In many ways, the building materials supply chain is under siege. While large-volume production home builders threaten to tip the balance of demand and dealer services by continuing to consolidate and search for new market opportunities, pro-oriented lumberyards fight ongoing battles against big box pricing, materials shortages and price spikes, direct selling and national accounts, and, in an increasing number of markets, a slowdown in new-home construction activity. Along the entire channel, players often struggle to communicate and transfer transactional data effectively and efficiently and drive costs out of the process. Prospects for growth and/or profitability present themselves, and while they can truly be a path to riches, they also can be a road to ruin without defined business processes.
No doubt, it can be hard to compete in the pro dealer arena, especially without a supply chain plan.
In an industry known for its gut-driven decision-making, at least among dealers still far removed from the Fortune 500 and the New York Stock Exchange, the time has come to get serious about strategic planning to not just survive, but to thrive in the new world order. “This is an industry with good operators who have tremendous sense of their business and the market,” says Ruth Kellick-Grubbs, president of Kellick & Associates, a supply chain consultancy in Tryon, N.C. “Those skills and knowledge could be enhanced substantially with an intentional planning process that challenges their assumptions.”
While it's probably fair to say that successful dealers, large and small, follow some sort of strategic path, Kellick-Grubbs and other supply chain gurus often see them struggle to dedicate time and resources to a more formal or intentional planning process, particularly one focused on a broader view of the market and how that perspective might impact their independent operations. “Most of them don't know how or don't have the internal resources to really look at the market and position themselves today for tomorrow,” she says. “It's a challenge to carve out the time to do the thinking required.”
While there's not much to be done to inspire dealers to find the time and gather the troops for semi-annual sessions of strategic planning, there are industry-specific tools that can assist in organizing the process and cutting a deeper, dedicated supply chain path.
One comprehensive guide is the Supply Chain Operations Reference-model (SCOR), a cross-industry framework devised by the Supply-Chain Council (a global, independent, nonprofit corporation based in Washington, D.C.) that integrates forward-thinking business processes and benchmarking to quantify performance and establish best practices, and process measurement toward unifying supply chain partners and creating better relationships along the entire channel.
By design, the SCOR-model delves into all phases of satisfying customer demand, from the supplier's supplier to the customer's customer. The framework stands on five basic components—Plan, Source, Make, Deliver, and Return—housing a wealth of depth and applications that can challenge a dealer's assumptions about markets and relationships among business partners. It also provides a solid foundation for making strategic decisions that better ensure profitability in an industry, and especially at this link in the chain, in which future success often seems increasingly less certain.
If there's an overriding theme to the SCOR-model and its applicability to the LBM supply chain, it's that intentional and dedicated concern for strategic planning, supplier relations, inventory management, logistics, and returns provides a formula that enables better, more accurate, and more timely troubleshooting and forecasting that, in turn, fosters more reliable and sustainable success. “If you're not constantly challenging your people, programs, and systems,” says Wallace, “the market goes right on by you.” —Rich Binsacca is a contributing editor for PROSALES.