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Purchasing for Residential Steel: Establishing a Network of Suppliers

Western Metal In Architecture - May/June, 1998
By Scott Shaddix

In 1993, Nicholas Lane Contractors had completed the first 155 homes of the Presley Companies' Discovery Creek housing project in San Marcos, Ca. Wood prices had been increasing and Presley thought it was time to test a new material. For the last 11 homes of the project, Nicholas Lane Contractors was asked to use light-gauge steel.

Fantastic! The first residential steel contract for Nicholas Lane was in place. This was a new frontier. But where do we start? Where do we get our steel? Where do we find out fasteners and tools?

"There was absolutely no distribution established for residential steel," exclaims Debbie Adams, Nicholas Lane's Purchasing Director.

Streamlined Purchasing For Wood Supplies
When Nicholas Lane Contractors is awarded a wood framing contract, our purchasing agents follow a straight forward process for procuring supplies. After conducting takeoffs, we enter the per plan information into the Lane Systems construction management software system. The Lane System outputs bulk and package material lists for lumber and hardware.

With the material lists in hand, we send out to lumber yards and hardware suppliers who apply unit prices to the lists and provide a project quote. A supplier is determined and a delivery schedule is put in place for all hardware, bulk wood materials and cut packages for all openings.

For wood, Nicholas Lane has multiple suppliers to bid from to ensure competitive pricing. Lumber yards and hardware suppliers stock all necessary materials.

Establishing Suppliers for Steel: Trial By Error "Residential steel was like starting from scratch!" notes Ms. Adams. In 1993, steel roll formers had a distribution network established for commercial materials only. For residential gauges and materials, Nicholas Lane had to establish relationships directly with the roll formers.

California Expanded Metal Products Company (CEMCO), a regional steel roll former which is directed by Tom Porter, was eager to establish itself in the residential market. In addition to producing residential gauge materials, CEMCO agreed to cut bulk and package lengths themselves so that material delivery to the Nicholas Lane jobs site would be no different than if the job as being done with wood.

After the first eleven homes of the Presley Companies project, CEMCO realized that the labor-intensive work of cutting steel studs to size and assembling packages required too much space, was too time consuming and extremely costly. After the Discovery Creek project, the ball was now back in our hands to cut the materials.

Nicholas Lane's next steel project, Homecoming, entailed 73 homes in Temecula, CA for Taylor Woodrow Homes. Without a distributor to cut, package and deliver the steel to the job site, we decided to do the work ourselves. For each phase, 20-foot lengths were ordered and CEMCO delivered all the steel material to the job site at once.

If you have ever been to a track housing project, you can imagine the problems associated with moving large quantities of steel studs, cutting individual pieces for each opening and transferring the packages to the appropriate location in the midst of a construction site. Moreover, without the appropriate equipment, our labor costs shot through the roof.

Wood Suppliers Jump Aboard
The obvious solution to the problem of supplying steel for residential construction was to convince the lumber yards who are already familiar with residential wood to get involved. "We had not worked with steel, but we were looking to expand our market when CEMCO and Nicholas Lane approached us about supplying the residential steel materials, notes Rick Smith, Sales Manager for Southern California based Terry Lumber.

Initially, Terry Lumber did not stock any steel materials. Delivery from CEMCO was on demand. This meant that when Nicholas Lane placed an order, Terry Lumber first had to get CEMCO to roll the studs, then ship to the Terry Lumber yard; a process that adds 5-7 days to the purchasing schedule.

Cutting steel studs also required Terry Lumber to modify its wood equipment, but the methods for cutting light-gauge steel were not yet fully developed. "We had to try several different types of blades, develop a mist-cooling system to keep the blades from getting too hot, slow down the blade speed and learn to disengage the dust system, before we finally developed an efficient system for cutting the lengths," states Mr. Smith.

