Plan The Plan phase of the SCOR-model is the strategic portion of supply chain management, refining a dealer’s approach to meeting customer demand for products and services and monitoring the supply chain for efficiencies, lower costs, and high quality and value.
Here’s an example of how this process works: Nearly a dozen years ago, Charlie Babb came on board as president at Raymond Building Supply, a now five-location, $248 million operation based in North Ft. Myers, Fla., to help chart a new course for the dealer. “Production builders were just starting to look at southwest Florida,” says Babb. “We could see it in their eyes.”
To address the impending influx of high-volume home builders, Raymond Building Supply relocated and built new facilities, including enough land around each of its three lumberyards and new truss and window manufacturing plants to expand if demand outstripped the dealer’s capacity, which it has in the years since.
But Raymond Building Supply’s success is not simply a matter of the dealer throwing the right darts at a large target; part of the plan has been to embed itself with its big-builder customers, primarily by serving on advisory boards formed by the top handful of builders to discuss various issues impacting production, the supply chain, labor, and other topical issues with their top-tier suppliers and trade partners. “Early on, builders saw the stress on the local labor and materials markets and wanted to marry up [with suppliers and subs] to make sure they had those capabilities as they grew their operations,” says Babb.
Among the by-products of serving on these advisory boards, Raymond Building Supply gains real-time insight into each builder’s production projections—not just raw starts, but also regarding new products and features—which it leverages to better manage the supply chain and the products and services it offers, especially as the southwest Florida market slows down after a decade of white-hot activity.
It’s that kind of data that Kellick-Grubbs encourages dealers to seek out and secure as part of an intentional strategic planning process. “You want to make decisions about what you know, not what you think you know,” she says. “This industry typically and historically operates on low information, but it’s a big gamble.”
In addition to gathering hard data, whether from advisory boards formed by builders or local contractor association chapters, various reports and trends they indicate, or primary and secondary market research, Kellick-Grubbs encourages dealers to devise an exit or transfer-of-ownership strategy for the business that, in turn, sets organizational objectives that will boost the value of the business and achieve a thriving profitability beyond a simply sustainable level. “The goal is to develop a five-year horizon with the means to get real-time feedback regarding progress toward that goal,” she says.
In the case of Vassar Building Center, a single-location, $12 million dealer in Vassar, Mich., the transfer of ownership from one generation to the next has, in part, driven dramatic changes for the dealer during the last two years as it manages a dramatic spike in sales.
In fact, a lack of strategic planning by a competitor, resulting in that dealer’s sudden closure, created an opportunity for Vassar Building Center to double its revenue. “We saw the opportunity to grow sales without opening another location,” says president Mike MacKay, who hired the company’s first-ever outside sales associates, a trio culled from other competitors’ downsizing. “We knew it would burden us, but the sales staff came through with the business.”
Now, as the local economy struggles against slowdowns in the nearby automotive industry (Vassar is just north of Flint and the Delphi auto supply plant), Vassar is once again adjusting. MacKay has drafted two plans, one with a six-month horizon in case fortunes turn around quickly, the other looking forward three years under the current conditions. “We’re working to right-size our capacity as the market changes,” he says. “The trick is to stay ahead of your reports and not rely on history, but on at least what’s happening now.”
