Time as Money
How lumberyards, supply houses and other vendors are vying for a piece of the $180 billion remodeling industry.
What is necessary for good relationships between suppliers and remodelers? Larry Murr, CGR and owner of Lawrence Murr Inc. in Jacksonville, Fla., didn’t have to think long at all about that question. He was trying to clean up a mess created when a tile supplier, who had assured Murr’s clients that their selection would be available within two or three days of ordering, came up way short. Even though Murr placed the order a week in advance, his tile trade contractor got stonewalled when he went to pick up the material.
“We eventually found out that the tile had to be ordered from Spain,” Murr says. “So the clients had to go with the same pattern in a smaller size and settle for a different look than they wanted. And I had to reschedule every other trade contractor that was scheduled to come in after the tile guy: the electrician, the plumber, the painter. It’s a real domino effect.”
Murr describes the ideal supplier as “one who understands what we are up against in remodeling. We are typically on a tighter schedule. Selections may change in the course of the project. There is very little room to store materials on the job, so they may not be able to deliver the materials as soon as they arrive. We need honesty about the delivery schedule — what does ‘a couple of days or so’ really mean? Keep us informed of any delays of the delivery of the materials, for whatever reason. The house is torn up; the owners’ lives are in disarray. We need information!”
Not your father’s building supplier
Fortunately, there are suppliers who understand the frustration remodelers feel when a supplier drops the ball, and they are going out of their way to provide targeted information and services designed to save remodelers time and money. They understand that builders and remodelers are not interchangeable and that remodelers have specific needs that rarely come up with builders. Some have sales forces devoted exclusively to remodelers; others just spend a little extra time trying to figure out which of the remodelers’ needs can be identified and met without breaking their own budgets. It might be tough to compete on price against the buying power of Fortune 100 corporations, but the smaller suppliers favored by remodelers emphasize product knowledge, shared experience in the industry and especially personalized service.
For example, look at one of Murr’s favorite suppliers, Insulating and Weatherstripping, also in Jacksonville. The sales staff — owner Don Chandler, Bill Ramsey and Willie Lawson — anticipates customers’ needs by regularly checking through two lists of Jacksonville-area building permits and notices of commencement.
Armed with the addresses of new projects for their existing customers, they visit these sites the next time they are in those neighborhoods. These preliminary stops give them a good idea of what each remodeler will need for the job and when. They follow up with a phone call to the remodeler to confirm their estimates and make the arrangements. It might be the next-best thing to having insulation magically appear and install itself exactly when the contractor needs it.
“I may be able to see that a wall or ceiling isn’t thick enough to accommodate the amount of insulation required by the state code,” Chandler explains. “I can mention that to the crew so they can fur it out. It can eliminate some problems before they get to be bigger problems.”
Chandler has no illusions about the overall importance of his product’s role in the grand total for the project — usually 1% to 11/2% of the cost of construction — but he takes pride in his company’s ability to shoulder some of the overall burden for customers.
“It’s a very small part of the project,” he says. “But we can eliminate this one headache for a remodeler when he’s worrying about the electrician and plumber and the roofer not showing up.”
Chandler and his employees can also serve as pre-inspection inspectors for projects, using a checklist during a walk-through with the project manager or lead carpenter. “We can show the crew what’s missing and leave the list for them so they can fix the problems before they call for the inspection,” he says. “It’s a personal touch that doesn’t cost very much.”
Serving a service industry
Most suppliers see service as the cornerstone of their business, especially in these days of increasing competition from big-box retailers that are battling for the attention of professional contractors. Rich Cortese, chief operating officer of T.W. Perry, a lumber and building materials dealer in Gaithersburg, Md., is blunt about it: “Service is the key in all aspects of our business. We have to provide good service, competitive pricing and quality products. If you don’t do that, you’re not going to be successful.”
Cortese takes special pride in the breadth and depth of expertise of T.W. Perry’s sales staff, particularly the segment dedicated to remodelers. Noting that these customers have different needs than new-construction builders, he emphasizes that there is no substitute for experience in meeting those needs.
“There are a lot of small quantities and having to match products that might be 70 years old,” Cortese says. “The remodelers need guys with experience who know where to get this stuff and what they’re talking about. Drywall and studs are easy, but finding 80 feet of a particular molding or a special window to match the ones already in a house that was built in 1930 is not.”
The firm offers next-day delivery for stock items, and to meet the needs of remodelers, part of what’s in stock is an inventory of more than 200 moldings. T.W. Perry just published a catalog featuring the profiles of these moldings and has distributed copies to 3,500 architects, remodelers and builders. The catalog lets users identify which moldings they need and place their orders over the phone.
“It’s a lot easier than wandering around the warehouse with a piece of molding trying to match it up,” Cortese says with a laugh. And it saves remodelers a lot of time and, therefore, money.
Cortese also points out that the average time spent on a pickup at one of T.W. Perry’s locations is 171/2 minutes. “We can get people in and out quickly because we have a knowledgeable staff, and we have a lot of guys working in our warehouses and yards. Time is money to contractors, and we know that.”
And knowledge is power. Twice a year, T.W. Perry sponsors its Contractor College: five three-hour seminars. Each seminar features an industry expert who speaks on a different aspect of doing business, such as sales, collecting money and estimating. The courses count toward recertification for CRs and CGRs, too.
|Specialty suppliers such as Architectural Impressions offer education and advice on installation of the many materials used in the moldings, niches, medallions and other embellishments displayed in the company’s showroom.|
Product education is a responsibility assumed by many suppliers, especially those that deal with specialty or technical products. Cristina Kreis, showroom manager and co-owner of Architectural Impressions in Arlington Heights, Ill., says that a big part of her job is helping experienced carpenters learn how to install the moldings her store sells. With remodelers accounting for about 75% of her company’s sales of wood, composite, high-density urethane and other kinds of millwork, she gets plenty of opportunity to work closely with them in sales and installation.
