A supplier’s perspective

by lbanyay@solagroup.com

By rights, this should be a short discussion. Remodelers need building products and support services. Building material dealers want remodelers’ money. Therefore dealers should provide those products and services.

Sometimes that’s exactly how it works. But too often, remodeling contractors can’t get the attention they need from the suppliers they’d like to buy from.

There’s nothing wrong with preferred customers. Remodelers pick and choose their projects whenever they can, too. But it’s easy to make bad choices and it works both ways. The supplier who looks like the best fit may turn out to be a disaster. The one who barely notices you could be perfect — if you can get established. Here’s how.

Not surprisingly, one of the first things suppliers look at is potential volume. Among survey respondents, 84 percent said they spend $750,000 per year or less on materials while 82 percent buy from at least four suppliers each month. Usually there’s a primary supplier who gets a disproportionate share of those purchases. If you’re a full-service remodeler, chances are it’s a lumberyard.

If you spend $375,000 per year on materials from one lumberyard, that’s roughly equivalent to the typical package (framing, doors, windows, siding, and trim) for seven or eight median-priced new homes. That may or may not be enough to get you noticed, depending on where you buy.

If a lumberyard is focused on production builders, its sweet-spot client is building at least 50 homes per year. You’ll never make the A list, and that may not matter if they’re really good at what they do. But if they’re focused on tract builders and they’re doing it right, they probably don’t maintain the inventory, the equipment, or the expertise to provide ideal service levels for remodelers.

Markets that are large enough to support specialized production yards invariably also have lumber dealers who don’t sell to big builders — either intentionally or otherwise. Dealers who cater to custom home builders are a natural choice because they usually also focus on remodelers.

Versus production yards, they stock a wider range of inventory, sell more premium brands, and have greater special order capabilities. They understand the ins and outs of working with customers’ clients, and their sales expertise tends toward construction details and methods. That’s not to say salespeople who focus on production builders are less competent, but they spend more time managing the workflow on jobsites than solving technical problems.

There are a limited number of specialists like this. You’ll typically find them in markets that have a sizeable high-end clientele, for example, Minneapolis-St. Paul (Scherer Brothers Lumber or Shaw/Stewart Lumber), the suburbs of New York City (Riverhead Building Supply or Ridgefield Supply), or the Gulf Coast of Florida (Kimal Lumber).

That doesn’t mean there aren’t lumber dealers with the same skills elsewhere, though. For example, Wichita, Kan., is hardly known as a hotbed of design/build activity. Yet Wichita-based Star Lumber has team of salespeople dedicated to remodelers and a program to generate leads for its remodeler clients. The company regularly sponsors Katz Roadshow events as well as manufacturer seminars.

When QR’s respondents ranked the most and least desirable services suppliers provide, three stood out from the rest. Correct orders ranked first, followed closely by willingness to make good on mistakes and timely deliveries.

Everyone claims to have stellar service. Obviously not everyone lives up to that claim. It’s always a good idea to ask for references, but it’s a foregone conclusion that I’ll steer you to customers I think are happy with me. Everyone does that.

If you really want to know how reliable I am about complete, correct, and on-time deliveries, ask me how I measure them.

Some dealers call it OTIF (on time, in full). For example, Star Lumber has a formal system in place to track its performance on every delivery it makes, and to identify the reasons whenever a breakdown occurs. Anyone who has an OTIF system can tell you in detail how it works, and you can be confident that they’re serious about it. Recordkeeping costs money. 

Some dealers would be surprised to know that price ranked only fifth on the list of things remodelers want. Their experience is that customers are still suckers for the notion that larger suppliers buy for less and pass those savings on.

It doesn’t work that way. The cost of moving products from a factory to the store shelves is pretty much the same no matter who does it. Big suppliers who cut out the middleman take on that overhead themselves. If they’re selling a product for less than their competitors — assuming it’s the same product and not a stripped-down version — they’re nearly always giving up profit in hopes of making it back on related products you need to complete the project but don’t price-shop.

Basically it’s a shell game, and it undermines your ability to maximize your influence on suppliers by focusing your buying power.

Even if there is no one in your market who focuses on remodelers, you may find individual salespeople who do. For example, McCabe Lumber in the Cincinnati area is full-service dealer serving builders, remodelers, and large-project consumers. As an inside counter salesperson, Rick Wedding made a personal decision to focus his efforts on remodeling contractors.

Wedding had nearly 25 years’ experience in the business at the time, and certainly most remodelers would prefer a salesperson with that level of expertise. But expertise can be learned. What you need is someone who understands that if you get more work, they’ll get more work.

Just 29 percent of QR’s respondents say their suppliers provide them with new business leads. Wedding maintains an email list of homeowners who come into the store or visit his personal web site, BuildingSupplyGuy.com. He stays in touch by regularly emailing them home maintenance tips and recommendations on contractors who can help with larger projects.

The right supplier will boost your sales and profits. If you can’t find one who already fits your needs, you can always grow your own.

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