Today we take you behind the scenes of the John Houston Homes building process. A lot of moving parts and people work together to make a home happen, and it certainly wouldn't be possible without the vendors we partner with; from concrete and landscaping to plumbing and countertops, the list is long. On this episode, our very own Director of Purchasing, OT Posadas, reveals how John Houston Homes continues to maintain great relationships with our vendors, even through the challenges of the industry, and what that process of working with our trade partners looks like to make your dream home a reality.
S2 Ep20_A Crash Course in how JH Homes Streamlines Your New Home Vendors (OT Posadas).mp3
Intro: [00:00:03] Welcome Home, a podcast brought to you by John Houston Homes. Join hosts, Chelsi Frazier and Whitney Pryor, as they walk you through the exciting adventure of your home buying and building journey.
Whitney Pryor: [00:00:18] Thank you for joining us today on the Welcome Home podcast. This is Whitney, and today I'll actually be hosting this show by myself. Chelsi is on vacation. We're super excited and just a tinge jealous, but she definitely deserves it. She's been working hard this year, so today I will be hosting by myself. We have an awesome guest on today that I've known for quite a while. He is the Director of Purchasing at John Houston Homes and has worn many hats within the construction industry as a whole. We're excited to have him on, talk about his experience, what the role of purchasing is to John Houston Homes and how it affects our home buyers. Welcome to the show OT Posadas.
OT Posadas: [00:01:03] Thank you. Thank you for having me. I'm excited to be here.
Whitney Pryor: [00:01:05] OT, I've known you for a while, before we even worked at John Houston Homes. You've worn several hats within the construction industry. Can you just kind of go through all the different things that you've done in construction and how long you've been in construction?
OT Posadas: [00:01:23] I've been in the industry for 25 years, but actually grew up in the industry. My father was a builder and a remodeler. He's still a remodeler to this day. It's funny because I never wanted to be in the Construction Industry because I grew up in it. In doing so, I was like, "man, as soon as I get out of High School, I'm out. I don't want anything to do with this." Ironically, I was brought into it in '99, about six years out of High School. I started in Sales because I was bilingual. One of the guys I worked with said, "man, you'd be great in the Construction Industry." I'm like, "I don't want to get into it." The funny thing is that being in Sales and then having that relationship with the the people, the actual labor trades and everything, helped me out so much. It was so relational to me because of what my father and my uncles did. It really gave me a perspective that they didn't have.
Whitney Pryor: [00:02:28] Yeah, my Mother was a remodeler, so kind of the same situation. I was like, "I'm never going to do this. I don't like sweating. I don't like getting dirty. I'm going to work in a cold office one day and be happy." You grow up and you kind of get back into it. You don't realize how much you learned from being a child growing up in that and how much you know that other people just don't have any clue about.
OT Posadas: [00:02:52] Yeah, there was just so much that you did pick up and that you do know. The insights that you don't see on the surface, if it's fair to say. There's many times that I call him now and I just thank him because I know that had I not experienced all that, I wouldn't be where I am today. What we do is very relational. We have to remember how many people are out there helping put these houses together. It takes an Army in every single project. My family's from Mexico. My Father's from Mexico and my Grandmother still lives in Mexico. There's a lot of areas and regions of Mexico that these guys are from that I've been to personally that I know, have experienced the culture firsthand.
Whitney Pryor: [00:03:46] Yeah, that really helps in that relationship.
OT Posadas: [00:03:48] It's really big because they just want to please. They're there to do a job, but they're good people at the end of the day.
Whitney Pryor: [00:03:58] Definitely.
OT Posadas: [00:03:59] It's pretty neat to have that. I spent years in Sales. I guess probably about 2007/2008, sales weren't going so well.
Whitney Pryor: [00:04:10] Because the market crashed.
OT Posadas: [00:04:14] I had one Manager that I literally followed from 99' up until 2007. Anywhere he went, I went, I mean, we were just a team. He finally called me in his office one day and he's like, "I need you to resign." I'm like, "but I'm happy, I don't understand." He said, "trust me, you just need too." Actually, it was pretty pivotal in my life. He helped me out. I ended up working for a Homebuilder and got a taste of that. It just took off having seen the other side. With having 8 years of experience on the Sales side of it, the vendor side of it and then to flip over to the homebuilding side, it was a good transition. There's a lot of things that you learn on that side that helps you on this side, especially processes and things like that.
