Some LBM dealers seem to thrive despite these meager times. They may not know it, but they're practicing a form of what we in Louisiana's Cajun country call "Chank-a-Chank."
I first came across Chank-a-Chank during my college years because of Mulate's Restaurant in Breaux Bridge, the heart of the Acadiana region. Along with its Cajun food, this eating spot–which has since changed hands and now is called Pont Breaux's Cajun Restaurant–also was known for its Zydeco music. Zydeco gets its distinctive sound in part through an instrument that's as creative as it is plain: a steel washboard with two spoons.
A friend of mine named Martin Beirne frequented Mulate's and fell in love with the music, culture, and food. He interpreted Chank-a-Chank, a synonym for Zydeco's washboard sound, as the act of doing something very big with minimal resources. To Martin, a successful Chank-a-Chank trumps what another person with far richer resources might accomplish.
I have since adopted this into my personal life and into the LBM business. So, if you ever hear a dealer located far from Louisiana say "Chank-a-Chank," you can guess who taught him that term.
How are dealers using Chank-a-Chank to build additional profits?
Stretch Meals Instead of spending money advertising to attract customers, dealers are using low-cost stretch meals, like red beans and rice, gumbo, or pancakes, to attract customers and learn about their businesses. Many times these events are sponsored by vendors. When you put food in a customer's stomach he's likely to buy more products. And instead of serving a catered meal, dealers are cooking the food in their own kitchens and bringing it to the yard to reduce expenses.
Reducing Inventory SKUs and Quantities I have seen many dealers lean heavily on their distributors to supply them almost every day. In addition, dealers are choosing to not stock shorter lengths of slower-moving specialty lumber. When they do get a request for a shorter length, they simply cut a longer piece. That uses up some staff time, but it saves inventory costs.
Fleet Review Five years ago a dealer may have had one semi, two tandem trucks, and two flatbeds, all of which guzzle fuel. Since then, some dealers have acquired another large semi and have unloaded the mid-size, fuel-inefficient trucks for smaller V6s. These dealers are putting more products on larger trucks as well as making more trips with the smaller trucks, reducing overall fuel consumption and repairs on older vehicles.
Tweaking Margins by Product Category Dealers are going to the distributor that provides their nuts and bolts and are requesting updated bin tags showing higher prices for those fasteners. They are also working with hardware distributors and reviewing their selling prices, moving some down but many more up. They are ranking A, B, C, and D items within departments like lumber, increasing margins on D items. They're also keeping an eye on the competition through price checks at the bix boxes' websites.
Increased Mill Charges or Labor Charges Let's face it: Consumers do not have many choices when it comes to the milling of lumber. The reasons include increased costs of labor, electricity, and insurance, as well as the retirement of the craftsman generation. If you are providing labor for a retail job, take a close look at your minimum orders, price per labor hour, or price per foot on milling. I have seen dealers increase prices and increase volume.
While Mulate's promoted Chank-a-Chank as a buzzword for Cajun music, consider making Chank-a-Chank a buzzword around your office and see how you can do more with less–and particularly more than those that have the resources.
Challenge your employees to do something bigger than your competitors while investing minimal dollars. When asked why, tell them: "Chank-a-Chank."
Chris Rader is president of Rader Solutions, an IT company based in Lafayette, La. He also writes the "Rader's Edge" LBM management column for ProSalesOnline. E-mail: email@example.com