This is part 7 of Shifting Profit Drivers, a periodic series of essays.
My wife and I are enjoying an extended stay in the Bahamas on a small, laid-back island. There is no red light, and banking hours are 10 a.m. to 2 p.m each Tuesday. The largest grocery store, around 600 square feet, posts these store hours: “We here we open, we not we closed.” Exact time doesn’t seem to have meaning here. When someone says tomorrow, that could be anytime within a week.
But there’s one exception to the much-used local island phrase “soon come mon.” It’s when building materials are delivered.
Eight-Step Process
There is a well-stocked lumber yard and hardware store on a larger island about seven miles away by water. All framing lumber is shipped from the U.S. by freighter, unloaded at the port, and trucked to the lumber yard.There framing packs are assembled, trucked to different port, loaded on a crane barge, pushed by tug to an unloading area on the smaller island, and trucked to the jobsite. The materials arrive within 10 minutes of when the framing crew shows up.
I found this impressive and decided to speak with the builder to understand the similarities and differences between the Bahamas and the U.S.
The first noticeable difference is all framing is #1 KDAT treated yellow pine and treated plywood sheeting. The builder explained that with freight costs, as well as high taxes and import fees, he can’t afford to buy inferior materials. Also, if he has to “cull” material and is short a few 2x4s, there are no “quick ships.” As I watched the jobsite, I was impressed that waste material was removed in a couple of wheelbarrows, not a couple of dumpsters.
No Errors Allowed
I was curious about the level of service he received from the lumberyard, so I asked the builder, “How often do materials arrive when promised?” I got a questioning look and he answered, “Always.”
Okay, that is impressive. Next question: “Without quick ships, what do you do when the yard ships 2×4-14s instead of the 16-footers you ordered?” Another questioning look. “Don’t know. It has never happened.” I could tell from his face that he thought I didn’t know much about delivering building materials.
Some years back, Leonard Safrit, the owner of Safrit’s Building Supply, in Beaufort, N.C., and the 2013 ProSales Dealer of the Year, engaged me to interview several builders in his market area, both customers and non-customers. I asked, “What is most important to you from a supplier?” They all answered the same,:“Get my materials to me when you promised”
Since that time I have ask many builders the same question and always get the same answer. Yet, on a small remote island when I asked about accurate on-time deliveries, I get a “that is really a dumb question look”
When Errors Are Priceless
Asking myself why, I realized it is the difference in the cost of time and money to correct the error. In a previous article I wrote about 10X mistakes, but that only applies to LBM operations in the states. In the Bahamas, it is at least 100X to correct mistakes.
So what do you do? You don’t make mistakes, because the cost to correct is too great.
Some dealers realize the cost savings as well as the competitive advantage of accurate on-time deliveries and are tracking their accuracy rate. Many report rates of 97% and higher. What these dealers do different is that they review each “miss” and then go back upstream and fix the “cause of the miss.”
Yes, it takes time, but look at the math. If you eliminate just two, $100 mistakes a day that is $50,000 / year and equally important 500 more successful customer encounters than you would have by going into superman mode and fixing the mistake.
Previously in this series:
1. Want Higher Profits? Start Thinking More About Logistics.
2. How Efficient Is Your Operation? Find Out With These Benchmarks.
3. Lots of Dealers Drive Trucks Until They Collapse. That’s Wrong.
4. Errors Cost You 10 Times More Than Doing Things Right. Here’s How to Reduce Errors
5. Most Dealers Can’t Tell You How Much It Costs to Serve a Particular Customer. They’ve Been Sucked Into a Black Hole
6. This One Hour Each Day Can Make All the Difference in Your Operations
