Tim Seims has a decidedly unenviable job: Selling technology to building material dealers. You might think that Seims, a relationship manager and building supply chain specialist at Heartland Payment Systems, is being overly charitable when he admits dealers "are not what you would call early adopters." While other business sectors routinely allocate up to 10% of their annual revenues to new technology, most dealers spend less than half of one percent of revenue on information technology.
But that state of affairs overlooks innovations that are seeping into building material distribution. They don't fully integrate the building material supply chain, but each new product could remove some kinks. Here are some notable developments.
Reducing Duplication. Dealers using software to do takeoffs and engineering analyses typically have had to redraw the designs based on Adobe Portable Document File (PDF) versions. Cadsoft's Envisioneer design software helps avoid data-entry errors and saves steps by allowing the estimator at the LBM dealer to model the entire job from the beginning. It also allows for collaboration among homeowner, builder, and supplier.
"We're creating a 3-D digital model of the house that is the vehicle of collaboration," says Cadsoft vice president Brad Finck. The model and bill of materials can be e-mailed or transferred to a customer relationship management or point of sale system, or pulled into popular software such as the kitchen-and-bath program 20-20 Design, with a consolidated quote. Finck says MiTek Industries passes Envisioneer models directly into its TrussFramer software, which then feeds enterprise resource planning (ERP) and manufacturing systems. A user can also download online catalogs and merge them into Envisioneer's master catalog.
Sharing Data. Customers of software vendor DMSi use its PartnerView web portal "to look up inventory, look up pricing, and determine whether they can get that product," says Jim Hassenstab, DMSi's chief executive officer. PartnerView has existed in some form since the late 1990s, but demand has increased in the past two years.
"DMSi is looking to create a direct link from a dealer to a distributor," Hassenstab says, and is working on new data-transfer tools for customers. "They'll be able to have a direct view into each others' systems."
Tying Together Systems. There are lessons to be learned from other industries. Few companies have a better vantage point than Activant Solutions, which–besides serving LBM dealers–sells to industries with highly automated supply chains, including hardware and office supplies.
"In the hardware industry, the supply chain is completely wired up," says Steve Bieszczat, Activant's senior vice president of marketing. "If you're an Ace dealer, your system goes back to the Ace distribution center. You're pretty much zippered to the supply chain."
Linked ERP, warehouse management systems, and yard-management systems made or installed by companies such as Activant "span a great deal of the supply chain," Bieszczat says. "They're moving a lot of dollars around," he says, "so half a percent, one percent–they all matter. So does getting one truck to do the work of two."
On the other hand, Bieszczat says the prevalence of special orders and negotiated prices in LBM create major obstacles to greater automation and the data-driven demand and inventory planning seen in other industries.
"I don't hold out much hope for some kind of supply chain metrics that will tell a guy how many burnt-orange gas lamps to make," he says. Commodities such as insulation and liquid nails are a different story, and can be more efficiently manufactured, stored, and distributed with better use of demand data.
Warehouse Management Systems. DMSi sells an entry-level WMS for bar coding and picking in warehouses, and it (with other vendors) partners with Majure Data to provide a more robust WMS. Hassenstab says some customers are looking to take their inventory systems to the next level by investing in demand-planning software.
Envisioneer, for example, employs the Building Information Modeling language. Electronic data interchange (EDI) is most often used by big-box retailers Home Depot and Lowe's, manufacturers, and the largest, independent pro dealers, and its use is increasing, Hassenstab says. Bieszczat says some Activant customers electronically exchange purchase orders and inventory data between lumberyards and suppliers. Most of those are done through what are called value added networks, or VANs. Cheaper alternatives to VANs, based on the web's Extensible Markup Language (XML), are emerging.
Windows to the Future. Ply Gem, a window and siding manufacturer, has automated its plants and warehouses with bar codes that feed inventory data to its JD Edwards ERP. John Wayne, president of the Ply Gem Siding Group, says just over half his business is conducted over EDI. The company also has systems that enable Ply Gem to receive sales and order data electronically from customers, predict future demand, order fresh stock, and cut an invoice.
There have been challenges. "A lot of it [involves] that customer getting a comfort level with giving up ownership of the day-to-day ordering," Wayne says. Customers vary widely in their degree of automation. The firm hopes to give customers the ability to track orders online.
Tracking Trucks. Ply Gem uses a system from Appian Logistics Software for inbound and outbound freight. "It optimizes the use of the available vehicles to minimize the miles that we drive," says Chris Pickering, vice president of marketing. And third-party carriers use software to translate orders into efficient truck loads.
Big-Dealer Activity. Ply Gem is developing an XML interface to ProEdge, the order-management system of ProBuild, America's biggest LBM dealer. Seims says large regional players, including 84 Lumber and BMC Select (formerly Building Materials Holding Corp.), have been especially aggressive in using technology to remove steps from their supply chain and prevent records such as invoices from falling through the cracks. Ply Gem is also developing a potential XML interface between its AccuQuote configuration software and Pro Edge.
Customer Relationship Management. CRM, another commonly used component in well-integrated supply chains, presents another opportunity to dealers. So says Michael Clapman, president of ArrowMark Software, maker of Contact CRM. Benefits include improved customer service, easier access to detailed customer information, and the ability to cull data for prospects. "We can basically bring in data from any point-of-sale system," Clapman says.
The time might be right for improved integration, these experts say. It seems counterintuitive, but economic downturns motivate companies to invest in computers to get more out of shrinking resources. During booms, orders roll in and efficiency takes a back seat: "Can you deliver?" is the only question that matters.
–David Essex has covered information technology for 24 years. He is based in Peterborough, N.H.