{"id":7154,"date":"2005-12-12T15:17:59","date_gmt":"2005-12-12T15:17:59","guid":{"rendered":"https:\/\/zonda-develop.go-vip.net\/prosales\/article\/systems-check_o"},"modified":"2025-06-27T02:07:54","modified_gmt":"2025-06-27T02:07:54","slug":"systems-check_o","status":"publish","type":"post","link":"https:\/\/zonda-develop.go-vip.net\/prosales\/business\/systems-check_o\/","title":{"rendered":"Systems Check"},"content":{"rendered":"<div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"><p class=\"wp-block-paragraph\"> Considering the sustained and consistent growth of the construction industry over the past decade, when pro dealers across the country close the books on 2005 this month and crunch the year-end numbers, they&#8217;ll likely find their companies riding another wave of success with the P&#038;L in the black and sales increases approaching the double digits. If you count your company among this industry majority of balance sheet victors, feel free to kick back momentarily to toast your crew and your customers on another great year. But make sure to keep the numbers out of the desk drawer: Whether your yard is a local operation doing $1 million in annual gross sales or a regional powerhouse topping $100 million or more, leveraging that balance sheet against your own historical performance and the performance of your peers is vital to continued success in the traditionally cyclical construction business.<\/p><p class=\"wp-block-paragraph\"> Luckily, the building supply side of the industry is teeming with opportunities to facilitate this practice, and astute pro dealers and trade experts agree that the best year-end position for any enterprising lumberyard executive is seated at an industry roundtable with balance sheet in hand. \u201cIf you have the right mind-set, and you&#8217;re progressive and want to grow the business, you&#8217;re in the right place regardless of your volume,\u201d says Jim Enter, president of the Charleston, S.C.\u2013based American Association of Roundtables, an organization devoted exclusively to benchmarking and roundtable services for the LBM industry.<\/p><p class=\"wp-block-paragraph\"> Enter, who began his career in the industry in 1964 with the Pelican Cos. (now part of Dallas-based Builders FirstSource), currently facilitates 13 separate roundtables and manages facilitators for 12 others. From owner roundtables where dealers compare 110 separate financial metrics to best practice roundtables benchmarking installed sales and truss operations, Enter says dealer interest in the peer-to-peer exchange of strategies is on the upswing, particularly in the areas of fuel and delivery costs and compensation and benefits. For the dealer that has yet to pull up a seat, Enter offers a tempered promise: \u201cIt&#8217;s essential to stick with it to see long-term results, but you&#8217;ll get multiple paybacks from your very first meeting.\u201d<\/p><p class=\"wp-block-paragraph\"> <b>Associate Yourself<\/b> One of the most accessible avenues for pro dealers to begin benchmarking financial data and sharing best practices is by leveraging membership with the National Lumber and Building Material Dealers Association (NLBMDA) and its 21 regional federated associations, virtually all of which offer one or more roundtable opportunities with topics covering everything from financial metrics to operating truss plants and installed sales programs to running millwork operations. At the national level, NLBMDA has launched a Strategic Analysis Program to support its annual Cost of Doing Business survey (see \u201cGoing National,\u201d page 56). Regional associations also offer similar business condition survey-based reports, but primarily are facilitating roundtables for their members.<\/p><p class=\"wp-block-paragraph\"> At Paducah, Ky.\u2013based Cole Lumber, president Ronald Goode bolsters his participation in NLBMDA programs with roundtables hosted by the Kentucky Lumber and Building Material Dealers Association to gain perspectives from a cross section of dealers\u2014both regional and national\u2014to gauge the growth and success of his pro\/retail business. \u201cIdeally, you&#8217;re not just looking at your peers, but at companies doing business a little bit differently than you to get the best of the best practices,\u201d Goode says. \u201cWe do benchmarking with the relationships we&#8217;ve built through the Kentucky lumber dealers association, and we&#8217;re also pitting ourselves against the high-profit, contractor-only based yards &#8230; through [participating in] the Cost of Doing Business survey.\u201d<\/p><p class=\"wp-block-paragraph\"> Dealers in the South can consider themselves fortunate with the opportunities available through the Southern Building Material Association (SBMA), which boasts 17 roundtables, more than any other federated association, according to SBMA president Larry Adams. SBMA&#8217;s offerings, which include financial metrics, operations manager, installed sales, purchasing manager, truss operations, millwork operations, and CFO roundtables, have been growing since its first group began meeting in 1987. \u201cRoundtables enable you to do things a little bit beyond [analyzing raw data],\u201d Adams says. \u201cThey allow you to talk about what affects financial numbers, and how you can change them. The group gives the participating companies advice on improving metrics\u2014it adds another dimension to the financial analysis.