Instead of patting themselves on the back for simply being responsive to dealer needs and occasionally offering product training and education during a quarterly call, Beveridge says, value-added two-steppers will embed themselves with dealers by finding ways to reduce the dealer’s costs, improve sales, and boost productivity. “The smart ones will set agendas for and with their dealers,” he says. “They’ll work so that their dealers can’t do business without them,” thus helping ensure their status downstream in the supply channel, as well.
Tabor’s sales team, for instance, engages each of its dealer-customers in annual strategic planning sessions to address specific market conditions, and also field ad-hoc feedback. “We force our customers to do [strategic planning] sometimes,” says Tabor, to get on the same page strategically and make sure BMD isn’t taking initiatives that its dealer network can’t or won’t support.
Among several benefits, the practice helps BMD balance the dealer’s (and its own) inventory holdings to make that cost more efficient while satisfying demand for a wider range of products. The sessions also enable BMD to float new programs that the two-stepper initiates, albeit driven by customer needs.
A plan for online orders, for example, is the distributor’s answer to reducing costs, accounting errors, and a dealer’s time—even if its customers aren’t quite yet up to speed with the technology. “Strange as it sounds, we don’t want them calling us with orders,” says Tabor, but rather eventually placing orders either online or via BMD’s reps using mobile handheld devices (such as PDAs) that manage transactions and inventory electronically. “We want our conversations with dealers to be about service, value, and product mix,” he says, instead of stud counts.
Huttig is equally interested in employing a higher level of technology to reduce redundant data handling and wasteful costs in the channel. “Every other commodity channel uses the same name and part number throughout the channel except this one,” Vrabely says, thus hampering accurate data transfers. To address the issue, Huttig is revamping its product database to reflect its manufacturers’ part numbers and bar codes to standardize the language upstream. “It’s a small step, but the first one toward standardizing the entire channel,” and, he says, helping to ensure the company’s long-term survival.
Whether utilizing technology or not, a solid distributor-dealer partnership is critical to securing both players’ place in a changing LBM supply channel. Doing so takes work, however, as well as a shared level of commitment. “Why it doesn’t always happen is all-encompassing,” says Beveridge, from a lack of appropriate sales training to complacency in a strong market, among several other reasons. “But it always comes back to leadership. What we tolerate is what we’re going to get.”
The Dealer’s Role Tabor believes dealers are arguably on the hottest seat when it comes to managing a variety of threats to their status, from consolidation in their own segment of the supply chain to watching and reacting to price-driven retailers reducing their margins and large-scale builders demanding a product mix of volume and customization delivered just-in-time (or sooner).
But rather than go it alone, or suffer with weak two-step partners, Beveridge and other distribution experts challenge dealers to demand more from their upstream partners. “It’s up to dealers to help raise the standards of the suppliers that call on them,” he says. For instance, “I wouldn’t allow a distributor rep into my shop to make a product demo ever again unless he shows the product in application and how to sell it in a customer-focused way.”
