A supply chain deep dive
The challenges of today’s supply chain cast a constant shade over the presentations during the recent ProDealer Industry Summit in Washington, D.C. In one particular presentation, the spotlight shined directly on the subject.
The bottom line from the session – titled “How to manage an unpredictable supply chain” — would read something like this: communicate, communicate and communicate.
“It’s about relationships,” said Mike Reeves, president of Espy Lumber Co. of Hilton Head, S.C. “I mean, you've got to communicate with your customer, you've got to communicate with your vendors, and that's the only way that this thing works.”
Reeves was joined on the panel of like-minded group of lumber-industry insiders who explored the topic of communication, recruitment, sales and strategy, all under the pressures of supply chain shortages.
Reeves expanded on his theory of straightforward communication. Espy manages expectations from the beginning of the order. But sometimes, the order gets delayed three-or-four weeks after expectations have already been managed, and the process already begun.
Now you have to go back to the customer, explain to then again why you just went from 16. weeks to 20. Weeks,” he said. “How else can you do it other than to be honest about it?”
Joining Reeves on the panel were John Perna, president of Hamilton Building Supply of New Jersey, Stephen Sallah, president and CEO of LBM Advantage; and Mark Hopkins, COO of Hancock Lumber.
As way of introduction, the panelists described a variety of headaches down the line. Hopkins noted the general desire for a return to a. more predictable ebb and flow of products.
“Everyone in this room can agree that [the supply chain] is terrible right now,” he said. “Product is delayed, it’s late, it’s expensive. Consistency is really what would help our industry a lot right now, whether it's just consistent lead time, a consistent price. It's a challenge. And what we've doing is just super communicating with our customers and vendors to try and make it as smooth as it possibly can be.”
One approach that has helped Hancock navigate shortages is the nurturing of neighborly partnerships with local competitors.
“There are times where we are up against our engineered wood allocation,” he said. “But because we share the same distributor as our competitor down the street, we sometimes worked together. If they haven’t used all their allocation, we borrow from them, and we reciprocate. So developing some strategic alliances or friendly competitive partnerships can prove to be beneficial at a time like this.”
Another is to go throw your business behind a supplier that’s been a steady supplier in times good and bad.
“As a company, we try to be the best customer that we can be for that supplier,” Hopkins said. “We’re going all-in.” The strategy is designed to boost support from suppliers in times of scarcity, and it’s worked well so far,” he said.
Similarly, Hamilton Building Supply of New Jersey sharpened its focus.
“We actually narrowed our line card down prior to the pandemic, just so that we could align with certain vendors in each product scope, and that's worked out well for us up to this point,” said Perna.
Finding alternative suppliers to fill gaps is a challenge, but Hamilton Building has worked diligently on that front.
We're big advocates for offering alternative product solutions, and doing it not at reactionary but more proactive in the buying process,” Perna said.
Nurturing and maintaining the workforce has been a compounding challenge for dealers working through an. Unpredictable supply chain on top of a pandemic.
Espy Lumber described some of its responses including pay increases and improved benefits for truck drives. “We’re hiring part time as well as full-time truck drivers,” he said. “We’re looking for every avenue possible to make sure that the products we sell get delivered.”
To keep the high quality team members happy, treat them as high-quality team members, advised Perna. “It’s really important to identify your really skilled workers, and work with them,” he said. “Have a progression [for them to advance] within the company and make them feel valued.”
Drivers are especially valuable. “Many times, they're the first and last face that a customer is going to see on the job site, so it's really important that they leave behind a really good impression,” Perna said
The dealers also described a balance between protecting their core customers, and reaching out to new business. With the supply chain as it is, a dealer must be careful taking on new customers.
“We're not taking customers that are going to be a one-shot deal, or bought eight units of OSB,” said Hopkins. “That customer we're not taking. But if it's a customer who we've been out prospecting and he's got a job going on, and they’re going to do business the way we do business, then we'll take them all day long.”
The panel hammered on the concepts of loyalty and relationships as crucial to success in tough times. And Perna added an important point: Loyalty is a two-way street.
“We have a lot of great suppliers that we work with who really have been true partners in this whole supply chain situation,” he said. “But then we also had some suppliers that were kind of treated it so matter of fact. We're going to remember those suppliers who really stuck by us as being a true partner once we get through this whole mess.”
