Survive or thrive: The reality of using group purchasing with Ryan Lipchek

Today on “The Building Code,” Zach and Charley are joined by Ryan Lipchek, vice president of sales at CBUSA, to talk about group purchasing and why it’s become more of a necessity with the growing material costs and shortages of the post-COVID-19 environment.

Check out the full episode to hear Ryan’s view on the best ways to run purchasing departments and the outlook for construction pros who aren’t taking advantage of group buying power.

HOW DID CBUSA COME TO BE AND HOW IS IT BENEFITING CONSTRUCTION PROFESSIONALS?

“So, we’ve been doing this for 17 years now. And I say we started out in Northern Virginia and DC with a group of builders that started working together because they were getting run out by the big builders there in the DC, Northern Virginia area. They couldn’t compete with land. They couldn’t compete with pricing. They said, ‘What if we did something shocking in the building industry? What if we all work together? What if we met every month? What if we streamlined the products that we bought and who we buy those products from? What if we become better builders? What if we agree to all pay on time and swing a bigger stick locally, be better at what we do, and then expect better from our suppliers?’ And what they found after they did that, and it took them a while to get their feet underneath them and understand how to do it, but they not only got better pricing, but they got better quality, they got better service. They started mattering more to their suppliers. They, all of a sudden, are buying with the power of a national company behind them, but they keep their unique features that have made their company great locally.”

HOW IS CBUSA AND GROUP PURCHASING HELPING TO ALLEVIATE SOME OF THE STRESS BUILDERS AND SUPPLIERS EXPERIENCE IN TODAY’S ENVIRONMENT?

“We do that through local committed purchases, where our builders come together, and we buy a lot of lumber together. And we let those suppliers of lumber go be better buyers on our behalf because for the next six months, we’re going to buy as a group, we’re going to commit to buying from one lumberyard and a whole bunch of stuff. They can go get into the futures game. They can go buy trainloads instead of truckloads. They could procure, take a position on this big chunk of lumber, just like a national builder would do, which then drives that value to our builders because we’re being more efficient in the way that we procure materials. We do the same thing with a lot of different commodities that go into a home. That’s a major way that we look at what’s out there and figure out how to get a better price. Again, we haven’t held off those price increases. Our builders still have them. But when the rest of the world is seeing a 30% price increase and we’re seeing a 15% price increase, that’s good.”

LINKS AND MORE

CBUSA

https://cbusa.us/

Related articles:

Increasing building costs

Record number of builders report material shortages

Spiking lumber prices

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Ryan Lipchek | CBUSA

Zach Wojtowicz:

Welcome to “The Building Code,” episode at 122. I’m Zach Wojtowicz, as always, here with you to talk with Charley Burtwistle. Charley Burtwistle. Here he is the man, the myth, the legend.

Charley Burtwistle:

It is I.

Zach Wojtowicz:

Today, we have one of our newest acquisitions here at Buildertrend, Ryan Lipcheck of CBUSA to come talk to us about …

Charley Burtwistle:

Ryan’s the man.

Zach Wojtowicz:

I have not really had the pleasure to meet Ryan.

Charley Burtwistle:

One of my favorite people, I think, I’ve ever met.

Zach Wojtowicz:

Wow.

Charley Burtwistle:

A bold statement. And he’s not listening right now.

Zach Wojtowicz:

We’re going to bring him in.

Charley Burtwistle:

When he hears the recording, he’ll know I mean it.

Zach Wojtowicz:

Yeah. And one of the things we’re looking to do on “The Building Code” is to dive a little deeper in these topics with our guests. So, we have a couple of things that we wanted to kind of talk about before we brought Ryan on. Obviously, Ryan works for CBUSA. We’ll get more into kind of their business model and what CBUSA actually does and why, ultimately, it made sense for Buildertrend to really look into acquiring them, and ultimately, making them an important part of our future. And when we look at previous guests we’ve had on in the last three or four episodes, there’s been one really common theme, which is the building cost issue that’s kind of coming across due to a lot of variety of reasons. The COVID-19 pandemic coming to an end, the demand for these materials. There’s a lot of stuff going on, and I hear it when I talk to clients on the phone right now. What …

Charley Burtwistle:

It’s what everybody’s talking about. It’s the hot topic. You can’t really be in the construction world without coming across this conversation at least once a day it seems like with the people that we’re talking to.