Whitney Pryor: [00:05:09] Definitely. Homebuilding is not just taking one piece like you have with the vendor, but then multiplying it times how many vendors we use in home building to build a house.
OT Posadas: [00:05:20] You know, one thing that I don't think we realize is how big that list of trades is per home. Everyone thinks of the main things.
Whitney Pryor: [00:05:34] If you could guess or estimate, how many different trades or vendors touch one home?
OT Posadas: [00:05:42] I would say that it's between 15 and 20, to be honest. You start with your Concrete People, Plumbers, Electricians and your HVAC. People think of those that just come to you, but then you have Cleaners. You have Interior Cleaner, Exterior Cleaner, Painter, Trim Guy and Landscapers. The Dirt Guy is separate from the surveyors. The list goes on and on. Then, you count your Appliance People. The amount of families and people that you touch from one home is a lot. We were talking about that one day. If you think about the Mason. He comes over and he's got 4 or 5 guys with him, right? Those 4 or 5 guys are taking that money and spending it on "X". If you just start going down the line, it's hundreds of people that are affected by this. I think that's why this industry is so important to our economy, because of the amount of people that are affected by it. With having that many trades, that many vendors and then being in a market that we're in now with all these logistical constraints and raw materials not available, the delays are just are unprecedented.
Whitney Pryor: [00:07:04] It all started from COVID, right? From the Pandemic and it just kind of rolled on.
OT Posadas: [00:07:08] Yeah, so the narrative that I get consistently is that when COVID became prevalent, everyone was like, "okay, we've got to scale back because this is going to be a long term shutdown." The complete opposite happened in our industry. Nothing slowed down, everything accelerated. Now you cut your supplies back and now demand is through the roof. Then throw in some natural disasters and a little freeze. The one precursor raw material that has affected more industries than anything is resin. Resin is used to make to plywood, resin is used in paint and resin is used in flooring. I mean, the list goes on and on.
Whitney Pryor: [00:08:02] I didn't realize that was what one of the issues was. I knew there was a paint shortage, which I thought was kind of strange. I'm like, "how can you just not make paint?"
OT Posadas: [00:08:13] It's all the precursors. I have family that's in Louisiana in Baton Rouge. I never realized how important that whole Gulf Petroleum Chemical Base is for us as an industry. It's huge.
Whitney Pryor: [00:08:33] Wow.
OT Posadas: [00:08:33] There are tanks, the containers of resin that froze in Mexico during the freeze.
Whitney Pryor: [00:08:42] Wow.
OT Posadas: [00:08:45] They got people in there trying to chip it away to make the tank usable again. I mean, you're like, "what?" How does that happen, right? It's not a quick fix and then we had the hurricane just a few a couple of months ago. Ida came through, knocked out one of the Dallas plants and they didn't have power for three weeks, thus comes the paint shortage. It's all so intertwined and connected. It's crazy. This has been the most challenging two years in this industry, that I know of. A Lot of my mentors and people that I know that have been in the industry since the 70s, they've never seen it like this and hey actually think I'm crazy for jumping into it. What are you thinking?
Whitney Pryor: [00:09:35] Material shortages? Yeah, I'll be Director of Purchasing, et me figure this out.
OT Posadas: [00:09:38] It's literally Whac-A-Mole. You'll fix two things and three more things pop up. It's just constant, but fortunately, we work for a company who has a very solid reputation.
Whitney Pryor: [00:09:53] Yeah, I was going to say, relationships here have certainly helped us to be able to at least communicate or know ahead of time on some of those shortages, right?
OT Posadas: [00:10:04] Right. We've got a really good reputation with all of our trades and some of our trade base has been with us from the very beginning. This is a very relational business, more than anything. Some of those key trades have just been huge. If you think of lumber, they are one of the biggest components. One of our companies, one of our reps Tony, has really just been very helpful. He is like family. I get to see him once a week. The good thing about having that relationship with him is that he has probably one of the largest books of business and lumber in our Metroplex. I would safely say that. With that, comes all this intel and information that he hears. That's where those relationships are really valuable because when you get that level of relationship and you care about him and they care about you, there's more ways they can help you other than just their piece of it. He's been been huge.
