Many lumberyards still do not have their own wood truss and wall panel manufacturing as part of their offerings to their contractors but are contemplating whether this might be a good investment. There are pros and cons to this type of big investment; if you have been doing any research, you have probably heard some say it is a great investment that gives a very good return and others say that it has been one big horror story and that they wish they had never wasted their time. Well, both versions are very true, and to a guy like me who makes a living giving advice on improving net profit for truss and wall panel component manufacturing, the reasons for this are clear.
Highlights
- When sales exceed $5 million per year, this normally provides a 10% to 12% net profit per sales dollar in most regions.
- There is also the added benefit of supplying the company’s own products to their sales offerings.
- Lumberyards tend to let bad component manufacturing operations continue within their companies at a single-digit net profit or breakeven.
- The process of quoting, designing, manufacturing, and delivering has complexity that is error prone when not understood and managed correctly.
- The other aspect is that retail management versus manufacturing management is not the same type of management.
- Another critical error many lumberyards repeat is they listen only to advice from plate and equipment vendors and then think they are able to figure everything else by themselves.
- Yet, in spite of all these negative issues, if everything is done right, it is well worth the investment. When a lumberyard gets the component division operating properly and sales are strong, the overall sales and profit for the entire company will be enhanced.
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