Zach Wojtowicz:

Yeah, Charley, what are we saying from a data perspective as far as, is there anything that we can look at?

Charley Burtwistle:

Yeah. So, our last guest actually, we talked to Chicago Lumber here in Omaha. It was a really, really interesting conversation to hear from the vendor side of things and some of the struggles that they’re going with, which really kind of led to us bringing on Ryan. It was like, okay, let’s talk to the builder side of things and how they go about purchasing, and some things that they’re seeing and doing, trying to avoid to really make the most cost benefit decisions. Really to prep for this episode, I think this is going to be a new little segment that we’re going to do, right, Zach?

Zach Wojtowicz:

Yeah.

Charley Burtwistle:

That we’re workshopping a title for, but timely topics is what’s printed on our sheet right here. So, what’s interesting is we’ll link all these articles in the shownotes, but what we want to do is just try to bring in some external resources, some articles for the people listening to kind of connect the people that we’re talking to here on the pod to actual real-life examples and some external research they can do on their own.

So, the first one was just all about the increasing building costs. So, people talk about the rise in lumber prices and other materials, but this article really kind of puts some numbers to the problem. So, for instance, they quote in here building material costs are up 26.1%. So, closest, 27% on average over the past 12 months. This is single family builders just talking about the cost of the same home that they had last year versus this year. And that’s actually the highest percentage cost increase ever recorded in NAHB history, so National Association of Home Builders. The previous record was a dismal 6.1% back in 2016 or 2017. So this really goes to show how massive this problem is. The previous record being 6% jumping all the way up to 26%. So, this is a really, really interesting article, again, that will kind of link in the shownotes after this.

Zach Wojtowicz:

Yeah. I was working with a client recently and we were looking at their budget. And on their original estimate, they had put aside $120,000 for lumber. They’re a pretty large commercial contractor building multiunit developments in Seattle. And then on their revised costs sheet, they got their bid back from their vendor and it was $240,000. And I noticed almost immediately in their actuals, what they had cut the PO for, it was $350,000. And I asked them, A, is this happening on all your projects? B, what can you even do? And that’s the struggle, I think, for a lot of our builders out there is they don’t know what the future looks like. Is this the new normal? Hopefully not. Are they going to be eating that costs? Most people are going to probably shift that onto the customers. What’s that conversation like?

Charley Burtwistle:

Yeah, absolutely. And that’s why I’m super excited to get Ryan on today. Obviously, a big part of CBUSA’s value prop is that they can help lower those purchasing costs by being a preferred member. You get certain rebates at certain vendors from certain national contracts all across the U.S. to really help in these trying times make sure that you’re part of a group that has the best interest at stake for everybody.

Which leads into this next article really well, that’s talking about not just the cost of materials, but also the shortage. And what’s cool about this one is it actually goes into and starts predicting a little bit when we think we’ll see a bit of a change and things kind of going back to normal. It goes into all the way up the lumber mills, just the shortage of labor and how that affects things all the way downstream. Shortage of truck drivers transferring the materials across the country. And actually it goes forward to say, hopefully early 2022, we can start things kind of getting back to normal.

But again, that’s something that we talked about on the last episode of what can builders be doing to account for this huge disruption in their schedule if products that they’re purchasing aren’t coming in time. And we talked about some of the features in Buildertrend using the scheduling feature, linking certain items together. So, if one thing gets delayed, you can see in your entire rest of your schedule how that affects the rest of it. So, that’s another one I think will be really, really interesting to our listeners out there to dive into if they want some additional resources.

Zach Wojtowicz:

Yeah, absolutely. And then going off of my story as well, this article from Constructiondive.com about spiking lumber prices, they report that the lumber future for this past May increased about 60% from the month previous. But compared to the last year, it’s up 374%.

Charley Burtwistle:

Right, which is insane.

Zach Wojtowicz:

I’m sure you build that into your margin protection when you’re estimating, right? Mark it up just a little bit. Along with that, there’s this other side that we also alluded to, as far as this disruption of purchasing behaviors. Right now, Charley, you just bought a house.

Charley Burtwistle:

I did. I’m a proud homeowner for the first time in my life.