\u201d<\/p><p class=\"wp-block-paragraph\"> Knoxville, Tenn.\u2013based Tindell&#8217;s Building Materials belongs to five roundtables at SBMA, including the building material owners group formed in 1987 as well as installed sales, sales manager, and truss and millwork operations groups, reports company owner Carl Tindell. \u201cPeople are pretty critical in a good roundtable,\u201d Tindell says of the twice-yearly review of balance sheets and more than 90 financial metrics in the owners group. \u201c[The other members] tell you when you&#8217;re screwing up and where you need to improve. I&#8217;ve always looked at it as my report card, how I&#8217;m doing in comparison to my peers, in relation to the industry.\u201d Over the years, Tindell&#8217;s has used the benchmarking process to improve margins and make decisions on buying computer systems, vehicles, and equipment, Tindell says, \u201cand in turn we&#8217;ve shared our own best practices, particularly with our incentive programs.\u201d<\/p><p class=\"wp-block-paragraph\"> According to Adams, consistency in that dealer-to-dealer exchange of ideas is a critical component of any successful benchmarking or roundtable effort, a benefit that improves as regular contact beyond scheduled meetings increases. \u201cEventually we see our dealers talking to each other [outside of the roundtable framework] on a monthly and even weekly basis, and that&#8217;s one of the reasons we do this, we want them to have that kind of communication with their peers,\u201d he says.<\/p><p class=\"wp-block-paragraph\"> Just as important is keeping things fresh: SBMA roundtable facilitators have their own annual roundtable to choose group events, guest speakers, or educational presentations to complement the straight shoptalk. For example, the association&#8217;s operational roundtable concluded its fall meeting this October with a visit to Alpharetta, Ga.\u2013based storage solutions provider Sunbelt to look at some new technology in racking systems and approaches to yard logistics.<\/p><p class=\"wp-block-paragraph\"> <b>Upstream Solutions<\/b> Pro dealer vendors like Sunbelt\u2014especially those with maximum exposure to varied retail operations\u2014are often an overlooked resource for benchmarking, especially in the areas of inventory and operational best practices. \u201cAny time dealers and suppliers can lean on each other as an outside source it helps to boost everyone to a new level,\u201d says Sunbelt vice president of sales Clint Darnell. \u201cSo it&#8217;s always a positive for us to act as that type of a resource.\u201d During SBMA&#8217;s recent visit, for example, about 12 dealers joined Darnell at Sunbelt headquarters for a PowerPoint presentation on Sunbelt&#8217;s newest inventory systems followed by a strategic roundtable covering emerging best practices in door and window storage and delivery.<\/p><\/div> <!--nextpage--><div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"><p class=\"wp-block-paragraph\"> As specialists in yard design and redesign, Sunbelt has helped to retool approximately 500 lumberyards over the years, and the expertise it has gleaned from the experience reaches far beyond inventory turns and product pitches. \u201cIt&#8217;s rare that someone calls us up and just asks for a 150-foot T-shed,\u201d Darnell says. \u201cAlmost everyone is looking instead for strategic improvements. While dealers across the country differ in their products and their inventory mixes, their challenges are quite similar, and best practices in yard design range over areas that include improving workmen&#8217;s comp, operational efficiencies, and maximizing space.\u201d<\/p><p class=\"wp-block-paragraph\"> At Indianapolis-based Krauter Storage Systems, vice president of sales Rick Hogue and his sales team aim to provide their dealer-customers with design and operational advice accumulated partly by visiting approximately 12 different dealer yards every week. \u201cWe get to see the good, the bad, and the ugly,\u201d Hogue says. \u201c[The exposure] makes us a good resource for best practices.\u201d Hogue agrees that there is less of a concern with inventory turn metrics from the vendor standpoint. \u201cMost successful dealers really have a handle on that already,\u201d he says. \u201cPeople are usually interested in what other dealers are doing in terms of keeping product under cover, dealing with the mold issue, and learning other best practices.\u201d<\/p><p class=\"wp-block-paragraph\"> <b>Group Efforts<\/b> Buying groups, as well, are fast emerging as a go-to source for both financial metric data comparisons and full-on roundtables, especially since multiple market coverage and deep membership ranks allow dealers to network among non-competing peers and size themselves up against larger- and smaller-volume operations. Since most buying groups and co-ops already require members to submit annual financials, providing dealers with a comparative analysis of those metrics is becoming a key service offering for many organizations. \u201cTraditionally, a buying group has been just exactly that\u2014we help you buy stuff better and [then] everything else you turn elsewhere for,\u201d says Nelson Wood, marketing manager for Grand Rapids, Mich.