Thursday, November 12, 2015

Is It Time to Take Your Modular Home Factory’s Temperature?

These days modular home builders are trying to save money by getting better prices from their factories. But is getting a better price always a better deal?

Experience tells you that price should not be the only factor. In fact, there are four important things to consider when choosing your next factory or reevaluating your present one.

1. Price -
Yes, price is important. But if your modular factory cannot make a reasonable margin on your business, then something is going to suffer. And if the factory doesn't cut somewhere, it might put their entire business at risk. Two major areas that are first to suffer are service and quality..

2. Service -
Most factories that find they need to cut costs begin with service. The Service Dept in most factories is funded as a percentage of the price of the house sold to their builder. The percentage varies from factory to factory. Two things that have a significant impact on the service dept are the total number of homes delivered and the overall profit of the factory. If either of these takes a nosedive, the service dept takes the hit and then so does the builder.

You can tell the temperature outside your window by looking at a thermometer and you can usually tell how well your factory is doing by comparing this year’s service level with previous years.

3. Quality -
This applies to how well the factory sticks to the things that they promised you when you signed up to be one of their builders. Are the materials used on par with what you normally use, is the QA in the factory still effective, are shipped loose materials all accounted for and arrive in good condition, is the house built as per the floorplans and is the overall feel of working with the sales rep and others at the factory still good?

Most builders know to look for these metrics but they seldom measure how well a factory actually meets them. It's important for you to know the actual cost of your factory’s failure in any of these categories.

4. Alignment -
It's this fourth category that many builders fail to consider. And it's just as important as the first three. Most builders buy from just one factory and tend to stay with them for years. But what happens when your factory takes on a huge commercial project. Do your homes get pushed back a few weeks or even a month.

And what happens when the owner and/or top management stop visiting your offices or returning your emails and calls in a timely manner? You’ve asked them for ways to help you get more leads, asked for special promotions that would help both of your businesses, and offered to partner in any way they think would strengthen your businesses working together. That's what partners do, right? But you've been consistently underwhelmed.

That’s when you begin looking at other modular home factories and discover that they are interested in how you sell, what your target market is and what's important to you and to your customers.

As a result, you've found how their research, suggestions, programs, quality and pricing can be used more effectively. Their insight into your business has enabled them to create incentives that make sense to both of you so that you can both grow profitably together.

That's because these partnerships are better aligned -- on everything from providing customer insight and additional tools and processes, to developing unique promotions and maybe even volume incentives.

Does your factory take your business, but only on their terms? Doesn’t it seems to you that when a factory is not aligned with your long-term interest, then you should stop buying from them -- or at the very least, limit your buying.

Isn’t it time that you need true partnerships where your factory(s) have just as much concern for your customers and your long-term success as you do.

Hopefully when you take a fresh look at your present factory you will find that the four key things above are very much alive in your working relationship and you can settle back knowing that both of your businesses are rowing in the same direction, singing from the same hymnal and any of a thousand other sayings that mean you are in good shape together.

1 comment:

Anthony said...

I felt compelled to say this for so many just find it so easy to just "bash" or criticize at any given time.

I have to say that the factory employees and office staff (sales through warranty) at Excel Homes goes over and above in all four categories plus! We have worked with several other manufacturers in the past and no others the service, quality, product or attention that Excel Homes provides on a day to day basis. They truly partner with Zarrilli Homes and we work together to offer the best product to each and every one our customers!