Zach Wojtowicz:

Yeah, we mentioned that in another episode. And you were looking to go out. Do you have any friends who are waiting to buy a home because of this change in how things are happening? I’ve talked to a lot of people like, oh, I’m going to wait.

Charley Burtwistle:

Yeah. Honestly, a lot of them have kind of been forced into it. When they’re lease is kind of expiring, they’re like, oh wait, we’ll start looking four or five months before our lease ends up. And they go out into the market, they realize how crazy it is. They put in offers, nothing is getting accepted. And all of a sudden, their lease is up. They’re like, well, I can’t just be homeless. So, they’re re-upping, going another year and hoping that things kind of calmed down in the next year or so. But yeah, I was super fortunate to find a home that I could make my own. And I definitely wouldn’t go through that experience again in the current market.

Zach Wojtowicz:

Picked a great time.

Charley Burtwistle:

Yeah, absolutely. First time.

Zach Wojtowicz:

It’s like musical chairs on the market.

Charley Burtwistle:

But yeah, super excited to bring Ryan on today. We’ll let him do his full intro, but again, he’s the VP of Sales with CBUSA. He’s going to be talking about home builder group purchasing, and some of the things that anybody out there can be doing to get ahead of the game and make sure that they’re maximizing their value in their purchasing decisions. So, Ryan. For our listeners who are kind of unaware of what CBUSA is or what they do, maybe a brief little background on just the high level company strategy and kind of who you guys are.

Ryan Lipchek:

Heck yeah. Yeah, for sure. So, we’ve been doing it for 17 years now. And I say we started out in Northern Virginia and DC with a group of builders, Charley, that started working together because they were getting run out by the big builders there in the DC, Northern Virginia area. They couldn’t compete with land. They couldn’t compete with pricing. They said, “What if we did something shocking in the building industry? What if we all work together? What if we met every month? What if we streamlined the products that we bought and who we buy those products from? What if we become better builders? What if we agree to all pay on time and swing a bigger stick locally, be better at what we do, and then expect better from our suppliers?”

And what they found after they did that, and it took them a while to get their feet underneath them and understand how to do it, but they not only got better pricing, but they got better quality, they got better service. They started mattering more to their suppliers. And then their builder buddies around the country through like NAHB Builder 20 clubs and different types of things started saying, what are you guys doing there in Northern Virginia? We want to do it in Cleveland. We want to do it in Houston. We want to do it in Raleigh. And they said, well, it’s not that easy. You actually have to get a group of builders together that trust each other, that are willing to do all these different things that we’ve been working on for years. And that’s when Bill Smithers said, “There’s something to this. We can teach builders around the United States how to do what we’ve done.”

And we’ve done it. And fast forward now 17 years, we’re in 34 markets. We have 560 of the best custom and independent builders in the country. Together we do 12,000 plus homes a year and almost $5 billion in annual revenue. So, we are by far the biggest home builder purchasing group in the United States. And we do two things for builders. We help them buy better locally, and then we roll them all up as a big top-five national builder in the country and help them buy better nationally. And those things change the game for custom and independent builders. They, all of a sudden, are buying with the power of a national company behind them, but they keep their unique features that have made their company great locally. So, that’s us in a nutshell, guys.

Zach Wojtowicz:

That’s super interesting. And a concept that I know is really important. A lot of people belong to NAHB and a similar type of networking. Is that kind of where the idea came from or did Bill just happen to recognize that a lot of builders never really had networking opportunities? I’m really curious of where did that inspiration come from. It’s really observant of kind of how builders were operating and taking action on it.

Ryan Lipchek:

I think two things, Zach. One is yes, NAHB and all the local HBAs around the country where the best builders kind of come together and kind of impact their local community in a positive way. So, they proved that they can work together, but there was nothing ever with purchasing. They never got into purchasing. They got into a lot of other aspects of business, but not buying the same products from the same people and actually improving their purchasing. So, it kind of stemmed from that. And then we found a gap in what those groups never did and figured out how to do that.

