&nbsp;and butterflies.&nbsp;The added demand&nbsp;causes&nbsp;issues.&nbsp;Supply shortages happen, and COVID-19 has caused supply chain issues globally, leading to shortages and high prices for materials in high demand.&nbsp;Delays are sometimes inevitable, but&nbsp;it&nbsp;does not mean that builders and their clients&nbsp;will&nbsp;be happy about it.&nbsp;Pro&nbsp;dealers&nbsp;should be proactive about setting expectations on availability and delivery dates. Conducting regular follow-ups to provide updates can go a long way in keeping clients&nbsp;content and informed.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"none\">What can<\/span><span data-contrast=\"auto\">&nbsp;pro&nbsp;dealers&nbsp;do to prepare for supply&nbsp;shortages,&nbsp;so their customer base&nbsp;is&nbsp;not significantly&nbsp;impacted by&nbsp;them?<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"auto\">Supply chain personnel and&nbsp;pro&nbsp;dealers&nbsp;can avoid many headaches and frustrations through effective communication<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<h2><b><span data-contrast=\"auto\">Finding the&nbsp;strategic&nbsp;fit<\/span><\/b><\/h2>\n<p><span data-contrast=\"auto\">It is best when&nbsp;pro dealers&nbsp;and manufacturers align in terms of their strategic fits. One that is very common in the COVID-19 era is Intercompany Scope. This philosophy centers around both parties having a strong enough relationship to care about the other\u2019s profits.&nbsp;<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"auto\">For example, low inventory drives prices up, which can cause friction in the relationship, and that relationship might even sour. Through effective communication, both parties can agree on inventory management to decide where the surplus will sit if there is one. When a team mentality is adopted,&nbsp;pro dealers and supply chains do not mind sharing information, which can help reduce inventories and total costs.&nbsp;As a result, the supply chain surplus increases. All of this together adds up to a more competitive supply chain.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"auto\">Best of all, everyone wins!&nbsp;Pro dealers&nbsp;and supply chains work together to provide the much-needed materials to builders, who then do&nbsp;not have to spend a higher amount of money because of shortages.&nbsp;Once the relationship grows, the pro-dealer can proactively go back to the builder with alternative suggestions if they know there will be shortages&nbsp;in the near future.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><span data-contrast=\"auto\">Two options builders have once the contracts are signed but before the build start, are to&nbsp;leave the client with a fixed-price contract, but an additional 3.5% would be added to the lumber price to cover any fluctuations in the market. Another option is for the builder to include an allowance for the lumber and then let the client take on the risk of the fluctuating price&nbsp;and in return for&nbsp;taking on&nbsp;the risk, the client could end up saving money if the price of lumber drops. This puts the client in charge of the decision.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:259}\">&nbsp;<\/span><\/p>\n<h2><b><span data-contrast=\"auto\">Impact of&nbsp;globalization<\/span><\/b><span data-ccp-props=\"{}\">&nbsp;<\/span><\/h2>\n<p><span data-contrast=\"auto\">One factor that is both a blessing and a curse when it comes to supply chains is globalization. It affects exchange rates, global demand and the price of crude oil. All three also affect supply chains. For these reasons, it\u2019s important for supply chains to be flexible and adapt depending on the circumstances. Being able to pivot&nbsp;producing&nbsp;what would be easier can ease constraints and maintain prices stable. While manufacturers might not make certain products, production does not stop completely, and the overall business engine continues to run.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<h2><b><span data-contrast=\"auto\">Always&nbsp;aim to&nbsp;provide options<\/span><\/b><span data-ccp-props=\"{}\">&nbsp;<\/span><\/h2>\n<p><span data-contrast=\"auto\">On the builder-client side, builders should plan and ask their customers for multiple options they prefer for their homes should the first option not be available. While it might not be ideal for the customer not to get their first choice, at least they will be getting another option of their choosing. Having multiple options in advance will help move the project forward instead of having it stall and drag out for&nbsp;an extended&nbsp;period, ultimately costing them more money in the end. It is always best to prepare for the worst and hope for the best while always being transparent with your customer about potential supply shortages due to supply chain issues.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<h2><b><span data-contrast=\"auto\">Conclusion<\/span><\/b><span data-ccp-props=\"{&quot;335559740&quot;:259}\">&nbsp;<\/span><\/h2>\n<p><span data-contrast=\"auto\">In sum, the perfect solution, a crystal ball, does not yet exist. Instead, we must rely on experience and history to help provide a path forward.&nbsp;Supply chain managers, builders, and contractors must be aware of current trends and issues to communicate with their clients and set the right expectations effectively.&nbsp;People get upset when they are surprised, and custom home builders can significantly diminish the element of surprise with effective and constant communication.<\/span><span data-ccp-props=\"{}\">&nbsp;<\/span><\/p>\n<p><a href=\"https:\/\/prodealer.buildxact.com\"><span data-contrast=\"none\">Learn more<\/span><\/a><span data-contrast=\"auto\">&nbsp;about&nbsp;how pro dealers&nbsp;can better&nbsp;collaborate with builders&nbsp;to increase sales, lower costs and build loyalty.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559740&quot;:259}\">&nbsp;<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supply chain managers, builders, and contractors must be aware of current trends and issues to communicate with their clients and set the right expectations effectively.\u00a0People get upset when they are surprised, and custom home builders can significantly diminish the element of surprise with effective and constant communication.<\/p>\n<div style=\"display:none;\" class=\"postcatlist\"><a href='https:\/\/www.buildxact.com\/us\/tag\/dealer-integration\/'><span>Dealer integration<\/span><\/a> <a href='https:\/\/www.buildxact.com\/us\/tag\/dealers\/'><span>Dealers<\/span><\/a><\/div>\n","protected":false},"author":1,"featured_media":3310,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25],"tags":[136,135],"contributing_author":[],"class_list":["post-7233","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-dealer-integration","tag-dealers"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO 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