“Remodelers who know me send in their clients,” Kreis says. “I work with them to determine what style is most appropriate to the house and to their budget. That is a service the remodelers appreciate, too.”
Architectural Impressions does some installations, but the finish carpenters on the project put in most of the product. In those cases, Kreis is adamant about providing information on proper installation. For example, high-density urethane must be installed differently than wood. It has to be fitted tightly, and the corners should not be coped.
Education is a key element in the approach to remodelers taken by Scherer Brothers Lumber Co. in Minneapolis. The firm’s Remod Squad — a dozen sales representatives who focus almost exclusively on the remodeling market —provides nationally known speakers and product training for remodeler customers, but the reps do as much learning as teaching. Several times a year, The Remod Squad gathers 20 customers for an in-depth discussion of what the remodelers want and need from suppliers. Most recently the topic was the job site; the participants were operations managers.
“Most building supply companies don’t carry a lot in the way of demolition and protection products, but we do,” says Bill Clemen, vice president for retail at Scherer Brothers. “Remodelers look for resourcefulness; builders, especially production builders, mostly want consistency and reliability.”
T.W. Perry is embarking on another expensive but potentially important venture in its quest for customer service. By early May, the company expects that its customers will be able to log on to its Web site to check stock, place orders, get quotes, check statements — in effect, do just about anything Perry’s salespeople can do within their accounts. Remodelers will be able to check availability and place orders at their convenience, even in the middle of the night, and Perry will be relieved of the paperwork and transactional costs associated with taking that order. The company will bring in its customers for training on the proprietary software.
T.W. Perry is more technologically minded than typical building materials suppliers, but still Cortese has been surprised by the interest this project has stirred among contractors. “It’s different from the general perception,” he says. “Many of these guys keep up with technology.”
The lack of e-commerce capabilities within the remodeling industry is a surprise to Seymour Turner, vice president of Airoom Inc. in Lincolnwood, Ill. He thought several years ago that the industry would be further along than it is electronically. He notes that while many manufacturers supply detailed information and complete specifications for their products online, remodelers still must go through traditional channels to order the products.
“You can order a book through Amazon.com and not think twice about it,” he says, “but if you try to order a bathtub without a whole lot of paper flying back and forth, you’ll have trouble.”
The future use of electronic data interchange (EDI) could provide the solution to another of Turner’s pet peeves: catalogs that fail to provide complete information about all the materials necessary to install a product. Paper catalogs usually require cross-referencing and list-checking to ensure that an order includes all parts necessary for installation. Electronic catalogs could provide automatic prompts for each item required.
Michael Strong, CGR and vice president of Brothers Strong in Houston, is more than surprised that EDI hasn’t caught on with remodelers and their suppliers. “This is the most frustrating, aggravating bottleneck within the sales and production process in remodeling,” he says. “It makes me crazy that I can’t go online and check pricing, let alone order anything I need in building materials. Those suppliers have 10 or 20 times the volume we have, and they just don’t get it.”
|F.E. Wheaton’s system allows customers to view their password-protected accounts for information, but online order entry is not available yet.|
But one supplier venturing into EDI points out that the nature of remodeling makes it tough to standardize products, a crucial element to effective e-commerce. Jeff Brown, president of F.E. Wheaton & Co., a building materials distributor in Yorkville, Ill., says 25% of remodelers’ orders with his company are special orders. He would like to do more with this segment of the industry because, he says, remodelers have more need for e-commerce than large builders, who often have in-house purchase order systems.
“There’s not a big demand for order entry from remodelers,” Brown says. “There are so many details and specs with materials like windows and prehung doors that we’re limited with the products we can handle through EDI.”
Wheaton does have a system that lets customers view invoices and statements online, but order entry still is handled through more traditional methods. The most sophisticated customers e-mail spreadsheets with their orders.
Money is money
ABC Supply, based in Beloit, Wis., has rolled out a variety of what it calls Freedom Programs, so called because they are designed to give remodelers the freedom to do what they do best: sell and build. Kevin Hendricks, vice president of branch operations, says the company’s focus on contractors is especially sharp because ABC’s founder — his father, Ken — was a roofing contractor before he started the company.
One example of the help ABC offers customers is marketing. ABC offers job-site signs and targeted mailing to 50 or 100 homes in the immediate area around a job. “That gives the remodelers some lead-generation tools that let them spend less time on that part of their business and more time on the actual construction,” Hendricks says.
ABC provides contractor customers with unusual opportunities that translate directly into cash savings, as well. One program provides financing through a company with which ABC has established a relationship. The homeowner talks directly to the company about the loan and usually has an answer about the financing within 15 or 20 minutes. “That lets the remodeler sell bigger jobs,” Hendricks points out. “And it allows smaller contractors to compete with larger ones.”
ABC also works with remodelers to “pool” employees into a larger group to get better rates on worker’s compensation and other insurance. The remodelers then “lease” the employees back from this pool. As a result, small and medium-size remodeling companies can offer their workers better benefits, increasing the companies’ attractiveness in a competitive job market and improving the retention rate of existing employees.
“Anything we can do to help remodelers be more successful is our obligation,” Hendricks says. “These people deserve the utmost respect. We need to find more ways to help our customers make more money.”
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