I own a car, a motorcycle, and a boat. I bought all three because my needs and destinations vary. Those vehicles’ manufacturers know that as well, because none try to sell themselves as being appropriate for every occasion.
If only life were that segmented with LBM software. Vendors like to sell themselves as being the solution for a wide variety of construction supply companies, but the truth is that they often excel within only a limited range of tasks. I faced this when I ran the installed sales operation at Stock Building Supply. Our point-of-sale system was incompatible with both our installed business and our flooring division. This caused any number of problems with true job cost accounting.
Later, at Standale Lumber in Michigan, we found that our system was great for typical LBM transactions but cumbersome when tracking installed operations regardless of product. The flooring department finally launched a function-specific program just for flooring. But as robust as this new program was, it would not interface with the ERP platform, so every record was entered twice.
And I’ve been very lucky. I had a client that made three platform changes in four months.
Thus, I would caution that if you run anything beyond a plain-vanilla construction supply company. If your business is more diverse, be aware that making out-of-the box software meet your needs can require you to either: 1) adjust your habits to the software’s limitations; or 2) write changes to the software that can make it look like a boat with tires—and perform about as well.
Swapping out an enterprise resource planning system is complicated enough on its own, particularly when you try to transfer inventory names, SKU’s and counts into a new system; Years ago, a dealer in Michigan lost track of just under $1 million worth of inventory that was still in the yard. But when you enter other businesses, your challenges multiply.
For example, let’s say you have a flooring department. Dealers’ traditional operating systems are set up to receive and ship goods in whole amounts—a unit of lumber, a window, a door, etc. Inventory comes in, is held. and then is sold and invoiced. Inventory drops and triggers a re-stock flag to purchase more—again, in whole units of material. But that’s not how flooring works.
In the flooring business, depending on how the company is set-up, complete rolls of carpeting are ordered, some of which is used on a job site and the rest is returned to inventory for sale to someone else. Your system needs to know not only how much leftover you have, but who the original buyer was, because only that roll has the right dye colors and styles to match what was used previously.
In addition, most if not all flooring is sold installed, so you also have to deal with the typical accounting problems associated with installed sales, such as labor costs. Payment periods often will differ with job completion periods, so accounting has another headache.
As our industry continues to rebound, many LBM owners and managers are looking at upgrades to POS software. Please investigate every claim that the company makes. Talk to other dealers in your roundtable or user group settings, seek out recent converts to the new system and ask questions. If you don’t ask, you probably won’t get the results you desire. This is a large investment in fiscal resources and human resources. Your employees will thank you and just as importantly; your customers will thank you as-well.
