For the wood truss industry, the single most important component in a component plant is LUMBER. Nothing is as price volatile. Nothing else takes up more physical space. Nothing else requires more constant cash or credit line. Nothing impacts the physical appearance and structural integrity of the product you sell like your lumber.
Regardless, when lumber is purchased can be the most profitable aspect of your entire business model.
The first, and most critical aspect of lumber inventory management is determining need. An efficient computer program that updates inventory every time an order is placed and built is imperative. Categories for lumber inventory should include, In Stock (actually on the yard), On Order (purchased not delivered), In Process (pulled for the job being built), Pending (needed for a sold job). This matrix determines what you need and when you need it. To avoid surprises, this should be examined by the lumber buyer no less than twice a day...first thing in the morning and mid afternoon. The objective is to anticipate lumber inventory changes at least one week in advance. The lumber buyer should know right now, how many 2x4x10#1 do we have on the yard, or order, being processed, what the replacement cost is and how quickly the next load can be delivered.
Included as a twice weekly preparation Monday morning and Thursday morning, the lumber buyer should be aware of the direction of the lumber market's pricing trend and potential changes. If prices are rising, lumber should be bought early in the week, by Tuesday afternoon to preempt midweek increases. If prices are falling, purchasing should be delayed until Friday morning to allow for weekly price declines.
Being aware of lumber market price direction is easy. I do it for you. That is my job. You determine the need, I'll help you determine when to buy it and pick the pocket of the lumber market.
Give Your Competitors Something to Talk About
One of the first sales and marketing strategies I learned way back in the '70's, was not to bad mouth the competition. The conversation should be about you, your company, the product, and the service. Including the competitor's name in any fashion, even negatively, gives them a presence at your negotiating table...and they are not even aware of it. Giving your competitor a seat at your sales presentation can be fatal.
The objective is to create, maintain and enhance your relationship with your customer...one on one... one at a time. Accentuating what others cannot do does not imply that you can or will do better, it only keeps them in the conversation.
In the next sales meeting, ask your sales staff each to give a brief summary of why they get orders. Then ask why they do NOT get orders. If there is no mention of competitors, congratulations. Your team is truly on your team. If they use competitors as excuses, they need an indoctrination....and quickly. Every conversation between sales and customers that includes any supplier other than your company lessens the likelihood of a sale.
The most obvious evidence of this "fact" is the 24/7 question on every news network around the world for the last six months. "How can Donald Trump be stopped?" The implication is "Trump is unstoppable."
Imagine the enthusiasm around your office, with the sales team...imagine the frustration among your competitors...imagine the ease of getting a look at more jobs...if the conversation in your market was, "How do they keep doing that?" "How can they be stopped?" Make your company unstoppable. Give your competitors something to talk about. Cause them to worry about you.
Looking Forward, ML