Whitney Pryor: [00:11:11] Just to give some perspective for our listeners, pretty much everyone knows that there was a huge spike in lumber cost and there was lumber shortage, right? We were just trying to get our hands on it. With that, the relationship part is so important because there are other builders that don't have that relationship with their supplier. What happens is, they get these price increases on the back end after building a home and then have no idea. Then they realize, "oh, we're building all of these homes right now and we're short $20,000 to pay the lumber on it. Now we've got to go and tell the homeowners, that have already signed a contract, "hey, you have to give us more money for your home because otherwise we're not going to make any money on this home." We didn't have to do. We were able to forecast and because we meet weekly with our rep and have that strong relationship, he was able to help us know, "hey, this is what's coming," so that we could prepare and also prepare our homeowners for what was coming.
OT Posadas: [00:12:22] Oh yeah, that's the thing. We've seen some of the horror stories in the news and how that played out. It's unfortunate that that happens. Going back to that relationship piece, because we have that relationship in that communication, it allows us to be really proactive in what we do. We've seen this in several of our trades. The brick shortage, we we got ahead of that. There was extended delays that we've never seen, so we restructured and our process changed, so that we could get ahead of that. That communication is what's really been vital. The lumber hit unprecedented increases. In the history of tracking lumber prices, it's never been as high as it got. The shortages were there. Again, having that tenured relationship with him, being able to give us the forecast and pour into us on what other other builders were doing, that that really helped us out it. We're most have seen some struggles, we've been able to to get through with what we have.
Whitney Pryor: [00:13:38] Yeah, so that's one piece of purchasing right? Is the relationship building with the vendors and the trades. Can you kind of give our listeners a whole picture of, what does purchasing do for a homebuilder there? Their not really seeing out in the field, like a Sales Rep or a Builder, but really, they're almost the brains of the operation, right? Can you kind of tell the listeners what all is in their scope?
OT Posadas: [00:14:04] It's a pretty neat role because basically, you're buying all the ingredients for the home, if you will. We have a process that we go through when we onboard our trades. We find every trade needed. We have a trade base that we use. It's not as easy as just getting a bid. "Okay, your bid looks good and the scope of work and lines up." It's finding the trades that will fit that neighborhood for the size that it's going to be, monitoring their progress and their workmanship. We try to align with companies who share our values because that's something that we really pride ourselves in. As you know, our mission statement is to, Reach People for Christ and Give to the Kingdom. It's really tough in our industry, but there are a lot of our trade partners who are similarly parallel with us in those views, so that helps us reach our end goal. If you think about it, you have the dirt guy. He literally is a guy on the Bobcat clearing the lot for you. From there it goes to the Plumber, the Concrete Guy, the Framer, the Lumber Supplier, the Sheetrock and the Insulation. You're literally bidding out every single trade. The homeowner comes in and they sign a contract. I believe it's 72 hours and then they go to the design center appointment. That's when the clock starts ticking. That's when they go to Starts. They get their plans drawn and they get their permits submitted. Then it comes to us. You think, "okay, you've already hired all these people, your work's done but it has just begun. Now we take the plan, design options, color selections and make sure that everything's there that's needed. We put all the purchase orders together with the right amounts and the right trades. Some trades change because of availability. It's a lot, especially now during the Pandemic. One thing that's happened is, you've got these trades lined out and this is who it's going to be.I got a text message last night. "I need a cleaner. My cleaner has COVID." Okay, so that crews out for two weeks. You got a closing next week. I got a house that needs to be cleaned, who's up? It's a shuffle. That shuffle is not as simple as just picking up the phone and calling someone. Now I have PO's that I have to void and reissue, so it's a lot. I have a great team. I have have four Agents- one lead Agent, a Manager and an Estimating Department. I have a really, really good team that makes my job easy because they really are very good at what they do, but it's a lot. This morning, I had 48 emails overnight of things to be done this morning, so it's constant. It never ends.
