Wolf

Big Projects, Great Prices and the Independent Dealer

Tom Wolf published this article on January 23, 2012 in Build your Business. No comments. | Comment

The independent building materials dealer channel is not considered by many industry observers to be the first place to look for supply chain efficiency.  The big box channel is where the action is according to some of the smart folks in those well heeled consulting firms.  The boxes are big, they tell us, they control large supply chains, and they have a ready demand in their retail customer base.  In this brave new world of building materials, they confidently assure us, the traditional independent dealer is little more than an interesting throwback to a simpler time and a more fragmented localized economy – a romantic anomaly in a globalized, integrated, modern world – even when it comes to big projects.

I disagree.  When it comes to good supply chain design, the smart money really ought to be on the independent building materials channel especially when it comes to the big projects serious do-it-yourselfers and professional contractors typically tackle.  Kitchen remodeling jobs, room additions and decks require the kind of expertise, experience, quality products and good pricing which only independent dealers can provide.  So despite the conventional wisdom, independent dealers in fact have a great advantage when it comes to supplying the right products at the right prices for a very important segment of the building industry.

There are three reasons why independent building materials dealers have tremendous relevance and clout in our industry:  1) independent dealers are very close to their customers – especially the professionals – and they do a better job than anyone else in understanding, anticipating and responding to the unique challenges big projects serve up to this very important segment of the industry; 2) independent dealers typically have low overhead costs in running their businesses; and 3) independent dealers typically have the scale (often through cooperative buying organizations) and the flexibility to make sure the system delivering their products is optimally efficient.

The first of these – proximity to their customers is clear.  Independent dealers see many of their customers on a regular basis and they spend a lot of time trying to understand their needs and solve their problems.  Independent dealers work hard to guide these serious customers to the right product for the job; they know how to procure these products efficiently; and they know how to deliver them to the right place at the right time.  From the owner to the sales representatives to the warehouse workers, independent dealers exploit this proximity to the serious project customers to tailor their products and services to the needs of those unique and valuable customers.

Second, these independent dealers also tend to be good business operators.  They understand how to survive the volatile building cycle by keeping their operating costs low and variable.  They generally have modest occupancy costs since they are rarely located in the high rent section of town and they usually don’t spend a lot of money and effort on slick advertising and marketing campaigns.  Instead, they rely on informative displays and experienced sales people to keep professionals and serious do-it-yourselfers tuned in to the constantly changing world of building products.  These serious customers know that when they buy a product from an independent dealer, they are getting the right product for their job.  They also know they are not paying for fancy frills or expensive overhead costs.

Finally, independent building materials dealers buy their products right.  They know their vendors and they know how to keep their costs of goods as low as possible.  They know how to build efficiency into their buying processes.  In some cases, this efficiency comes from getting products direct from the mill or the factory; in some cases it comes from being part of a well organized cooperative buying group; and in some cases it comes from buying from an efficient distributor or sourcing company.  Whatever the route, independent dealers have within their grasp the experience, skills and connections to adapt their buying decisions to the specific needs of each individual customer or job.  They have an efficient and flexible supply chain and they know how to use it to satisfy their serious customers.

The point is that the independent dealer channel really does have the expertise, experience and clout to offer great prices to big project customers.  They are closer to their customers than any big box can ever be; they don’t have to pad their prices to pay for nice stores, fancy locations, and slick advertising campaigns; and they know their vendors intimately.  In sum, despite what conventional wisdom and some very expensive consultants tell us, independent dealers are at the heart of the most efficient supply chain in the industry.

So, you’re working on a big project?  You want the right products at the best prices?  Check out your local independent building materials dealer.