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Like many pro suppliers, Washington, N.J.–based Warren Lumber & Millwork wasn't the quickest company in the world to grab developing information technology (IT) over the past decade and leverage it into the business of building materials distribution. But as competition in the New Jersey market continues to heat up, the five-unit pro dealer is reconsidering IT as a possible channel for new growth and is making investments to get wired while times are still good. "It's like that expression, you fix the roof when the sun is out," says company president Kevin Kuchova. "Now is the time to make investments, and frankly we're behind on the technology aspect of business, so it will be a major area of focus for us. We see it as a tremendous customer service opportunity."
While gains have been slow, there has been an upward trend in spending on IT products and services. In 2004, 48 percent of the PROSALES 100 planned to spend less than .25 percent of sales on IT products and services. By last year, that number had decreased to 44 percent, and minor 1 percent gains were seen in the number of dealers that were spending either .51 percent to .75 percent of sales or .76 percent to 1 percent of sales on IT (see "Percentage of Sales the PROSALES 100 Plan to Spend on IT Products and Services During the Next Year," below). At Warren Lumber & Millwork, the vast majority of IT spending in 2006 will likely be on what Kuchova calls "business system implementation." "We're looking at how our builders can get online, drill down into our inventory, drill down into their accounts, and make purchase orders," he says. "Technology will just be a huge component of what we can offer to our customers moving forward."
Industry consolidation and big builder demands are pushing Zeeland, Mich.–based Zeeland Lumber and Supply Co. further into the tech arena, a place where it has already felt some comfort as a market leader, according to company marketing manager Jeff Leyes. "Making the contractor base see that we have more to offer than just price is the challenge right now," says Leyes. "We view IT as one of the ways that we can set ourselves apart from the rest of our local competitors, and we have always viewed it as something we want to be on the cutting edge with."
Zeeland upgraded from aging hardware and software platforms to Activant's Falcon system in the second half of 2005, and is poised now to begin offering online pricing, ordering, and payment to its contractor customers.
Those types of e-commerce capabilities will definitely place the pro dealer in a minority among the PROSALES 100. While 29 percent of the ranked suppliers offer account access, the categories of online pricing, purchase orders, and payment are still at a low 21 percent, 14 percent, and 10 percent, respectively (see "Online/E-Commerce Services Offered by the PROSALES 100," right). Still, all of those offerings are on the uptick compared with last year's PROSALES 100 data, especially online payment, which saw a 7 percent increase.
At Zeeland, the investments are paying off in efficiencies for the back office and greater customer loyalty as national dealers like Lanoga Corp. and Stock buy up larger independents in its market, and Leyes suggests that suppliers facing similar challenges do likewise. "If we have a system that can mesh with our builders' systems, we become more efficient on our side. We convert the information, print the pull ticket, and load the materials, and there aren't people still in the back rekeying information," he says. "IT can make for more accurate orders, but it ultimately creates greater customer loyalty. As you succeed, it makes it all the more difficult for a customer to pull away from you and start all over again with new systems."