5 Advantages of a Long-term Supplier-Builder Relationship
Originally published by: Builder Online — October 9, 2015
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When Dale Garwood orchestrated one of the first exclusive home builder/appliance supplier agreements for Whirlpool Corp. in 1993, such relationships were uncommon. Instead, builders worked with multiple suppliers in one-off transactional relationships as opposed to long-term strategic ones.
Fast forward 20 years and the agreement between Benton Harbor, Mich.-based Whirlpool and Los Angeles-based KB Home has not only withstood the challenges of time and changing market conditions, but has become a model of a successful builder/vendor relationship. As Garwood, now director of strategy and operations for national contract sales at Whirlpool, says: “It comes down to people. When you have good, open, transparent relationships, even the most difficult obstacles won’t diminish that relationship. In fact, the hard times actually strengthen that relationship even more.”
Founded in 1957, KB Home is one of the largest home building companies in the United States, operating across 40 metropolitan markets last year. For the past two decades, the homebuilder’s growth has been aided by the company’s partnership with the country’s largest home appliance manufacturer and its KitchenAid, Maytag, Jenn-Air, and Amana brands. Here are some of the top reasons why it’s been a mutually beneficial relationship:
--Name recognition. “When you consider how important appliances are to people, it’s clear that having a choice of well-known brands provides an immediate impression to the customer of overall home quality,” says Dan Bridleman, senior vice president of sustainability, technology and strategic sourcing for KB Home. Whirlpool and its brands help build home buyer confidence, he says, particularly in KB Home Design Studios, where buyers get to choose appliances and materials and personalize their homes.
The ability to offer these choices is one of the home builder’s strongest selling points, says Larry Oglesby, KB Home’s senior vice president of national operations. “In our business model, our No. 1 competitor is not another builder--it’s an existing home,” he says. “But one thing an existing home can’t offer is choice – on finishes, floor plans or appliances. For consumers, often the first place they look for significant upgrades is in the appliances, and by being able to offer all the choices that Whirlpool provides, we have an advantage.”
--Access to consumer trends. KB Home has exclusive access to Whirlpool’s in-depth consumer insights. “We’re constantly working with them on merchandising, product assortment reviews and jobsite efficiencies so we can make new investments to further develop the value we are offering KB’s homeowners,” says Garwood, now Whirlpool's director of strategy and operations for national contract sales.
--Sustainable practices. KB’s focus on resource-efficient building, especially in the western U.S., led in part to the design and creation of KitchenAid’s water-conserving Architect Series II dishwasher. The commitment by Whirlpool to developing cutting-edge products has helped KB Home stay ahead of the curve, says Bridleman. Thanks in part to the partnership, all homes sold by the builder now earn Energy Star certification.
--Streamlined supply chain. Of the thousands of homes built and sold since the two firms’ partnership began in 1993, Bridleman says there was never a time when the builder missed a closing because the appliances weren’t delivered and installed on time.
“Our process certainly helps in streamlining KB Home’s system supply chain,” says Bob Johnson, Whirlpool’s senior sales manager for national accounts. “They have one vendor for appliances that also provides installation, which means they’re not dealing with multiple vendors or multiple installation crews across their market. They also have one provider of delivery services, and that really helps streamline their procurement functions as well as their internal operational processes.”
--Logistics. Since 1993, KB has expanded from 6,800 annual deliveries in West Coast markets to more than 32,000 nationwide by 2006. To handle such growth the company created new ways of sharing information to help maintain the consistency, reliability, and predictability of the product procurement, delivery, and installation processes. Whirlpool Corporation IT specialists played a key role in helping develop those new electronic data-sharing platforms.
“Think about the delivery schedule for doing 32,000 houses a year,” Bridleman says. “When we got that large, we had to figure out how we could share data and delivery instructions electronically, how we could better maximize Whirlpool’s distribution system. To me that was a huge deal. For Whirlpool Corporation to be able to do something very specific like that for us was big.”