LBM executives from Builders FirstSource (BFS), Foxworth Galbraith Lumber Company, and Hammond Lumber Company joined ProSales Editor-in-chief David Myron to discuss various industry-related topics, including acquisition pain points, culture integration, and ERP system installations as part of the ProSales 100 Conference’s Executive Panel.

Peter Jackson, the executive vice president and CFO of BFS, spoke about the company’s recent acquisition of Raney Companies in December 2019. Jackson spoke about BFS’s acquisition strategies and pain points encountered in the acquisition process.

“Acquisitions are always tough. The integration of culture, the technical systems, the operators have to get to know each other,” Jackson said. “The big challenges are usually pretty obvious: you’ve got to get the financials right [and] getting the teams working together.”

Mike Hammond, CEO of Hammond Lumber Company, the 2020 ProSales Dealer of the Year, also spoke about the challenges involved in acquisitions. Hammond acquired EBS—at the time the 80th ranked company on the ProSales 100—in June of 2018 in a move that increased the size of Hammond Lumber by more than 50% and moved the company among the ranks of the 25 largest companies on the 2019 ProSales 100 list. Hammond touched on the difficulty in updating the IT side of the businesses in the integration process.

“[EBS] had a legacy system that we chose to run with until winter of 2019 [when we decided to do an ERP conversion]. We had done ERP conversions and we felt pretty confident that we had a good training department,” Hammond said. “[However], we were spread thin from a training perspective.”

Hammond said the ERP system conversion went live in March 2019 and the company is continually refining the processes. He described the process as “hard” and likened the ERP conversion to a brain transplant.

Walter Foxworth, chairman emeritus at Foxworth Galbrath, touched on the company’s recent initiatives, including efforts for transparency in customer service standards and initiatives to make the business leaner. The customer service standards effort included making the company’s “bar” for customer service transparent to customers and created accountability among associates. It also communicated the standards customers could expect, which proved as a strong selling point for customers.

Foxworth said the lean best practices initiative resulted in 625 suggestions from associates for improvements in the company. He added that many of the ideas would be put into operation and lead to many wins in cutting waste out of business operations. The program also led the company to plan updates to its ERP system and convert to Epicor, a program that is in process with a planned installation in October.

Acquisition Culture Integration
With each executive on the stage involved in multiple acquisitions, the LBM leaders shared several of the most important takeaways they had learned in the integration of two companies. Typically, there is friction and resistance between legacy employees and employees of acquired companies.

Jackson said communication coming from the leadership team is one of the best ways to ensure a smooth transition of culture after an acquisition. Hammond touched on the importance of an open-door policy that was in place during Hammond’s acquisition of EBS. Hammond was available to employees to answer any question related to the process.

Hammond also focused on the families of the employees and made efforts with all involved to help them feel more comfortable moving forward. While also agreeing with stressing the importance of the family in the business, Foxworth said it is also important to make all employees feel valuable to keep morale high.

“We’ve always felt the more people know about how we’re making money and how they’re helping in making money, the better they’ll do their jobs,” Foxworth said. “I want every employee to know how the specific job they’re doing impacts the bottom line.”

Looking Ahead to 2020
Each executive also touched on the big initiatives that their companies will be focused on in 2020. Hammond said the company will focus on refining the integration of EBS into the company. Foxworth said the installation of the company’s ERP will be a major initiative, but the company will also continue looking for lean initiatives that can further save the company money. Jackson said BFS’s reduction of its debt has placed the company back in the merger and acquisition field and the company will look for tuck-in acquisitions and ways to grow the BFS team.