Profit Opportunities for SBCA Framer & CM Members?
Originally published by the following source: SBC Magazine — January 3, 2020
by Kirk Grundahl. Mindy Caldwell, Sean Shields & Laura Soderlund contributed to this article
While entrepreneurs inherently know that change creates opportunity, there is another important concept to keep in mind when developing your 2020 business model: “There is not an entirely new thing under the sun.”
For example, it’s not new that land developers (owners/developers/builders) operate under a business model in which buildings are the secondary investments needed to sell/lease the land and generate a budgeted return on their investment. As such, the following needs for success are also not new:
- The lowest in-place cost wins because the cost of construction is a key profitability factor.
- Getting “heads in beds” quickly has great value.
- The cost stability of raw materials makes profitability more predictable.
- Labor efficiency is key to lower cycle times.
- Warranty work is expensive, so quality and durability are important.
- Waste reduction is an often forgotten cost factor that, when managed well, helps lower in-place costs.
Construction Industry Market Structure. Key question: What inefficiencies are really profit opportunities? Click to enlarge.
Companies that figure out how to deliver on one or more of these attributes stand to grow market share and/or increase profitability far in excess of industry averages.
In simple terms, supply chain collaboration that works to solve pain points will be successful. Consider the following questions:
- What inefficiencies can be exploited in each step of the supply chain?
- How can each partner’s logistics be improved to get the right product in the right place at the right time?
- Is there a way to streamline constructability with respect to current architectural and engineering plans and specs?
- Will different details and componentized (i.e. engineered industrial framing) solutions improve installation efficiencies?
Component manufacturers and framers that collaborate with these questions in mind can create one or more value propositions, which include but are not limited to:
- Being a just-in-time supplier.
- Getting the right product installed in the right place quickly and easily.
- Processing digital plans and specs to remove dimensional problems, undertake clash detection, and help systematize the framing process.
- Ensuring all wall and ceiling surfaces are “flat” and roof planes are accurate.
- Correcting load path and constructability issues in errant plans and specs.
- Creating a precise bill of materials take-off.
- Organizing the building material logistics game plan and coordinating plan implementation with key trades.
The best way to begin this process is to “self-scout” your business’s key characteristics to identify areas of strengths and weaknesses. Then ask both your suppliers and your customers where they perceive undue stress is created within the supply chain relationships. Ask them for feedback about what you do well and how those strengths can be used to sharpen the entire process. Ask them for constructive criticism about processes that can be improved to strengthen mutually beneficial partnerships.
Then take this relational information and consider doing the hard work (nothing new about a tried and true "old school" approach) of educating your market about your business and the value it has to your customer’s growth and profitability.
The bottom line? By interacting often with customers and supply chain partners, it is certain that your business will find a variety of pain points to solve and create long-term relationships in doing so. By educating and developing relationships with market gatekeepers such as specifiers, building officials, and city officials your business can become THE well-known “go to” company in the market.
When this happens SBCA CM and NFC framer members become the “engineered industrial framing” solutions experts, essential partners with customers, specifiers, building officials, and supply chain teammates who come to you because you have both the technical and business knowledge to reliably solve pain points. Knowledge truly is power.