The other thing is every other industry in the world pretty much as figured out ahead of home building that if you come together in co-ops, or whatever it is, you’re going to be better off. They do it in hospitals, and restaurants, and office supplies. And all the different things that go into a house, lumber companies, drywall companies. They’re all members of purchasing groups. Where little guys get together, and they all buy together because they’re all buying the same thing. Then they can compete. A great example is a guy that sat on our board for years with Office Max, Office Depot, all those type of big office supply companies. They were one of the first to get into this arena of buying better. So, there’s thousands of little mom and pop stores around the country that when they get together, they can beat the Office Maxes, Office Depots, all those types of companies around the country.

So, we just mimic what they do, bring it to the home building level. And then we use all of our experience. All of us are either from the supply chain or from the home building background like me. So, when we help builders, we come from a position of strength because we’re offering a lot in the way that they run their business and helping them run it more efficiently to strengthen their bottom line. So, that’s what we do.

Charley Burtwistle:

Yeah, that’s super interesting. I was scrolling through your guys’ dotcom website today, and you had a really interesting infographic there. It was like CBUSA combined is, what is it, would be the seventh largest home builder in the U.S. just from a purchasing standpoint there. Which is a really, really kind of staggering number, if you think of how many members make up your group and the little guys that now have the purchasing power of a national player.

Ryan Lipchek:

That’s perfect Charley. While at the same time they’re maintaining their identity locally, they’re purchasing with the sophistication, the technology, the power, the buying power of a national builder. And those both are really important to our network. And I’ll tell you guys this, of our 560 builders nationwide, some are doing 10 homes a year at an average price point of $5 million each. And others are doing 150 homes a year at an average price point of 350,000. And then everybody in between. And that’s what makes our group powerful. Manufacturers love the breadth of product that we buy. Whereas, if they do a deal with a big national builder, they’re pretty much buying one set of stuff, mostly, for their whole network. Us, we have a lot of different types of builders. So, breadth of product from manufacturers is important.

And when our builders are sitting around the table, we get all of our builders together every month in every market. And we meet, and we talk. Those builders know each other in every market. They’re in this together to help each other get better. And some of them are competitors, by the way, which kind of an awkward dynamic there you would think at first, but it’s not because the high tide raises all ships. And if everybody’s getting better together and all the best builders in the market are getting better pricing, that can be a really cool thing for everybody. So, those local market meetings that we have are fantastic. And there’s something that every one of those types of builders brings to the table. A real custom builder putting in the crazy stuff to build a $5 million house has a lot to bring to that meeting. Just like the guy who has the efficiency and the buying power of a builder that’s doing 150 homes a year. So, you put them all around the table, and the conversation’s awesome.

Charley Burtwistle:

Yeah. And one more thing I want to touch on before we move on was you keep mentioning, better together and the best builders in each market. That’s something I found super insightful, Ryan. Just like you and I working together on the lead gen standpoint of helping you guys find more builders out there that would be a great part of CBUSA is just all the things that you guys are reliant on. So, are they paying on time? Do they have a good inflow of jobs coming in? It’s not just a large group of builders, but it’s also a really, really high quality group of builders too, which has been really, really interesting to see. These guys really are kind of the best of the best out there.

Ryan Lipchek:

Great point, Charley. Big part of our success over the years is getting the A-list builders from each market together. The kind of builders that suppliers want to work with. The kind of builders that have jobs ready for suppliers. They can come to their job and have it ready and make money on it. The kind of builders that communicate well. The type of people you want to work with. They become the builder of choice by operating their business very efficiently. And then you do that with a whole bunch of builders. And then you can earn better pricing. It’s not just saying, “Hey, I want to squeeze your company and you’re going to give me better pricing. Because we’re in this big behemoth now, we’re going to step all over you.” That’s short lived, that’s not how something is sustainable.

But if you can be better at what you do and be the best, then people can come, and they can be the best at what they do. And they want to work. That’s really our success. So, we vet builders at the beginning to try to get the right ones in there through a lot of different vetting mechanisms. And then builders are expected to continue at that pace once they’re in the group and continue at the high levels that we expect of them in order to pick up everybody around them and not drag them down. Great point.

Zach Wojtowicz:

Yeah, immediately, that’s what I went to is the operational aspects of this. You’re joining these groups specifically for CBUSA in a purchasing mindset, but I have to imagine there’s a lot of things you discussed at these meetings, too. Just how do you handle this? Even if you’re using a technology like Buildertrend, what’s your process for scheduling? What’s your process for handoffs between sales to production, to bookkeeping? It has to have even more benefits than even that’s tangible to the fact that you’re also getting cost savings by being part of this group.

