Lines of supply: traditionally characterized by small companies making low-volume purchases, the remodeling market definitely can be a challenge to supply—but it also can be a lucrative revenue stream for pro dealers that treat remodelers like VIPs rather than fill-in business

Prosales, Sept, 2004 by John Caulfield

It is ironic then, though hardly surprising, that when asked to identify three things that lumberyards and building supply outlets could do better, nearly half of those polled singled out "lower prices" (see Figure 4). Supporting that finding, price is the "No. 1" consideration when Murphy Bros. Contracting, a $15 million remodeler based in Mamaroneck, N.Y., chooses suppliers, followed by availability and delivery, according to Michael Anechiarico, the firm's production manager.

"Prices are always negotiable," adds Brian Stover, who until June was president of Invincible Associates, a $10 million remodeler based in Largo, Fla. "It all depends how bad the store manager wants your business."

The key word here seems to be balance. Whether a remodeler weighs price or a particular service more heavily, it's often the balance between the two that's most important.

Stover touches on an important point because remodelers tend to gravitate toward those suppliers that will go beyond the call of duty "I don't jump around just to get a [lower] price," says Tim Shigley, president of Shigley Construction in Wichita, Kan. "The baseline for me is the relationship you build with a supplier, in which we put a tremendous amount of trust." David Crane, who owns Crane Builders, a $3 million remodeler based in Nashville, Tenn., states that one local yard, Robert Walker Lumber, gets a good chunk of his company's building materials purchases because of its "willingness to deliver on short notice."

More than three-quarters of the survey's respondents graded "loyalty/past relationships" an 8 or better as a criterion for selecting a supplier, about the same percentage that said they'd favor a supplier with higher-than-average prices that also delivers higher-than-average service. What constitutes "service," though, varies by remodeler, and some have pretty basic requirements: They simply want orders filled accurately and on time. "We've been favoring a local yard called Prestige Lumber because they know they are supposed to send us their best [materials]," says Marion McGrath, co-owner of Orlando, Fla.-based Jonathan McGrath Construction, whose cost of goods is about 25 percent of its $1.8 million in annual sales. "They want our business and will do what it takes to keep it."

Others remodelers stick with suppliers and distributors that are long-standing partners. Murphy Bros. buys "the bulk" of its lumber from a local yard, Interstate Lumber, "which we've been doing business with since we were a $500,000 company," Anechiarico says. As a result, "we've gotten access to Interstate's online accounting, and much better in-field service. They'll jump on one of our orders, where someone we don't use as frequently might not be as quick."

Additional, Rainbow Construction, a general contractor and builder in Cape Elizabeth, Maine, purchases 70 to 80 percent of its commodities from Hancock Lumber's yard in Yarmouth, Maine, which had been Rainbow's primary suppler when Hancock bought it several years ago. Craig Cooper, Rainbow's owner, went to high school and college with Hancock's outside salesman, Alan Carr. "I will buy wherever he works, and Alan got me to go over to Hancock in the first place," he recalls.