3 Purchasing Strategies for Builders to Improve Profitability

When it comes to improving a home building business, knowing the best strategies for maximizing profits is crucial. According to Shinn Builder Partnerships—an organization that provides consulting and management services to the home building industry—understanding effective purchasing strategies can help home builders boost profitability all while keeping projects on track and ensuring the best quality. These include: strengthening relationships with suppliers, making purchasing more efficient through the use of technology, and understanding risk management.

Proactive risk management in purchasing can reduce the financial impact of fluctuating material costs, supply chain disruptions, and vendor reliability. Locking in prices and securing availability for high-demand materials with suppliers can protect you from unexpected price spikes. Diversification in sourcing helps ensure materials are available when needed, avoiding costly project interruptions. Do not sole source to any supplier or trade. Employ the 80/20 rule. That simply means that no trade or supplier will get more than 80% of the work, and the 20% trade needs at least 20% to maintain good workflow and cost. Read more