Ryan Lipchek:

You got it. It’s so multi-tiered, the benefits, that the builders get out of it. We have great discussions about construction management tools and about all aspects of home building. From land and how they buy land together, some of our builders, and the technology that they use to run their companies. And Buildertrend’s a great example of that. We talk about Buildertrend all the time. We talk about CoConstruct prior to the acquisition and all the different things of both of them.

When one builder says that they’re having great success with a company like Buildertrend, and there’s 20 builders at a meeting, and 16 of them are not using whatever it is that they’re talking about, gosh, that gets their attention. Because they say, well, Payne & Payne in Cleveland, Ohio is one of the best builders in the United States. And if they’re using this particular software or whatever it is, I’m going to use it, too. I’m going to try it out. And that’s really how it spreads. Manufacturers, suppliers, all different types of things. They know if they do right by one builder and get in with an influential builder in each market, it takes off like wildfire because they all know each other, they all trust each other.

Zach Wojtowicz:

Is there much cross marketing that happens. Like if you are in Cleveland, do you meet builders in the CBUSA network in Phoenix or San Antonio or wherever as well?

Ryan Lipchek:

That’s good timing because Alyssa and others on our team are finishing planning our Power 30 conference, which is Beaver Creek Resort outside of Vail, Colo. this year.

Zach Wojtowicz:

Sounds like a good time.

Ryan Lipchek:

September. It is. And I think Mr. Charley might be attending that.

Zach Wojtowicz:

What?

Charley Burtwistle:

Ryan, I looked at the invite list the other day, and there was a name that was missing from there that I’m a little salty about. But maybe it sounds like a great spot we bring the whole podcast crew out there. It sounds like the best builders in the nation.

Ryan Lipchek:

But Zach, our Power 30 conference in Vail, Colo. this year is something that we do every year. We get our best builders together from all over the United States, have an educational rubbing elbows, just all different types of best practices shared. We have industry speakers and all different types of things come in. I know Dan Houghton is going to be one of the speakers this year at the conference. But that’s the opportunity because we have 34 markets around the country that all know each other and trust each other. How do we get that community aspect going between regions, between markets all over the country? That’s one of the ways we do it. One of the most anticipated events of the year.

Those builders all form friendships. And they keep in touch, that’s one of the cool things. All our guys from Texas are tight with all of our guys from Cleveland. They continue to have those discussions. And then each one of those builders from each market brings all those discussions back to their market. And at the next CBUSA meeting they say, here’s what I learned from this conference. Here’s what these guys are doing in Texas. Can you believe what they’re paying for this particular thing in Texas versus what we’re paying here in Phoenix? That cross mingling of markets is really important and something that we’re going to do more and more of. Our connection with you guys now at Buildertrend, that we’re all one family is fantastic because now we have 20,000 plus companies around the country that you guys work with. The best of the best, great fit for CBUSA. The opportunities are limitless of what we can do together.

Charley Burtwistle:

So, the Power 30, before we move off that topic, we’ll plug that real quick. So, is that something that anybody, any listener out there, a home builder in the nation can attend or is this CBUSA member exclusive?

Ryan Lipchek:

It is exclusive. It’s invitation only. It’s our top 30 builders from around the United States, Charley. Plus, another hand selected 30 that are very influential. Plus, all of our national manufacturers come. And then some industry speakers. So, it’s kind of a deal where you continue to rise up the ranks of CBUSA and continue to grow your company the right way, and then you qualify to attend. So, it’s invitation only. Yes, sir.

Charley Burtwistle:

Gotcha. Well, if there are any listeners out there that are curious about Power 30 or CBSA in general, obviously, go out to CBUSA.us. If you’re a Buildertrend customer, reach out to your repz, and we can get you in contact and kind of start that formal process. We’ll link it in the shownotes.

Zach Wojtowicz:

The next piece I want to dive into a little bit more is actually the nitty gritty of what do you gain from a purchasing group. And I have to imagine, my background, Ryan, I was an onsite consultant. So, I’ve traveled around the country. I’ve worked with a lot of builders very closely. And this is a piece where they struggle. They don’t have a lot of structure. What is your experience working with these builders? What do you do with them to try and help them improve these operations? What value does CBUSA bring to that side of the actual business operation piece of purchasing?

