Being a dealer in Hawaii certainly has its complications, but our competitors face the same hurdles. At HPM Building Supply, we use technology as a competitive advantage to overcome those hurdles and better serve our customers. While conditions in the continental U.S. may not be as difficult, the solutions we use are universal to most businesses in the industry.
Founded in 1921 as Hawaii Planing Mill (HPM), we are based on the Big Island of Hawaii. We have three full-service (with retail) branches and two other locations with inventory on the Big Island, plus LBM yards on the islands of Oahu (where Honolulu is located) and Kauai and a sales presence on Maui.
Selling lumber on Hawaii differs primarily because of two things: logistics and bugs. When we import lumber, it typically can take four to eight weeks from the time we place the order with the mills to when the ship arrives. We then have to treat all lumber products to make them pest-resistant, which takes even more time. Because we treat most of our lumber at our plant on the Big Island, if it’s meant for other islands, we have to put the wood on another boat to get it to our customers. Inter-island shipping can take three to five days.
On the mainland, shipping costs can be an afterthought. Here, they can be 25% to 35% of the total sales price. We have to apportion those costs, plus other factors like crating, onto all shipped goods. It is extremely important our system does this efficiently and accurately so we can better understand our margins. We also have to keep a larger safety stock than mainland yards; there’s no just-in-time delivery here, and containers have been known to fall off barges.
Despite the oceans and mountains separating our yards, we view our separate stocks as one big inventory. The lead times are so long we’d rather transfer goods between facilities than import stock separately and leave our customers waiting.
We chose our ERP system, bisTrack, in part because it had a history of serving customers in the United Kingdom who deal with complex logistics costs and costs, including over-the-water freight, both to and between islands. We also needed a system that could account for the treating costs as well as a system that helps manage our inventory and purchasing by accommodating the many weeks it takes for us to get goods delivered. Most systems have the right fields for these factors, but it’s important to also have analytics, reporting, and dashboards to monitor and manage the process.
Island life has its challenges in three other ways: people, energy, and natural disasters. We started neutralizing the challenges about five years ago by moving most of our enterprise solutions to “The Cloud.” Finding talented job candidates in Hawaii with a tech background isn’t always easy, but by using Cloud computing we have access to technical expertise without bringing it in-house.
Cloud-based services also reduce our energy costs. Electricity in Hawaii costs around four times the national average, so the more equipment we can use on the mainland, the less electricity we use on island. After rebuilding our company twice from major tsunamis in 1946 and 1960, and given our proximity to active volcanoes, disaster recovery is a prominent, concern. All told, if we were to manage all of our own servers with all our own staff, plus have all the disaster recovery infrastructure, it would cost us two to three times more than hosting.