Although it was founded in 1930 and supplied lumber to jobsites from Seattle to Alaska to Europe over the ensuing five decades, Woodinville, Wash.–based Matheus Lumber—like several other wholesale volume lumber distribution companies—did not even have its own physical lumberyard until 1986. According to Matheus president Gary Powell, there were always enough independent mom-and-pop mills and reload facilities that were happy to break bulk, offer less-than-carload quantities, or otherwise serve companies looking to supply huge lumber packages to equally large commercial, multifamily, and production builders across the country. “Those mom-and-pop mills have largely disappeared, and the larger mills are more about volume and less about service,” Powell concedes. “For us, it necessitated establishing a facility [to execute on small service intricacies].”
For the most part, however, the wholesale lumber business model has remained largely unchanged over the years: Negotiate the bulk (usually by railcar loads) purchase of lumber from mills and suppliers across the country, contract for the delivery of said lumber to a regional reload facility, and again hire independent local carriers to drop the wood packages at the jobsite. Without the overhead of numerous lumberyards and a full-time dedicated delivery fleet, the model has earned many, including Matheus and Boise, Idaho–based Idaho Pacific Lumber, a reputation as lean-and-mean operators that consistently rank among the industry's top players when it comes to sales per employee and sales per outside sales reps.
“I think some of that perception of us being lean-and-mean operators is rooted in the fact that we hire someone else to do a lot of the things that lumberyards typically do for themselves, particularly yard functions, delivery, and the loading and unloading of trucks,” explains Idaho Pacific president Kent Mills. “Obviously we don't get those things done for free, though. Our margins are quite a bit lower than the typical retail lumberyard because we deduct those costs out of our gross profit rather than incorporate them into general overhead.”
Regardless of where things fall on the general ledger, lumber wholesalers have nonetheless adopted an alternative approach to the traditional building materials supply chain (mill to jobsite or mill to reload to jobsite versus mill to distributor to lumberyard to jobsite) that they say is equal to or better than traditional distribution models in terms of effectiveness and profitability, especially among the largest commercial and multifamily contractors. Over the past decade, single-family production builders working titanic projects in the Western states also have turned to wholesalers as a way to find further cost savings in their material purchases. “We have been seeing a lot more single-family production activity over the past decade,” says Powell. “We're working on four or five projects now that involve over 25,000 houses each, primarily in California, Arizona, and Nevada, where they can just bulldoze flat land and tack them up.”
Tech Savvy Much like their pro dealer cousins, wholesalers are quick to emphasize that personal sales relationships are the key to opening up those builder accounts. But the wholesale sector is also increasingly turning to supply chain management software as companies attempt to manage growing sales across the single-family and multifamily residential and commercial markets.
Both Matheus and Idaho Pacific have adopted lumber inventory management software from Richmond, British Columbia–based WoodPro Software. According to WoodPro vice president of sales David Goulet, the firm's software, which consolidates purchasing, order entry, invoicing, receiving, and transportation logistics, offers users a unique overview of all the product they have in motion from mill to jobsite. “WoodPro attacks everything along the supply chain, from procurement at the mills to what's coming in, what's on the ground, what's on the way out, what's rolling, what's been delivered. The user can pop on the computer and see in real time where everything is at once,” says Goulet, who adds that additional functionalities include the ability to incorporate electronic document storage, electronic data interchange, bar coding, and radio frequency data capabilities. “The main focus of our systems is to streamline the operation, to redirect staff to more income-producing activities, and to make lumber inventory management a customer service that helps to deliver the right products on time to the right customer.”