\u2013based Progressive Affiliated Lumbermen (PAL), a buying group with more than 300 members in 16 states. \u201cBut as we grow, we are trying to expand the services that we offer members other than just trying to find a cheap 2&#215;4.\u201d<\/p><p class=\"wp-block-paragraph\"> To that end, PAL provides dealer-members with a confidential comparison of annual financials against dealers in 10 separate sales volume categories ranging from $1 million to $100 million. \u201cIf a guy is doing well in that comparison, he can sit back and smile, and hopefully it doesn&#8217;t give him the wherewithal to simply think, \u2018Oh, I have got it made and I don&#8217;t need to do anything,&#8217;\u201d Wood says. \u201cBut if he is not doing as well as at least the average PAL member, then he can dig in and determine why.\u201d<\/p><p class=\"wp-block-paragraph\"> To assist members in determining just how, when, and why to leverage the operational and strategic significance of comparative analyses, PAL launched its first roundtable this year to facilitate face-to-face networking and benchmarking for dealer members, an effort that Wood says the co-op intends to grow, hopefully getting an additional five to six roundtables underway in the coming year.<\/p><p class=\"wp-block-paragraph\"> At Ballston Spa, N.Y.\u2013based Curtis Lumber, management has relied on similar co-op roundtables\u2014primarily through Wayne, Pa.\u2013based purchasing organization Lumbermens Merchandising Corp. (LMC)\u2014to gauge the financial health of the company, collect best practices, and generate new business ideas for the 18-unit pro dealer. \u201cWe favor using co-op roundtables for comparing benchmarks because outside of that environment it can be challenging to find a non-competitive atmosphere,\u201d says company director of purchasing, marketing, and advertising John Kirk, who\u2014along with company president Jay Curtis and vice president Jon Hallgren\u2014has been a stalwart supporter of LMC&#8217;s annual roundtable for several years.<\/p><p class=\"wp-block-paragraph\"> While Kirk says the LMC roundtable is among his best resources, he suggests that dealers will always benefit from buying group benchmarking programs regardless of their affiliation, and should commit themselves accordingly. \u201cIt is time out of our busy schedules, but at Curtis we truly feel the networking opportunity with our peers is well worth our time. It gives you insight and opens your eyes.\u201d And although the non-competitive atmosphere that co-op networking provides has been invaluable to Kirk, Curtis also supports roundtables\u2014especially those geared toward best practices\u2014within its own market regions via participation in programs of the Northeastern Retail Lumber Association (NRLA). \u201cThe programs and opportunities [at NRLA] are great,\u201d he says. \u201cAnd by now we all know what not to say in a room with possible competitors.\u201d<\/p><p class=\"wp-block-paragraph\"> <b>Stick to It<\/b> Regardless of whether you seek financial and best practice benchmarking opportunities via vendors, associations, buying groups, or a combination of these sources, industry experts and roundtable veterans have a couple of tips to help you get the most out of the process.<\/p><p class=\"wp-block-paragraph\"> Obviously, when you&#8217;re opening up the books\u2014especially for the first time\u2014to other business owners outside your company, hesitancy looms large. Achieving marked and measurable results from your roundtable efforts requires honesty in the presentation of your state of affairs, and establishing a comfort zone with your group prior to the formal sit-down can help eliminate the diffidence. \u201cHave a few drinks, go to dinner, play golf,\u201d suggests Enter. \u201cIt is critical to establish that trust, because the value is going to be in what the dealers learn from each other and ultimately how they hold each other accountable.\u201d<\/p><p class=\"wp-block-paragraph\"> Once you&#8217;ve settled in with a group, remain consistent in approach and show patience with obtaining results. \u201cYou throw 90 financial ratios at a new dealer, often they are seeing some of those metrics for the very first time,\u201d explains Adams. \u201cThey have to develop an understanding of what those numbers and calculations mean. Over time, with help from the group, they can begin to discover how to positively change those numbers.\u201d<\/p><\/div> <!--nextpage--><div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"><p class=\"wp-block-paragraph\"> Enter agrees, maintaining that dealers need to understand that true roundtable value is only gleaned through a multi-year commitment. \u201cIt takes about two years to see really measurable results,\u201d he says. \u201cTwo years to really turn your machine around and start heading in an even more profitable direction.\u201d<\/p><p class=\"wp-block-paragraph\"> Tindell, for one, understands the necessary commitment\u2014and the eventual payoff\u2014of the roundtable and benchmarking processes. \u201cI don&#8217;t see how any progressive dealer can afford not to belong to a roundtable,\u201d he says. \u201cIt should be the backbone of your business. Otherwise you are just guessing, reinventing the same wheels day-in and day-out.