At its annual stockholder's meeting on April 20, Federal Way, Wash.–based forest products giant Weyerhaeuser publicly unveiled “iLevel,” a new market and branding strategy that integrates five existing divisions representing the bulk of the company's structural frame products into a single source of materials, marketing, distribution, and technology.
The new approach, say Weyerhaeuser officials, is in response to a changing dynamic between the nation's largest-volume home builders and a supply channel that requires more flexibility and less cost. “The heart of the strategy is the continuing consolidation of home builders, especially the top-producing companies, and what they are asking of suppliers to help them construct homes,” says Kurt Liebich, vice president of marketing, noting increasing dealer investments in component manufacturing and installed sales to meet that demand.
Consolidation of Weyerhaeuser's so-called “differentiated” LBM products under the new iLevel umbrella, which combined accounted for more than one-third of the company's $22.6 billion in revenues last year and most notably include Trus Joist engineered lumber and Structurwood oriented strand panels, will enable dealers and builders to more easily negotiate customized structural framing packages from the supplier. “Instead of several businesses within Weyerhaeuser, each with its own brand, distribution, credit terms, service postures, and sales organizations, iLevel optimizes the entire structural frame,” says Liebich, often with a single point of contact for the dealer.
Or, in some cases, the builder, with the dealer acting as the distribution conduit instead of the primary point of sale. “Some of our customers want that kind of visibility with large suppliers,” to leverage significant materials purchases to achieve economies of scale across multiple divisions, says George Finkenstaedt, vice president of market development for Lanoga, the $3.1 billion, 356-location dealer based in Redmond, Wash., and one of Weyerhaeuser's largest customers. “We think that relationship is OK if we are to offer value to our customers and to our suppliers as a distribution partner.”
That concession, Finkenstaedt admits, goes against conventional LBM supply chain wisdom, potentially fueling speculation that the iLevel strategy is a ploy to eventually circumvent dealers and sell direct to builders—a scenario Weyerhaeuser denies. “We have no intention of selling direct. Our strategy is all about strengthening our relationship with dealers to help them deliver the solutions that builders need,” says Liebich. “We're not forcing one way to do business, but rather establishing one person to facilitate the best solution and apply the full resources of Weyerhaeuser to each dealer.”
For Finkenstaedt and other dealers large and small, that new order is a welcome change. “We'd have 12 people representing different Weyerhaeuser divisions and products in a purchasing meeting, and sometimes there was an issue we couldn't resolve because the person authorized to make the decision wasn't there,” he recalls. “It was rare, but you remember those times.”
Under iLevel, multi-market dealers managing tract builders in large metro areas and independent operations serving custom builders and remodelers will both benefit from a single point of contact for their iLevel needs. “Dealers will be able to coordinate all of our products with one call instead of contacting different organizations,” to wrangle products and services, says Scott Elston, director of national accounts for Weyerhaeuser, in turn helping dealers meet price and availability demands and better manage logistics and delivery issues regardless of volume.
That benefit promises to be enhanced as Weyerhaeuser evolves the technology component of iLevel to streamline the exchange of data along the supply chain. “The fewer times we can interrupt the flow of information, the more accurate the forecast data we have to achieve even-flow production,” says Elston.
Under the integrated iLevel model, the company is better able to build on the success of software programs such as TJXpert, which enables dealers to design and engineer floor systems for Trus Joist products, to create automated systems that account for the entire structural frame of a house.
In addition, shared sales and forecasting solutions that automatically share data up and down the channel, programs that manage cutting equipment to optimize a dealer's lumber inventory, and as-yet developed software for creating more efficient structural components—such as panelized floor systems—also are included in the iLevel vision. “We'll continue to invest in software tools to increase overall dealer efficiency and enable them to optimize the process for builders,” says Liebich.