Ryan Lipchek:

We consider ourselves consultants. When people ask me what CBUSA is, I tell them we’re a consulting company that’s focused on purchasing. And a lot of the greatest parts about our jobs is we get to go in and help custom and independent builders around the country see what they can do better. See where if they were more forward- thinking or if they were willing to switch this the way that they’ve done this for 10 years, 20 years, three generations, whatever it is, here’s what you can get. Here’s how you get better, your quality, your service, your efficiency, your bottom line. What is it about this change and how has that change is going to help you?

So we kind of take a holistic approach of a builder and say, “Okay, hey, you’re doing a lot of things right. Now, if you want to improve your purchasing, there’s some things that you could do better in this area.” And through our experience of, 25 years of mine, and 40 years for Bill, and 40 years for Phil and all of us, well, if you did this, this, and this, you could get better by this much. And we have savings calculators on our website that talk about if your revenue’s this and you have this many stars, here’s how much you should save annually with CBUSA. That’s great. But if you improve your efficiency as well, now you’re going to save time.

And our experience Zach, and you’ve probably have seen this throughout your career as well, but if you could save somebody, and I don’t care what product or service you’re offering. If you can save them time and money, you’re going to help them out one way. And lots of people are interested in saving time because they don’t have time to get to their kids’ ballgames. And they’re running a business, and they’re putting in 90 hours a week. They’re getting yelled at because their chores at home are getting done, and they’re running this business. Well, if we can help that person streamline the way that they procure materials, which is the biggest thing that a builder spends time on. How do they bid things out? What is it that they’re buying? It’s a huge task for a builder to procure the materials that go into a home.

So, we can help them come up with better processes and ways to do that. And then attach to them to the biggest purchasing group in the United States for residential home builders. We’re helping the way they do it. We’re helping how much value it may have. And at the end of that is going to produce time savings and money savings. And that’s where it becomes a no brainer for a builder to buy CBUSA, to jump into CBUSA as quick as they can because it’s hitting them on both sides and impacting them in a lot of different ways. So, that’s kind of the way we go to market.

Charley Burtwistle:

Yeah, Ryan, every time I talk to you, I just get fired up. A big topic that we talked about in the intro before you got on, Ryan, was you can’t really walk down the street without someone talking about lumber and material prices, and just supply shortage and things like that. Obviously, directly related to what you guys are trying to do and help builders with. So, can you talk a little bit about the shift that’s happened in the past 12 to 16 months, obviously affecting builders and construction in general all across the nation. How does CBUSA alleviate that? Or what sort of pain points have you guys also seen?

Ryan Lipchek:

Let me start with something that I’ve been giving talks about over the last three or four years, and I talk on the industry circuit around the country with different groups of builders and different industry people we know in conferences. I talk about land, labor and materials, the three big things that a builder spends money on. Land is getting tougher and tougher all the time. And what used to be considered a C-lot is now a B-lot or an A-lot because all the A-lots are gone. So, land is tough. Labor, people are aging out of the labor force like you wouldn’t believe. They’re plumbing, electric, heating, painting, drywall, you name it, it’s a dying breed of people that are doing that type of work. Kids nowadays going into college, trying to learn a trade, be an apprentice, people aren’t filling those jobs as fast as they’re exiting. So, what that means is labor is becoming very expensive. To find good labor is hard. A builder’s waiting for good labor more than they ever had. So, that’s land and labor.

Then you throw the other big one in there with materials. You throw that on top of everything else that’s going on right now, and materials are at an all-time high. They’re not only supply and demand got out of whack after COVID-19 and now, there was so much demand and the supply could not keep up. It got backwards. And we have never recovered from that. And we may not ever get back to where we were prior to COVID-19. And today, now, finally, some of those numbers are starting to come off and that’s a reprieve for a lot of builders. But anyway, the big three have made it very profitable for a builder, or I’m sorry, it’s made it very tough for a builder to be profitable.

