Stepping forward: with value-added services now the rage, two steppers say their foothold in the supply chain is stronger than ever—and they want to prove it - Pro Watch

Prosales, Dec, 2002 by Chris Wood

George Pattee sees the window industry moving toward a one-step, direct supply chain. "There used to be a lot of two-step distributors in the window chain," says the CEO and president of The Parksite Group, a Batavia, Ill.-based two-step distributor of specialty building products. "But all they were doing was quoting price and delivering product. Manufacturers and dealers will never see the value in that."

Indeed, Pattee is quick to note that Parksite is a sales, marketing, and distribution company. "All of those words are very critical," he says. "A traditional building products distributor concentrates solely on inventory, delivery, and credit."

For Parksite and other progressive two-step distributors and wholesalers, warehousing and moving product is only the ticket to get in the door. Long-term staying power in the market hinges on the ability to pump value into their supply chain link, with services ranging from product marketing and training to full-job, next-day deliveries and business demand creation.

According to David Heider, chairman for Des Plaines, Ill.-based Distribution America (DA), a distributor buying group and services organization, two-step distributors are vital to the independent supplier, but need to exert more effort in communicating their services in the marketplace.

"There is really a growing mindset among distributors to find ways to improve the construction supply process," adds DA president Bill Axline. "Distributors are constantly striving to improve turnaround time, to help pro retailers reduce inventory, and help them to compete against big-box advertising."

For example, as manufacturing, installed sales, and other new programs keep the pro dealer community busy, a labor, service, and marketing vacuum has developed--one that forward-stepping distributors are eager to fill. "We're concentrating on demand creation, on brand building, and training for product sales and installation," confirms Pattee. "With everything pro dealers are doing, their role cannot be to introduce and market new products. Their sales guys are worried about an entire house package and the quality and speed of their delivery."

At Parksite, keeping pro supplier customers full of product knowledge and builder orders is priority No. 1. While the firm's outside sales reps are training the dealers on product specs and working to maximize inventory turns, product specialists move even further down the supply chain to reach builders and consumers, marketing the distributor's housewrap, trimboards, solid surfaces, and decking. "Demand creation is our main role in the supply chain, and it's the way we will stay in the chain," Pattee says. "We need stocking programs and training programs for the suppliers, but we need to go to the builder at the same time and say, `Here's a new item, and here's the dealer who can get it to you.'"

Most successful two-step distributors agree with the Parksite mantra that it is easier to be a service company focused on efficiencies than to be a price-driven provider attempting to provide added services.

"The pro dealer is swamped," explains Joe Bayer, president of Belgrade, Minn.-based Bayer Built Woodworks, an interior/exterior door and millwork distributor to nearly 900 pro dealers in six states. "Dealers are providing or installing everything for the house from the shingles to the cement to lumber to the caulk. I can't imagine expecting them to keep up with all the millwork." To that end, Bayer Built has developed a "working salesforce" that makes more service calls than sales calls, assisting dealers in measuring out jobs and ensuring quality installation. "We have a service-based business model," Bayer says, "so it couldn't be any other way [at our company]."

Delivering More

Even as the construction supply chain has constricted over the past decade in an attempt to squeeze out the middleman mentality and its associated cost, two-step distributors like Bayer Built have seen business thrive by proving one-of-a-kind value on a consistent basis. "What makes us unique is our next-day service, which is virtually unheard of among our peers," Bayer notes as an example. "That's how we gained our reputation and grew our business from $1 million in 1987 to topping $40 million this year. We'll take an order as late as 2 o'clock in the afternoon and have a house job of doors ready the next day."

However, even spotless delivery and split-second turnaround has not held every misconception about this channel at bay. Many distributors and wholesalers still are viewed as a costly link in the supply chain, despite extraordinary efforts to provide service beyond stocking product and ensuring supply. "A lot of pro dealers might still have the misconception of the two-stepper as that of a middleman," Bayer says. "What has helped us is having tours for our dealers and, more importantly, encouraging them to bring their contractor customers. Their jaws drop at the facilities and the efficiencies; we're not just stacking millwork out of a pole barn."