\u201d<\/p><p class=\"wp-block-paragraph\"> With more than 25 years of experience in the area, Tindell ranks the practice as the top strategy to ensure corporate success and growth, and concurs with other successful dealers, roundtable facilitators, and industry financial experts alike on the definitive benchmarking and roundtable maxim: Any dealer missing from the table is ultimately missing out.<\/p><p class=\"wp-block-paragraph\"> <b>Go National<\/b> NLBMDA partners with MGT Strategies in an effort to provide quarterly, actionable data and financial benchmarking to dealers as a premium service to complement the annual Cost of Doing Business survey.<\/p><p class=\"wp-block-paragraph\"> \u201cBenchmarking is the quest to improve through continuous improvement,\u201d says Steve Davis, owner of Greenville, S.C.\u2013based MGT Strategies, an industry consultancy specializing in benchmarking, roundtables, and process improvement. \u201cThe challenge is coping with change, which is made all the more difficult because selling building materials to contractors is perhaps one of the most complex small businesses there is.\u201d<\/p><p class=\"wp-block-paragraph\"> To help pro dealers navigate through the shifts in the business of residential construction supply, Davis has partnered with the National Lumber and Building Material Dealers Association (NLBMDA) in launching the Strategic Management Program, a suite of quarterly and annual financial reports and analyses of some 670 financial measurements designed to support NLBMDA&#8217;s annual Cost of Doing Business (CODB) survey.<\/p><p class=\"wp-block-paragraph\"> To participate, dealers submit information via five separate surveys (assets, salaries, sales and expenses, operational statistics, and a forecast of future sales and expenses) on a quarterly basis. According to Davis, data reporting after an initial setup typically takes less than three hours. Within 10 business days after submission, participants receive a 30-page management performance report that pits current data against the dealer&#8217;s historical metrics with color-coded (green=good, red=bad) reporting schemes that provide at-a-glance upward, downward, and static trend analysis.<\/p><p class=\"wp-block-paragraph\"> About 45 days after submission, participants receive a 13-page Dealer Report Card benchmarking their performance against all other program participants. The Dealer Report Card also includes a financial impact page that shows the bottom-line dollar result of a dealer raising his performance in any of the given metrics. A year-end report similar to the traditional NLBMDA Cost of Doing Business survey rounds out the program, providing participants with an annual balance sheet and financial roundup.<\/p><p class=\"wp-block-paragraph\"> \u201cThe quarterly reporting is really a superset of the CODB survey. Not only is the analysis more in-depth, but the timeliness of it makes it that much more valuable,\u201d Davis says. \u201cBy doing a more in-depth analysis rather than just looking at the bottom line, you can see where there are opportunities to save some money, to make some more money, or to see if anything is out of kilter. And if you decide to execute a management initiative, you can see an immediate response in your next quarterly report. If you can see how things are working on a quarterly basis, you can pour on the coals, and by the end of the year see some huge benefits.\u201d<\/p><p class=\"wp-block-paragraph\"> Now in its second year, the Strategic Management Program currently has approximately 85 participating companies, and is available to NLBMDA dealers at a minimal cost of $1,500. \u201cWe&#8217;re all trying to move toward making decisions on a quarterly basis,\u201d says Southern Building Material Association president and program proponent Larry Adams. \u201cYou don&#8217;t want to wait until next year to look at last year&#8217;s information anymore, so we&#8217;re all striving to provide information that is current, information that dealers can react to right now.\u201d<\/p><\/div> <!--nextpage--><div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"><p class=\"wp-block-paragraph\"> For more information on participating in the Strategic Management Program, contact Steve Davis at 864.322.8874 or e-mail <i><a href=\"mailto:info@mgtstrategies.com\" target=\"_blank\">info@mgtstrategies.com<\/a><\/i>.<\/p><\/div> ","protected":false},"excerpt":{"rendered":"<p>Considering the sustained and consistent growth of the construction industry over the past decade, when pro dealers across the country close the books on 2005 this month and crunch the year-end numbers, they&#8217;ll likely find their companies riding another wave of success with the P&#038;L in the black and sales increases approaching the double digits. [&hellip;]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"scheduledNewsletterDates":[],"_scheduled_newsletter_id":0,"footnotes":"","jetpack_post_was_ever_published":false,"zonda_content_type_url_append":"_o","zonda_dfp_zone":"","zonda_exclude_recommended_contents":false,"zonda_exclude_most_popular":false,"zonda_exclude_tagged_results":false,"zonda_eyebrow":"","zonda_last_newsletter_date":"2099-12-31T23:59:59.999-05:00","zonda_original_url":"","zonda_pdf_version":0,"zonda_print_headline":"Systems Check","zonda_promo_abstract":"","zonda_promo_headline":"","zonda_promo_image":0,"zonda_subheadline":"From vendors to buying groups to NLBMDA and its regional federated 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