So, at CBUSA, we really focus on how can we, getting to your question about materials Charley, how can we help specifically with that? And we do that through local committed purchases, where our builders come together, and we buy a lot of lumber together. And we let those suppliers of lumber go be better buyers on our behalf because for the next six months, we’re going to buy as a group, we’re going to commit to buying from one lumberyard and a whole bunch of stuff. They can go get into the futures game. They can go buy trainloads instead of truckloads. They could procure, take a position on this big chunk of lumber, just like a national builder would do, which then drives that value to our builders because we’re being more efficient in the way that we procure materials. We do the same thing with a lot of different commodities that go into a home.

That’s a major way that we look at what’s out there and figure out how to get a better price. Again, we haven’t held off those price increases. Our builders still have them. But when the rest of the world is seeing a 30% price increase and we’re seeing a 15% price increase, that’s good. So, that’s kind of the way that we’ve gone about it. We have experts on our team that do nothing but lumber. And we have guys that have been in lumber for 35 years. There’s a whole lot of intricacies that go into how we buy it, when we buy it. We follow random lengths. If there’s builders out there wondering if there’s a better way to buy lumber, or if there’s something that they could do that wouldn’t be as expensive, there is, but it really surrounds about being a better builder and then attaching yourself to more value somehow.

So, even builders that are not a part of CBUSA, they ask me all the time, “Hey, I’m not in the CBUSA market, what can I do?” Outside of starting a CBUSA market, which is great. If you’re in a market and you want to start one, call me up, we’ll talk about it. But before that, what can you do tomorrow? Well, start leveraging your own purchasing power. Don’t buy from three different lumberyards like a lot of builders do. Streamline what you buy. Look at the products you’re buying. If you’re buying a lot of things that are very similar, buy one of them. Pick one of them and pick who you’re going to buy it from. Don’t be afraid to buy different things from different people. That’s becoming a better, smarter buyer. And if there’s some other builders in your neck of the woods that you can attach yourself to, that you trust, that you like, that work together well, why not approach them about buying certain things together and start your own little purchasing group? That’s some tangible things that I’ve seen builders do over the years. Short of joining the biggest invest purchasing group in the country, start doing things yourself. That’s one recommendation that I make.

Zach Wojtowicz:

Just some absolute free advice here on podcast. I love it. That’s just taking things into your own hands. I think a lot of builders feel like they’re on an island a little bit, and it’s something that you can control just by filling out networking and getting a little bit more intelligent about how you’re approaching the market because it can lead to huge savings like you’re saying.

Charley Burtwistle:

And if you’re looking to connect, if you’re listening right now, we do have The Building Code Crew out on Facebook. So, if you’re not a huge home builder, if you’re a specialty guy, remodeler, commercial builders, we have a plethora, a wide range of listeners out there. Feel free, post in The Building Code Crew on Facebook, connect with some of the people out there just like Ryan is talking about. Better together, when together. A rising tide lifts all boats. That’s a super easy resource that we have right out there today for all of our listeners.

Zach Wojtowicz:

Well, Ryan, we’re about against our time here today. We’ve really enjoyed having you and talking about CBUSA, but also just the world of purchasing in general. Do you have any final thoughts or things that you want to leave us with before we say goodbye?

Ryan Lipchek:

Thank you guys. Zach and Charley, this has been a pleasure. I look forward to seeing you both again on my next trip to Omaha. It’s been an unbelievable ride for builders. I guess I’ll leave you with that. It’s been from ’08, and ‘09 and ’10. And when the depression hit, a lot of builders got hit hard, and they got smarter. And what we’ve seen builders do after that has been really cool. The way that the whole building industry has come back from what happened there has been awesome. Now builders are stronger and weeded out some of the ones that weren’t as good, left the strong ones, and figured out how to move on.

And I think what we’ve just seen over the last year with COVID-19 and builders learning how to become virtual, and deal with their customers, and take these big delays in allocation, as far as materials and all that stuff, I think what’s going to happen is these builders are going to get stronger again. And I’ve seen it. And the building industry is on top of the world right now. And builders realize how to deal with the material shortages. I think what you’re going to see moving forward is this will do nothing but strengthen the building industry, again. It’s a resilient group, as you guys know. Buildertrend deals with the best builders around the country. And it’s a great industry to be a part of, and we’re blessed every day to be a part of it. We hope to continue to do it for a long time and positively impact the best custom and independent builders around the country, and do it with Buildertrend. And we’re blessed to do it. So, thank you guys for all your time, and good luck to everybody out there listening. Thank you, guys. I’ll see you again.

