The Japanese Keiretsu was made famous by Toyota (the largest and most profitable auto manufacturer in the world). Keiretsu is close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies. Toyota city is an example of deep vendor relationships that inspires interdependencies that benefit the whole.
Is it time for the home building industry to embrace keiretsu and learn like Japanese auto manufactures to keep your friends close but your subcontractors and vendors closer? American auto manufactures dipped a tentative toe in Keiretsu and began to lower the number of vendors they used and award long term contract but they never moved away from adversarial relationships and thus have never reached the kind of productivity that Toyota and other Japanese manufacturers have. It wasn’t long before american auto manufacturers jumped to the conclusion that the immediate benefits of low wage costs out of mainly China outweighed the long-term benefits of investing in relationships. As a result the supplier relationships with american auto manufacturers is worse now than ever. Fortunately, Toyota and Honda both have created successful supplier relationships here in america and proven it is possible. See Jeffrey Liker and Thomas Choi for more on this article in the Harvard Business Review.
For home builders in america it is clearly not an option to outsource much of their labor globally like the american auto manufacturers. So, it makes sense that the old “arms length” relationship with vendors and subcontractors might need to be abandoned in order to reach new cycle time reductions that benefit the whole (which would include the customer). The caveat being that the new deep relationship is a real one not just a paper one.
But what do “Real” relationships look like and how are they formed? If you have spent a lifetime squeezing the last nickel out of your vendors and getting along in what might resemble a fragile ceasefire it won’t come easy. Old habits are difficult to overcome but thankfully there is relatively new research that can help us replace them with new habits faster. Practicing the following list over and over with vendors and suppliers can help jump start a new collaborative relationship quickly.
1. Lighten up! Studies show that a little levity and a sense of humor engenders trust.
2. Ask for help on a challenging problem. There is no more powerful connection than helping a fellow human.
3. Increase the number of connection points. It is like the various touch points in sales, the more the better because anyone can get it right once.
4. Tell the truth!! Most of Americans think telling lies is a regular part of work but nothing builds trust like truth!
5. Empathize with real care and concern. Anything that is not genuine will sabotage the whole effort.
6. Bring donuts, food is the proverbial olive leaf that says “I come in peace.”
7. Schedule quarterly meetings to celebrate accomplishments and identify problem areas and do something about the problems. If you ignore the problems your effort will be seen a total waste of time.
Is it time for the home building industry to embrace keiretsu and learn like Japanese auto manufactures to keep your friends close but your subcontractors and vendors closer? American auto manufactures dipped a tentative toe in Keiretsu and began to lower the number of vendors they used and award long term contract but they never moved away from adversarial relationships and thus have never reached the kind of productivity that Toyota and other Japanese manufacturers have. It wasn’t long before american auto manufacturers jumped to the conclusion that the immediate benefits of low wage costs out of mainly China outweighed the long-term benefits of investing in relationships. As a result the supplier relationships with american auto manufacturers is worse now than ever. Fortunately, Toyota and Honda both have created successful supplier relationships here in america and proven it is possible. See Jeffrey Liker and Thomas Choi for more on this article in the Harvard Business Review.
For home builders in america it is clearly not an option to outsource much of their labor globally like the american auto manufacturers. So, it makes sense that the old “arms length” relationship with vendors and subcontractors might need to be abandoned in order to reach new cycle time reductions that benefit the whole (which would include the customer). The caveat being that the new deep relationship is a real one not just a paper one.
But what do “Real” relationships look like and how are they formed? If you have spent a lifetime squeezing the last nickel out of your vendors and getting along in what might resemble a fragile ceasefire it won’t come easy. Old habits are difficult to overcome but thankfully there is relatively new research that can help us replace them with new habits faster. Practicing the following list over and over with vendors and suppliers can help jump start a new collaborative relationship quickly.
1. Lighten up! Studies show that a little levity and a sense of humor engenders trust.
2. Ask for help on a challenging problem. There is no more powerful connection than helping a fellow human.
3. Increase the number of connection points. It is like the various touch points in sales, the more the better because anyone can get it right once.
4. Tell the truth!! Most of Americans think telling lies is a regular part of work but nothing builds trust like truth!
5. Empathize with real care and concern. Anything that is not genuine will sabotage the whole effort.
6. Bring donuts, food is the proverbial olive leaf that says “I come in peace.”
7. Schedule quarterly meetings to celebrate accomplishments and identify problem areas and do something about the problems. If you ignore the problems your effort will be seen a total waste of time.
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