Schlouch Turns Vendors into Partners with Care, Trust, Help

Schlouch Inc. Mission Statement: Schlouch Incorporated is founded on the premise that we are in business to be profitable and respond to the needs of people, by developing healthy relationships between our people and their families, our customers, vendors, and our communities.

One sentence from an central-Pennsylvania site-prep contractor’s mission statement explains the essential link between relationships and profit that drives the company’s ongoing success.

One example: part of rebuilding its equipment operation over the past ten years, the company has deepened its 30-plus-year relationship with Caterpillar dealer Giles & Ransome (G&R) from retail supplier to innovation partner. Ideas the Cat dealer brought to the contractor have resulted in significant ownership and operating cost reductions for asphalt pavers and pipelaying excavators.

Schlouch says the trick was managing the change “so that we come out the other end with people that are engaged in helping us and bring good ideas to the table, people that can earn a profit doing business with us, and people who can meet our needs.”

He insists that starts with managing the vendor relationship.

“Our corporate culture is focused on building relationships,” says Schlouch. “And a relationship is about three things: it’s about care, trust and help. I call it the CTH Model.

“We do care about Ransome and about Caterpillar, because we need them to succeed. We need parts, and we need service if we want to be in the business we’re in.”

Schlouch needed new ideas to help his company break its own habits and rituals to create new expectations for equipment costs. He needed outside perspective with equipment expertise to help them succeed. He and his crew recruited G&R to fill that role by trading on their mutual motivation to care about each other’s success.

“The second thing is trust, and we have to work hard to build that every day,” Schlouch says.

He uses the “trust bank” analogy, saying that we make trust deposits with the people we meet by saying what we’re going to do, and doing what we say.

But his company has risked more than you would expect in this personal-level trust building. Schlouch has shared specific operating costs with G&R in order to enlist the vendor’s problem-solving ability. They trust the vendor with the types of figures that buyers seldom share with sellers – numbers like the contractor’s detailed asphalt paver costs and its equipment budget for the year – because the information draws G&R into partnership in finding new ways to overcome old cost structures.

“The help aspect of the relationship is measured simply: is your life getting better or is it getting worse as a result of this relationship?” Schlouch says.

“If you put those three into play – care, trust, help – in a relationship, the possibilities for what you can accomplish become endless. The impossible becomes possible.”

Schlouch says that kind of potential has been necessary for his company to thrive in the post-recession construction economy.

“The recession strained both companies (Schlouch Inc. and G&R),” he explains. “Prices just dropped; workload dropped. And we’re all trying to figure out how to stay in the game. We just all had to change, and some of the things that we had to change were painful.

“We had some people issues, and we sat down and said, ‘This relationship is not working out and this is why.’ They made some changes, and we made some changes.

“One thing that Ransome has done is they’ve stayed engaged. Even though things weren’t working out at times, if you have a problem and the other person in the relationship keeps trying to work it out, that’s a big plus in the trust bank."

Schlouch kept his people focused on remaking the relationship, knowing it was a transformation that a persistent, motivated customer could lead vendors through.

“I think people ultimately want to work in an environment marked by care, trust and help,” he says.  “How do you say, ‘No’ to that?”

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