Who says bigger is better? While scale affords the LBM industry's titans certain benefits, it also can slow them down, especially when it comes to making quick decisions on service, technology, new market penetration, and, yes, even purchasing. While the big dogs are sweating out a national construction correction, smaller independents are continuing to prove there's market share to be had for shops that capitalize on creative thinking, ironclad commitments, and one-for-all industry alliances. Here's a look at four such dealers.
Less Is More Lesson One
Diversity in customers, inventory, and services enables Allen & Allen Lumber Co. to take advantage of specialty sales opportunities that are continents away.
"By the time I joined the company in 1977, that specialty mentality had become a big part of what Allen & Allen was," says current company CEO Buzz Miller. "We joked that in addition to lumber we'd probably be selling airplane wheels one day." While Boeing has yet to come a-knockin', there have been plenty of jobs across the globe to whet Allen & Allen's Texas-sized appetite for the specialty order business.
"We have shipped into Mexico for years," says Miller. "We shipped Pizza Hut jobs in Puerto Rico, we shipped wood for two roller coasters in Spain, we send specialty magnetic hinges to England, and we shipped the materials for a medical clinic in Peru."
Back home on the range, Allen & Allen sells to an equally diverse mix of local customers that include hotels, colleges, high school industrial arts departments, highway builders, traditional contractors, and other dealers. "We're not a lumberyard, we're not a retailer, we're not a wholesaler, we're not a hardware store, we're not a home center," says Miller. "We are really an unusual blend of all of those." Supporting a diverse cast demands a wide profile of inventory and services. Allen & Allen's millwork shop can grind its own knives to do high-end restoration work in woods from cypress to zebrawood to wormy chestnut. In 2001, the company opened a showroom to cater to architects and designers with products like Baldwin locksets, Toto toilets from Japan, and $2,000 decorative crystal bowls.
Adding to that is a Microsoft Dynamics Exp server system coming online later this year. "Mr. Allen eventually developed a huge Rolodex and shipped to 30 states, and from that vision we go to the Web," Miller says. "The new server is really something, and when we complete employee training we believe it will help us concentrate on our Web-based business. We think the sky is the limit in an online store."
When asked why more pro dealers don't think about the possibilities of the Web or doing business without borders, Miller just laughs. "We've just evolved that way, and certainly we know that we are a jack of all trades but a master of none." Regardless of business focus, he sees continued opportunities for small independents. "With cell phones and e-mails it's a 24/7 job now, and you need to handle that efficiently," Miller says. "But if you find good people and bust your ass and take care of the customer there is always a place for the independent."
Less Is More Lesson Two
Put It in Writing
Professional Builders Supply's team has built a $20 million dealer in just three years by holding the company accountable to its customer service promises.
In January, a Professional Builders Supply (PBS) truck carrying a large entry door for one of the company's newer accounts was blocked at a subdivision entrance due to asphalt work. For many dealers, that would have been a perfectly good reason why the delivery couldn't be made at the time promised. But it wasn't good enough for PBS. The two delivery guys locked up the truck and carried the door more than a mile for an on-time jobsite drop-off.
"Many of the dealers in the [Raleigh-Durham-Chapel Hill] Triangle are focused on size and sheer market dominance," says Isley, referring to such massive competitors as Stock (headquartered just a few miles away) and Builders FirstSource. "We've got players who focus entirely on national production builders, we have players that focus on both production and custom builders. But we [at PBS] are entirely focused on that local custom builder and their prominent service issues and unique needs."
Across the country, plenty of dealers can talk the high-end service talk, but to walk the walk–even if it's a mile on foot with an entry door in hand–PBS has codified its entire service mission into a "Customer Commitment," a set of 16 commandments that include promises on the minimum service levels that contractors can expect from the company. Those promises include four-hour fill-in orders, next-day delivery, responses to service and warranty requests, invoicing and billing accuracy, and credit returns. Copies of the Customer Commitment are given to every new client and new hire, and are posted throughout the lumberyard.
"We're focused on giving world-class customer service, and the Customer Commitment makes sure we don't just throw the 'world class' term around lightly," says Wilkerson, who sits down with Isley on a weekly basis to examine each service commandment as part of a "Measurement of Success" quality assurance review. "If we have a deviation from any of our commitments it gets written up and everyone in the company immediately knows about it."
Such deviations are addressed in a positive environment, however. Every error report submitted by an employee is entered into a monthly drawing for hockey tickets (Raleigh's Carolina Hurricanes, 2006 NHL Stanley Cup champions, are a hot ticket), and Isley says water cooler talk about service feats like the entry door delivery keeps the team charged as well.
PBS also uses the Customer Commitment as a working document to manage the company. If PBS is bumping against its four-hour fill-in, for example, managers will hire someone or buy additional delivery equipment to get the metric back down. "All of our processes revolve around the customer commitment. It is ingrained in everything we do," says Isley. "It is hanging next to all the tickets on the dispatch board. Inside salespeople have it on the wall next to their desks. You can't not see it during the day as you go about the job you are responsible for carrying out."
Unless, that is, you're already walking the extra service mile on foot.
Less Is More Lesson Three
Purchase Your Power
A 40-year-old buying group affiliation continues to keep Mans Lumber and Millwork strong, even in the face of economic slowdowns.
