One of my favorite new columns on ProSales’ website has been a series from Jim Enter. He’s been in the business long enough to remember when dealers’ pre-tax margins routinely exceeded 10%. Now, as a consultant and roundtable leader, he sees mostly financials that put net profit at no more than half that level. His columns show how dealers can do better if they pay closer attention to internal logistics and delivery costs.

Enter provides valuable context for this month’s feature on how best to install a new computer system. He argues that it’s not just what you make, it’s what you keep that will determine your long-term success. And the only way to do that is to have solid data on what you take in and where your profits dribble away.

Today’s computer systems help you spot far more accurately the key areas where you’re wasting money. Take your trucks. You invested good money in them, but how much benefit are they giving you?

In Maine, Hancock Lumber tracks journey value—how much the goods were worth when the truck left the yard. The higher the journey value, the more you’re making use of that truck. Meanwhile, California’s Hayward Lumber is seeing whether it might be better off having smaller trucks that leave with fuller loads than big trucks with lots of open space.

As Leonard Safrit of Safrit’s Building Supply in Beaufort, N.C., puts it, “Freight is the last fat rabbit we’ve got” to shoot at if his company wants to reduce costs. Safrit came up with a formula he uses to judge shipping costs that’s helped add several points to his bottom line. The software he uses helps make that possible today for people less skilled than he.

ProSales cover April 2018

Sometimes an attitudinal change is what’s needed. Tom Dias, assistant operations manager at Sherwood Lumber near Cape Cod, decided to take what he calls a NASCAR pit stop approach to speeding up the turnaround of his trucks when they come home for reloading. After measuring how long the job took normally, he and his team examined how the workers performed their jobs. Then, by assigning particular tasks to particular people, as in a NASCAR pit stop, they slashed turnaround times dramatically.

Odds are good you can achieve similar benefits, but doing so will require you to get out of your comfort zone and see your business with new eyes. The new software you’re installing will help, provided you use it; most experts estimate the typical dealer doesn’t take advantage of more than 25% of the features available.

Equally important is that you come to understand that your operation’s future shouldn’t depend solely on high lumber prices or robust home building demand. There are dealers out there today who have net-profit lines topping 10% of revenue. What will it take for you to join that group?