On today’s show we’re talking about managing your supply chain. There’s no question that some suppliers are having trouble keeping up with demand. Some channels are simply fully depleted. Almost all real estate investors at some point are buying construction materials, either directly, or indirectly through a subcontractor. When buying through a subcontractor, you often pay more because the subcontractor is simply passing the cost on to the end customer. If prices are elevated, then you can feel the full impact of those higher prices, even if the various supply chains are inefficient. Subcontractors have next to no incentive to shop around for low prices.
As a developer, you are faced with several difficult choices. Do you allow your subcontractors to quote and then purchase materials, or do you take on that procurement function in-house? If you decide to assume responsibility for purchasing materials, what supply chains do you want to utilize?