Zach Wojtowicz:

Sweet, see you, Ryan. Well, Charley, there’s a lot of takeaways there. What stuck out to you?

Charley Burtwistle:

Yeah, every time I talk to him I pick up on a couple of different things that CBUSA does. Their company and just the builders that are part of it. I thought it really, really interesting how he talked about them working together to become better builders. So, they’re not just signing up for this group for the rebates that they’re getting on purchases, but they’re learning from each other, competitors in the same market. They’re like, here’s how we’re doing things, here’s how we’re doing things. That was something that really, really stuck out to me. Obviously, we’re generally focused on the business aspect of things and saving money, but just the networking and the educational side of things I thought was really, really interesting.

Zach Wojtowicz:

And it’s almost like the money is just a nice bonus though. 

Charley Burtwistle:

Right. A side product of the …

Zach Wojtowicz:

I loved how he called himself a consultant. They’re there to help these companies evolve and learn how to improve their processes. And I think that’s something all of our listeners are always constantly probably thinking about is how do I get better?

Charley Burtwistle:

Right.

Zach Wojtowicz:

What can I do to improve operations? If you’re a company that is a little smaller, and you’re not really a large builder who is purchasing a lot, your leverage is shortened. You can’t do as much. And this is a type of business that actually helps give you a bigger voice. And I think that’s really powerful. That’s something that really, I thought, I had never really thought about. That other industries have gone through a similar co-oping and that’s what CBUSA is kind of pioneering or really breaking into that we don’t see a lot.

Charley Burtwistle:

Yeah, they’re not rewriting anything that hasn’t already been done before in different industries. Obviously, it works for a reason. And, obviously, their entire business is contingent on making these builders better and ensuring that they’re going to pay on time. They’re going to have a good flow of leads coming in. They’re going to get work done. They’re going to make purchases. Like you said, yeah, the cash savings side of things is just almost a byproduct at that point of reasons to sign up.

Zach Wojtowicz:

And to that point though, we opened the show talking about how there is this huge burden of increasing costs. And this is a way, the other thing that stuck out is if everyone’s seen a 35% increase, they’re only seeing a 15%, and that is substantial.

Charley Burtwistle:

Yeah. Numbers like that, obviously, aggregate up to a pretty huge chunk of change coming out of your pockets, or in this case staying in your pockets. Which during the times that we’re having and everything that’s happening with the cost of materials, you kind of can’t go without it.

Zach Wojtowicz:

How do you build a house without stuff?

Charley Burtwistle:

Yeah, exactly. That’s a make or break right there. Yeah, great conversation with Ryan. 

Zach Wojtowicz:

And this is one of my favorite things about getting to host “The Building Code” is talking to people like Ryan and previous guests who really just continue to open our eyes and hopefully our listeners out there, that are doing great work, but can kind of give you even more perspective on what other people are doing as well.

Charley Burtwistle:

Yeah. It’s so interesting. Obviously, our customers are people that are doing the actual building, whether they’re specialty builders or home builders, remodelers. It’s always really, really interesting when we get people on the pod here to talk about the other side of things of, how can we organize all these builders? How can we work with vendors? How can we work with national manufacturers? And like he said, it’s a win-win too. They’re getting guaranteed and planned purchases. It’s not like they’re just like, “Hey, we’re a big company. We have all these different members in our group. You have to give us a lower price. No, these are purchases that the vendors that they’re working with need as well, too.” So, really it’s a win-win on both sides of things. Just kind of lifting everyone up together.

Zach Wojtowicz:

Well, next week we’re going to have Marge Haley from our Customer Success team. We’ll get into a little bit more about how do you even go about onboarding Buildertrend. Taking it back to our roots and really get into the Buildertrend experience with her. We’re looking forward to having her. Remember to like, subscribe, comment, check us out on social media, and we’ll catch you next time. I’m Zach Wojtowicz.

Charley Burtwistle:

I’m Charley Burtwistle.

Zach Wojtowicz:

Thanks for joining us.

Charley Burtwistle:

Later.


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