Judd of BlueLinx suggests that just-in-time distribution actually works best to fulfill orders of non-commodity products. “A large dealer can always purchase a truckload of OSB and turn it effectively, but can they buy a truckload of porch columns the same way?”
Most dealers are committed to providing whatever products their customers need without dramatically expanding their yards’ inventory positions. But few seem ready yet to plunge into just-in-time waters. Spahn and Rose has struck such agreements with suppliers in categories like drywall and housewrap, but Hannan says the evolution to just-in-time continues to be “an uphill battle” with his yards that operate autonomously and decide how much they buy and what they will sell.
Other dealers are reluctant to meet suppliers’ purchasing requirements to ship at a moment’s notice. “We’ve talked with some vendors about getting materials in 24 hours, but they want 100 percent commitment,” says Dean Conrad, vice president of purchasing and marketing for Altoona, Pa.–based Your Building Centers. And then there are dealers like nine-yard Riverhead Building Supplies in New central inventory of high-dollar items that it moves from yard to yard as demand and sales dictate.
Juggling Act Many pro dealers face a common dilemma: Their yards are too small to keep up with their customers’ voracious appetites for products. Inventory management, then, becomes a juggling act with the balls in the air being which products to stock, how much to carry, whether to handle that inventory on a two-step basis through distributors or their own DCs, and what products to avoid.
In an effort to streamline its delivery process, Stock is driving more merchandise through its 10 distribution centers, which range from 50,000 square feet of covered storage on 5 acres to 250,000 square feet of storage on 11 acres. Rose wouldn’t say what percentage of Stock’s inventory goes through its DCs, but he did note that the dealer’s facility in Virginia, which is one of its smallest, handled $20 million in products last year. Stock has expanded its DCs in Wisconsin and Texas, and its DC in Raleigh, N.C., has doubled its volume over the past five years. “Manufacturers have become a lot more flexible about shipping us through these facilities,” says Rose. Stock has also gone to what Rose calls a “market concept,” which matches the proximity of its yards to jobsites receiving product.
Arlington, Wash.–based Oso Lumber, whose seven yards average more than 6 acres each, has been looking for land on which to place two distribution centers in the northern and southern areas of the state. Adam Lingenfelter, Oso’s vice president of sales and purchasing, says each of the DCs, which should open by the end of 2006, would sit on at least 20 acres and would handle builders’ larger home-package orders.
Your Building Centers is leasing extra storage for lumber, roofing, and panels near three of its 15 facilities. And Suwanee, Ga.–based Williams Bros. Lumber feeds its 16 yards through company-owned reload centers. David Montgomery, Williams Bros.’ vice president of information technology, says those reloads provide his company with a storage cushion when builders run into scheduling difficulties, which are usually exacerbated by bad weather. However, this tactic also can be a crapshoot. For example, when one of the wettest winters on record in California wreaked havoc with builders’ construction and caused lumber prices to collapse, the lumber that Sacramento-based Dolan Building Materials ordered several months earlier was sold at low margins. “Two months ago I was a genius; today I’m an idiot,” quips Will Eber, Dolan’s president.
As they search for more space, dealers also are trying to rein in the assortments they are stocking. This is easier said than done, though, as customers’ demands for different products and brands can be insatiable. Hofius points out that at one time Ply Mart “could get away with” stocking only unprimed spruce trim as part of its exterior siding and trim package. “Now we’re carrying five different types of trim in stock.”
Heard says Dixie Plywood stocks Trex decking, which comes in five colors, two of which are high-end lines that aren’t in high demand among his customers. Last December, Oso Lumber scaled back some categories and brands, including some of its Trex decking profiles. Lingenfelter says the move allowed the company to add profiles from TimberTech, which has emerged among contractors as an alternative to Trex, a buying trend that dealers in other areas of the country confirmed.
Controlling Interest As they edit what they stock to the lines of one or two suppliers, few dealers seem ready to move toward vendor-managed inventory (VMI), which would be a paperwork headache for companies like Ply Mart, Your Building Centers, and Williams Bros. that regularly transfer products from yard to yard. However, quite a few dealers seem to be only one step removed from VMI in their relationships with distributors.
