“I've never been sure why the supply chain is split between lumberyards and roofing distributors and siding distributors,” says Jeff Kelly, president of Harrison, N.J.–based Myles F. Kelly, a four-unit short-line distributor of siding and associated exterior products to remodeling contractors across the Garden State. “It's always been that way in Jersey. There was a lumberyard in our market back in the '90s that was really good, and I thought they might be one to finally merge all of the products together, but it never happened.”
That's just as well for Kelly, who says competition among his own kind for the remodeling dollar over the past decade has been fierce enough without new entrées.
Similar to pro dealers, the short-line supply market is highly fragmented and intensely service-driven. However, from countless local $1 million to $2 million players to semi-national behemoths like Beloit, Wis.–based ABC Supply and Avenel, N.J.–based Bradco Supply, specialty distributors of building products forego the full-line approach of traditional lumberyards to concentrate their business focus on a limited amount of products.
“Much of the short-line distribution that has developed over the past 30 years began with contractors who decided they needed some stock, and then they started selling some of that inventory and evolved into distribution,” says Walt Hoyt, director of marketing and communications at Valley Forge, Pa.–based CertainTeed. “The successful ones have become more sophisticated, have broadened their business scope, have grown in their service offerings, and [consequently] have grown in sales volume.”
Broad and Deep Focusing on a particular product segment allows short-liners to be nimble and flexible enough to quickly react to contractor service demands, often more quickly than others in the supply chain. “With some exceptions, full-line lumberyards don't typically stock vinyl siding the way it needs to be stocked to service the builder and installer,” explains Rob Long, vinyl siding marketing manager for Portland, Ore.–based LP Corp. “[Specialty distributors] do—they stock broad and deep and are generally prepared for anyone to walk in at anytime and purchase anything. They have racks and racks of vinyl siding. That's their business, that's what they do.”
LP's Rockwell siding line, for example, includes 17 colors in two separate profiles, says Kelly, and he has it all in stock. “To be in our business and do our job right and deliver on the promises we make to our customers, we have to have an immense inventory,” Kelly says. “Our customers expect for us to deliver a complete siding job with all of the J-channels, corner posts, and accessories tomorrow. And if they need it in purple, we've got to have purple here.”
In Minneapolis, Minnesota Exteriors stocks a 100,000-square-foot warehouse with complete lines of vinyl siding, aluminum siding, steel siding, and fiber-cement siding, in addition to 27 different colors of aluminum soffit and gutters. “It's not uncommon for us to place an order of 30,000 to 40,000 squares of siding from a single supplier,” says company president Jerry Faden. “In the summer we will have six or seven semis arriving each week, and on a daily basis I'll have six flatbed trucks delivering an average of 400 to 500 squares to jobsites every day. And then we install it.”
Sheer sales volume often works to the short-liners' advantage when it comes to partnering with manufacturer vendors upstream. Be it special order, co-op opportunities, or getting the first look at new programs and products, the sales volume generated by specialty houses can put them first on a manufacturer's hot list. “I think we carry some clout about how we go to market,” explains Faden. “We inventory and work just-in-time with our vendors and sell and install product to the end-user—we cut out everyone else in between. From aluminum to vinyl to steel to [fiber-cement], we move product in the Twin Cities, and when a manufacturer looks at approaching any segment from commercial to new construction to remodel, more often than not we are at the top of their list.”
Keep It Simple Focusing on limited product lines also can present disadvantages to the short-line supplier, however. In some markets, distributors are forced to invest a considerable amount of effort to both create a local market and ensure that product sourcing lives up to seamless specialty standards. For Advance Building Products, a vinyl siding short-line distributor in Sacramento, Calif., that problem is amplified by the fact that vinyl siding isn't a high-demand product in the West. The company stocks an entire inventory to make up for a lack of nearby manufacturing plants while continually formulating new marketing efforts to generate interest in the product lines. “There are still consumers in California that don't know what vinyl siding is, and we work extremely hard at our sales and marketing efforts [to change that],” says Advance president Mike Flanagan.
On the whole, however, the complexity of maintaining deep inventory is what many short-line distributors consider the tradeoff for an otherwise simple market approach. “We don't see a lot changing in terms of delivery and service execution,” says Flanagan. Advance contracts two freight carriers to distribute 70 percent of the company's orders throughout California and Nevada for local pickup by contractors at a traditional dealer or other convenient industry location. The remaining 30 percent of product is delivered directly to contractor jobsites by one of Advance's two delivery vehicles. “The key is executing product delivery—immediately getting product where it needs to be, when it needs to be there, so the customer knows they are going to have the product when they start the job.”