Terry Lumber and Las Plumas Lumber have both developed efficient techniques to supply steel for Southern California builders and Nicholas Lane now has two reliable sources of material to bid on all steel jobs. Terry Lumber has one crew that works primarily on steel, and Rick figures that they are as much as 30% more efficient than three years ago due to efficiencies in laying out cuts, and developing efficiencies in storing steel and simply knowing the material better.

Additionally, the average steel home weighs 6-7,000 pounds less than wood and the men working on the lumber yard have much less weight to carry with steel. Not to mention that because fewer steel studs are required for a steel home as compared to a wood home, a shipment of steel requires nearly 30% less space than wood.

Hardware Challenges After more than a year of trials, Nicholas Lane had secured a source for its steel needs. Purchasing hardware was another challenge that not only required us to find a source for our materials, we also had to figure out what to use. Fasteners? Screw tips? Saw blades? Tools?
Larry Files, Sales Manager for Orco Construction Supply notes, "when we first began supplying steel fasteners, I had to begin researching a whole new industry."

Orco and Whitecap Industries both began trying to fulfill Nicholas Lane's needs, purchasing primarily Compass International and Grabber fastener supplies. "Not sure what worked best, we began with about 15 different fasteners. We've narrowed it down to about six screws which work we states Larry Files indicating that the learning process was slow. Each hardware piece required a similar process of education and refinement.

Working closely with Compass, our suppliers and more recently Hank Mailand from the AISI Cost Reduction Field Study, we have figured out what materials work best and what our suppliers need to stock.

Arriving at a Carbide screw tip for screw guns that won't strip out a fastener, or a 150 tooth plywood saw blade for efficient small steel cuts was simply a process of trial and error in the field.

The tradesmen and our foremen in the field have worked to find the right materials to use, but purchasing required a whole new level of complexity because three years ago the suppliers did not know the material very well. "When you call up to order wood nails, your supplier knows what you need. Ask for a penny nail and you get what you want. When ordering a screw, if I ask for a 8 by 1/2 instead of a 8 by 1/2 #C12 Self Drilling Screw, I may get 50,000 of the wrong screws delivered to the job site," says Ms. Adams.
Compounding these difficulties, both Compass and Grabber were unprepared to deal with the volume that Nicholas Lane began doing once the 73 home Taylor Woodrow project was set for steel. "In the middle of the project, we ran out of screws!" Ms. Adams adds.

Supply Relationships Taking Shape
After nearly four years of supplying residential steel projects, Orco and Whitecap can both supply wood as well as steel. When Nicholas Lane sends out a hardware list for a bid, materials are stocked and sales representatives know what is needed.

Nicholas Lane is even making progress working with its suppliers to stock new materials. Dow Chemicals roduces Styrofoam Seal Sill, glue gasket that Nicholas ane has recently found to be effective to adhere the bottom late to a home's concrete foundation. Ms. Adams initiated a relationship between Dow and both Orco and Whitecap, and the suppliers now stock Dow's product on their shelves. Despite these advancements, there remains several material supplies that Nicholas Lane must purchase directly from the manufacturer. Tri-Cord studs, which are required for thermal enhancement, must be purchased directly from Tri-Cord Systems Inc. because they have not yet developed a distribution channel. Similarly, Integrity Gaskets, made by Shadwell Company, Inc., a buffer strip floor joists to reduce floor noise, does not yet have retail distribution either. "Every additional supplier I have to deal with adds time and cost to jobs," declares Ms. Adams who understands that simplifying the supply channel is critical to the success of residential steel.

It has been a long haul establishing a network of steady suppliers. "The trail has been blazed in our area. Now suppliers actually stock the materials, know the product, and know what I need," affirms Ms. Adams.
Nicholas Lane still builds in 5-7 extra days for material delivery on a steel framing job, as compared to wood. Nevertheless, leaders in Southern Califomia's building community are determined to realize the full potential of the steel market, and are achieving greater effciencies every day we go forward.