Whitney Pryor: [00:17:17] That is crazy! To keep up with all that madness, we have a really great Business Management System, right? Can you kind of tell us how that helps in keeping up, tracking and all the things. I know that you've worked for companies, at least in the past, that have been on a paper system.
OT Posadas: [00:17:38] I joke with everyone. We're an I.T. Company that builds houses because our I.T. infrastructure is beyond anything that I've ever worked with. It rivals some of the bigger, national builders. Seriously, we have a report for everything. A lot of our processes are automated. That makes us that much more efficient. The scheduling of a house, in a perfect world, if there were no delays, we could project, from beginning to end about how long it's going to take to build that house. Now obviously, that's not the case right now with with everything that we're going through, but all of our scheduling is automated. It's all sent via an app that we use called Hyphen. That sends the schedule out and sends the request out for the materials. The neatest thing about that is that unlike the paper builders, our vendors aren't having to bring us invoices every week. That is all an automated process. When your builder confirms that phase or that piece of construction has been complete, he's literally signing the check out in the field because he's hit complete, and that initiates the accounts payable process. That in itself is just a time savings.
Whitney Pryor: [00:18:57] That is a huge time saver. I can't imagine.
OT Posadas: [00:18:59] Just for the trades because that's one less thing for them to have to do. They don't have to come up here weekly to get their invoices stamped or anything like. They get alerts when something's rescheduled, so it works out really well.
Whitney Pryor: [00:19:12] I think it's a huge help for the builders, too, because it really keeps them on schedule with what they're supposed to be ordering or what's coming up.
OT Posadas: [00:19:21] Oh, absolutely.
Whitney Pryor: [00:19:23] A lot of our builders are building anywhere between 10 to 20 homes at a time.
OT Posadas: [00:19:29] There are.
Whitney Pryor: [00:19:29] They are all in different phases.
OT Posadas: [00:19:31] Absolutely. It's all based off of a template, so it's a schedule template. We're constantly monitoring that template and making adjustments to it as needed. Literally, I could give you an I-Pad with a template and you would be able to see where the home is and what's next, so that's that's super helpful. Especially if we have someone that is out ill someone. You can hand over, you can see the schedule where it's at and you can literally pick up where they left off, so it's really beneficial for us.
Whitney Pryor: [00:20:06] Definitely. On top of that, with all of the technology, of course, there's the the pre- work that we do to estimate the plans. Then there's the middle of the work with all of the vendors we're working with and doing that shuffle game. Then after the fact, because we have that technology, we're able to go back and look at our profit margins which allows us to forecast. This is where everything needs to be, know which plans people are buying more of and what they like, but more so that we can make those intelligent decisions. "Okay, people really like this style of kitchen. Let's put it in more of our plans." Knowing all of the intelligence behind it is super helpful too.
OT Posadas: [00:20:51] That is where the reporting that we have is amazing. I could go to the office right now and I can tell you the top plan, top elevation and the most chosen design option. That drives a lot of what we do when we go to negotiate these deals with the vendors. We know what's the most important to us and what brings more value to us. Like I said, the reports are just out of this world. We have a report guru. His name's Andrew. There's very little that he can't do given the right data points. He can he can pull some data.
Whitney Pryor: [00:21:35] Yes he can! The reports that we do have are amazing and they help us in so many ways that are affect our homebuyers in general. We're able to communicate to them or let them know, "hey, these are our most popular plans" or "hey, we're going to see probably an increase in pricing pretty soon" or "we're going to see material shortages in this area and it's going to delay the home being built for X amount of time," right?
OT Posadas: [00:22:07] Yeah, so one of the things that's probably one of the biggest challenges that we have right now is the shortages. Some of it is labor related and some of it is material related. The way that our reports are are done, I can pull a report and show you what stage every single home that we have is in. I can take that report and I can filter out what the issue is. If carpet's my issue this week, these are all the ones that are about to get carpet. I go to my vendor, here's the list, these are the ones, these are the closing dates, help. That's a report that I can pull within five minutes. Being able to have access to that data that quick is has really helped us through all of this. Some of those delays are days notice because everyone's seeing unprecedented times. If you imagine you have a warehouse full of workers, right, working close quarters, two or three of them get sick, guess what?
