Posted by: JC Gatlin | December 6, 2010

Wanna get Lean? Dump the Dead Cats

Have you ever heard the expression, “Even a dead cat will bounce?” That’s how we describe those floor plan designs that sell once in a blue moon. A lot of home builder’s fluff their floor plan offering with dead cats.

To be fair, it makes sense: Seems like a community that offers variety provides a greater appeal to potential home buyers. And, according to your Sales Professionals, it’s a sales competitive advantage. Unfortunately, it goes hand in hand with the mindset, “Let’s be everything to everybody.”

That mindset is the opposite of Lean. The law of averages tells you roughly 20% of your floor plan selection sells consistently. Or, in lean terms, 80% of the product offering is waste. Yes, some designs will sell from time to time, but then even a dead cat will bounce.

An Excessive Variety of Dead Cats

There was a time we offered 12 different floor plan designs in a given community. Now multiply that by the number of communities where we were building, and you can see that we created a very complex, wasteful system. Obviously, we were spending a lot of money. Code changes and product improvements were expensive, and we were wasting time and money updating plans that rarely sold.

But there was hidden waste in that excessive variety of floor plans. The Production Department spent hours maintaining pricing for all the associated options and upgrades for each plan. Both Production and Construction had a very difficult time keeping up with take-offs, as so many plans needed attention. Thus our construction budgets for almost every plan were inaccurate. Our Building Partners (trades and sub contractors) struggled to keep on schedule, cycle time suffered and we were dealing with constant building errors and increased warranty.

Bury the Dead Cats!

Over time, we dug out of that hole. We culled out low selling plans and limited the number of designs that could be offered in a single community. Production time focused on maintaining pricing on just the options and upgrades for strong sellers. Take-offs and construction budgets improved on those top sellers. Building Partners became more familiar with the plans, thus their build time improved, which increased our cycle time. Construction errors and warranty decreased. And, obviously, we are saving a considerable amount of money by not having to update code changes and product improvements on slow-selling plans.

How do you sell Lean to Sales?

So the builder across the street still offers 12 different floor plan designs and we’re selling the improved, lean selection. Seems like we’re setting our Sales Professional up for an objection.

Possibly. That’s why a Lean Sales Professional must show why our selection of designs sell so well, are a suitable fit for the community and meet the needs expressed by the Homebuyer. Then, on top of that, we have faster building cycle times with these plans. Plus, these designs have less warranty headaches for our Homeowners. Plus the eliminated waste allows us to add more value for less money.

It physics, really. Sure, even a dead cat will bounce. But get too many of them and they’ll stink up the model home.

© December 2010 Homebuilding Partners, Inc.   twitter-logo

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Responses

  1. Hi like your site, but I ask you, can you write about more success in building

    • Thank you for the support. Are you in commercial construction?

  2. Dead cats sound like a very bad thing to me 😦 I think keeping your cats alive is a much better plan.

    Even though this isn’t really related what it made me think of was a quote from Peter Scholtes: “Why do you hire dead wood? Or why do you hire live wood and kill it?” http://www.management-quotes.net/quote/37368

    • Point taken. Great quote from Peter Scholtes. That is something we definitely struggle with here from time to time. Thanks for checking in.

  3. In terms of your title, I’m reminded of the cliche’ that “even a broken watch is correct twice a day”.

    It is important to closely watch customer patterns to see buying preferences in both location and psychology of how the plans will be lived in. A selling point is that we are in the neighborhoods that people want to buy in and we offer the goods people actually want. There is a human desire to want to shop where there is a carefully thought out product range like a boutique which has an exceptionally knowledgeable staff. A Lean fulfillment system not only saves the builder and it’s teammates from waste, but transfers all the way down to the customer, who conserves personal time.

    I’ve single handedly watched customers start looking at more and more floorplans and it just becomes an overwhelming experience to where so many decisions are needing to be made by them…I think subconsciously, buyers are thankful for the upstream work the seller puts into the product offering.

    • Very well said…. Thanks!


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