Part One in the Save Money Series
Over decades of purchasing for a large component manufacturer and trading as a lumber broker, I bought and sold well over 25,000 loads of lumber. The most valuable asset I brought to the table as the truss plants’ lumber buyer was confidence to purchase directly from lumber producers.
Lumber Mills Want You to Buy Directly From Them
We refer to it in the trade as “buying mill direct” and it is exactly that. Rather than dealing exclusively with lumber brokers, you should buy directly from lumber producers. They prefer to sell directly to the end user and eliminate the middle man.
So what stands in the way of your buying mill direct? Not much.
- Lack of contacts…Buyers need to know how to contact producers that make the size, grade and specie you use. (I provide that contact information free to subscribers.)
- Fear of failure…Mill sales personnel are no more experienced negotiators than you are. The reality is, without you, they are out of business. They need you as much as you need them.
- Prompt-pay…lumber mills insist that customers discount invoices.
Costs of NOT Buying Mill Direct
Simply put, not buying mill direct tilts the scales in favor of your non-mill suppliers. When you are not talking directly to the mills, your suppliers know you are unaware of mill prices and will charge you more. As an ex-professional 20-year veteran lumber broker, I can assure you that you are giving away easy money by not buying mill direct.
The Perfect Mix: Brokers, Distributors, and Mill Direct
For those of you who already buy “mill direct,” good on ya'. For those of you who are buying exclusively from brokers and distributors, I strongly encourage you to stop and DIVERSIFY.
The reasons my brokerage customers bought from me are all good reasons to continue using your brokers and distributors along with buying mill direct.
Brokers provide these services and advantages:
- Price…they can offer lower prices by out-positioning other brokers and mills.
- Convenience…they do the shopping and present the best options while you multi-task.
- Mill direct contacts…they know the players in the market.
- Money…customers use brokers like a bank instead of prompt-paying invoices within the mills' discount terms, 1%-10-ADI.
- Emergencies…occasionally you will need something in a hurry. Distributors can be life savers.
Having a mix of a few reliable brokers, a couple of good distributors, along with mill direct contacts will give you the ideal supply chain to keep a balanced and competitively priced inventory.
The most costly mistake any truss plant lumber buyer can make is not taking advantage of all the options…putting all the supply eggs in too few baskets. Diversify, be confident, take control.
Coming next month in the Save Money Series…The Real Cost of Slow Paying Invoices
Happy Trading...ml
A veteran lumberman, Matt Layman publishes Layman's Lumber Guide, the weekly forecasts and buying advisories that help component manufacturers save money on lumber purchases every day. You can reach Matt at 336-516-6684 or matt@laymansguide.org.