Whitney Pryor: [00:23:09] The whole warehouse is going all out for two weeks.
OT Posadas: [00:23:10] It is and we experienced that with one of our garage door companies. There was one lady left in the office, bless her heart. I can't imagine what it was like driving up there. Your whole office is out with COVID and here you are.
Whitney Pryor: [00:23:27] Hopefully she was in a hazmat suit at that point.
OT Posadas: [00:23:30] To that point, with our technology the way that it is, we there is no one in my team that can't work from home. We have that flexibility and that availability that you literally can work from anywhere. You can get internet for this company, so that is huge.
Whitney Pryor: [00:23:52] We started doing that before any of the pandemic hit. We had the systems in place to be able to do that and be capable of working from home. Not to plug the company, I promise they didn't sponsor this, but Microsoft Teams has been a game changer for our company- being able to communicate, relay information and share documents. It's just been amazing. We were able to just seamlessly go work at home.
OT Posadas: [00:24:19] Yeah, like I said, having worked for other builders in the past and just with what we have here is is phenomenal. I mean, it really. I don't know if the public really can grasp that, not being in the industry, but it is huge. Everyone that I've onboarded so far. I've got a new manager that's been with us for about three weeks now and we were together yesterday, he's like, "man, it's pretty top notch." It is and it's nice to have that.
Whitney Pryor: [00:24:50] We care a lot about what we do and it shows. I think when you bring that many employees together that care about making the right decisions, really think through how this best should work, bringing great attitudes- really joyful, hope filled, and all of the things that we care about, it really makes a difference on the back end, whenever we're building homes for people.
OT Posadas: [00:25:20] It does and it's not hard for us to fall in line with that when when we're getting it from the top down. Our leadership definitely lives that out every day. I witnessed that firsthand over the Summer. With lumber prices being as high as they were, theft was rampant, so there was a task force that was formed by the sheriff's department and the local police departments. At that time, I was in the field. I kind of had my eyes on some of the hot areas and there was an arrest that we made. It was a young man and an older guy who was actually the kid's father-in-law that had him out there. They were stealing material and they were arrested. I had met with with our owner about a month and a half to two months after that. It was just kind of an update, how's it going? I'm telling them, "hey , you know, we arrested this guy and this that. He's still in jail." He looks over at me and he says, "we need to do something for him."
Whitney Pryor: [00:26:26] Wow!
OT Posadas: [00:26:26] I was just like, "uh, what do you mean?" He's like, "we got to love him." He didn't just say that, he stopped what he was doing right then and there made a phone call to our Chief Ministry Officer to try to get in touch with the sheriff, to see what we could do to get to get help for the young man. That's when I knew.
Whitney Pryor: [00:26:49] It takes a big person.
OT Posadas: [00:26:50] It does. I'd never experienced anything like that. It was pretty awesome. Knowing that's what we're working towards every day. Not only are we doing our job, but we're striving to be better people and it shows. It's pretty awesome.
Whitney Pryor: [00:27:08] Yeah. I think carries out into the field too, because he loves on us and then we're able to love on all of the people out in the field. It makes just a huge impact because of the number of people that we touch.
OT Posadas: [00:27:21] It sets us apart. We're human. There's frustrations, but hopefully at the end of the day, we're distributing that grace that we're given and being good with it.
Whitney Pryor: [00:27:35] On that note, thank you, O.T. for joining us. You have been just a wealth of knowledge and it's just always great talking to you. We're excited to have you as the Director of Purchasing. We know you're going to do great things, so thank you for coming on the show today.
OT Posadas: [00:27:51] You're welcome. Thank you for having me. glad to be here
Whitney Pryor: [00:27:54] Thank you listeners for joining us on another episode of the Welcome Home Podcast. Take a look at our show notes to get more information about John Houston Homes. You can visit us on our social media channels, such as Facebook or Instagram. You can visit our website at jhoustonhomes.com. or give us a call at 866.298.1416. We look forward to having you on another episode of the Welcome Home Podcast.
Chelsi Frazier and Whitney Pryor: [00:28:24] Welcome Home.