While new-home buyers aren't exactly flocking into Michigan these days, those that do move into the neighborhoods south and west of Detroit make friends quickly with Mans Lumber and Millwork, the four-unit pro dealer that gives out warm welcomes by the bucket load. Offered in conjunction with industry buying group Do it Best, the Mans "New Mover Coupon" initiative entitles all new residents to a bucketful of assorted hand tools, paintbrushes, spackle, adhesives, and local homeowner community magazines–the things one might need to ease some of the move-in madness. The buckets feature the Do it Best and Mans logos, and coupons are mailed out in circulars or are available for print on Mans' Web site.
"Every time a person is moving into a new home you are hoping they are going to finish their basement, redo their kitchen, or improve the deck," says Mans' fourth-generation president, Doug Mans. "We were aiming to get to those people that were doing projects those first couple of weeks after move in, and the Do it Best marketing department has always helped us with those kinds of things."
Indeed, Mans and Do it Best have been cozy neighbors since the 1960s, Mans says. "I'm not sure the exact year we joined, but we have easily had a 40-year relationship with them. Like the rest of our business, every success is about your relationships, and the relationship we've had with Do it Best has always been one that has helped us grow and helped us get into new markets." The New Mover program is just one example of the extra marketing muscle that Do it Best helps Mans bring to the table. Another advantage has been in online retailing, a market opportunity that Mans admits has never been one of the company's core competencies. Like many Do it Best?affiliated dealers, Mans has a link on the company's Web site that provides customers with point-and-click access to more than 70,000 products available for quick shipment.
"That has undoubtedly helped our online sales to grow," says Mans. "It's tough to measure exactly how much those sales are–we've never been experts at that. More important for us is that we get customers asking us for the items they have seen on the Web site. So the value at Mans is that the Internet has served as a heck of an advertising and promotional tool as far as getting new customers in the door."
Do it Best's power as a purchasing collective also continues to be a strong suit as Mans attempts to compete in a market filled with larger regional and national suppliers. "Obviously Do it Best has a full-time staff in place negotiating with mills with some multi-dealer buying power behind them," Mans says. "That's certainly been a help for us as a smaller independent trying to position ourselves with long-term purchasing and price protections." Mans leverages Do it Best for purchasing power on both lumber and hardware products, and while the company won't divulge exact purchasing amounts, Mans says Do it Best is a primary, first-call purchasing avenue that the company leverages "a lot."
The Do it Best annual rebate on purchases–presented every October as part of the buying group's fall trade show–certainly benefits cash-strapped independents. But Mans goes to the market not just for the check but also for the opportunity to network with the other 4,000 like-minded independents that give Do it Best its collective purchasing might. "We hit the roundtables, we talk to dealers across the country about new strategies and ideas, and all of it together has been a huge plus," Mans says.
According to Mans, a major competitive advantage for smaller independents has always been the ability to adapt quickly to meet changing markets, and Do it Best has shown itself to be a key ally in that regard. While other vendor partnerships and programs have tended toward a "one-promotion, one-flier-fits-all approach," he adds, Do it Best has "created program flexibility and has allowed some pick and choose from a menu of offerings that fit many niches." In Michigan, that niche has been to get first-mover advantage in securing every new homeowner dollar spent, and by all accounts at Mans, Do it Best is helping the dealer pull those customers in, bucket by bucket.
Less Is More Lesson Four
B&B Lumber uses its memberships in regional and national associations to learn best practices and competitive strategies.
Harold Baalmann has learned a lot over a drink and a steak. "I've learned how to run a lumberyard," the president of B&B Lumber and chair-elect of the National Lumber and
Building Material Dealers Association (NLBMDA) says of the networking he has done through national and regional lumber associations. "I really don't know where else to go. This is what has trained me. There's no price I could put on what I have learned just sharing a drink with a fellow lumber dealer–and this is the only place you can get it."
Then and now, Baalmann makes no secret that he's a to-the-point operator who relishes a bit of the independent, underdog status. Hired by 84 Lumber in 1971, he managed yards in several markets where even then he still wasn't the biggest player on the block. "I always competed against a huge contractor yard in my market," recalls Baalmann, "people like C.A. Dawson, Wickes, Carter Lumber, and Star Lumber here in Wichita." And although he tips his hat to 84's Joe Hardy for teaching him the basics of overhead, inventory, and merchandising, Baalmann says there's no better mentor or LBM resource than a similarly situated independent dealer. "I think they are better operators compared to a general manager at a chain," he says. "You are going to learn the best from them."
Since taking over B&B in 1976, Baalmann's tapping into the group-think provided at NLBMDA and Mid-America (where he eventually served as president in 1995?96) has brought B&B a wealth of competitive operating strategies that Baalmann says have "paid off in spades" compared to the time and resources he has personally put into the associations. In particular, Baalmann credits a continuing–but not permanent–decision to eschew installed sales to the talk he continues to hear from his peers.
"But it's not just strategic, it's everything," he explains. "Stuff right down to the wire, like how do you check your cash drawers, what are the different forklift brands, what are the best buying groups."
For Baalmann, the business at B&B is what ultimately benefits from his association involvement, and it should be the same for any other dealer who decides to participate and tap into the peer network. "There are 7,500 some-odd lumberyards in the country, and I'm only running one of them," he says. "If I can figure out just a little piece about what makes the others successful, it makes me better. That's the reason I am in MLA and NLBMDA, and that's what I think everyone else should expect to get out of it."