And, the MOST Important Buying Decision..."Buy Now or Delay?"
I read this week that this is no longer the lumber business, rather it is the construction business. Absolutely, the traditional contractor yard wears many hats, however for sawmills, lumber brokers, wholesale lumber distributors, wood preservers, component manufacturers, importers, exporters, and lumber market analysts...the 250 year old, 50+billion board foot, North American lumber business with its hundreds of thousands of employees is alive, well and thriving.
Lumber is unquestionably a contractor yard's single largest category. Buyers have hundreds of lumber SKUs to manage. When considering each purchase, multiple decisions are contemplated to determine need and solution. How many orders do I have for this item? How many more do I expect to get and when? How long before I run out? Which suppliers make the items I need? Which suppliers can mix the items I need? How long will it take to replenish? Is transportation an issue? When will I have to pay? Do I have the money to pay? How much credit line do I have with each supplier?
Before that first question has been answered, a more important question should be considered. The one that makes and saves the money. The one that makes a lumber buyer a force to be reckoned with. That question is, "What is the lumber market doing?" If rising, quick action is required before the next price increase. If falling, a few days delay to take advantage of price declines is the decision. The lumber buyer must know what the market is doing every day of the year, being prepared to buy that day, or delay.
"When to buy?" is the most important buying decision.
There are two ways to approach the lumber market. One is speculatively...looking for the big moves... accumulating and liquidating inventory at precise seasonal times. For many, that is too risky or too expensive. For others, that thrill is what drives them. Whether participating or not, monitoring speculators is the lumber buyer's responsibility.
Another strategy, suitable for all, is to eliminate speculation and risk. Maintain inventory turns and cash flow. The objective is to take advantage of price volatility.
Most lumber buyers do not take into account the dollar value of purchasing immediately or delaying. I'm not talking about a significant delay. Not at all. I'm talking about 3-4 days, a week at most. In declining markets, once realizing a need to buy...wait to purchase until Friday. In a rising market, always buy the day the need is realized. It's quite a simple strategy.
Take the “4-week 2x4 & OSB Challenge.” For the next four weeks, just these two items, follow the suggested buying strategy found on the specie page you buy. The forecasts with buying and selling strategies will make and save your company money every week...an average of $5 per thousand board/square feet...each week, each truckload.
Remember, these strategies require no market speculation; no extra inventory build up; no additional cash outlay; no risk; no increased inventory turns.
Literally the only thing necessary is buy before Tuesday noon in rising markets or delay until Friday during falling markets.
When sudden needs arise in between, buy them immediately in rising markets and delay the purchase until Friday in falling markets.
I will do the forecasting and market analysis. You execute the orders and make the money. We will review in four weeks.
Would you like to participate?