Technology solutions provide LBM dealers the power to succeed in today’s chaos.
As a species, we humans are pretty smart. We excel in creating things to make our lives easier, and we’ve been doing that for a very long time. Take for example a curious device discovered in 1928 just outside Baghdad, Iraq. Consisting of a clay jar with an asphalt stopper through which was sticking an iron rod surrounded by a copper cylinder, the so-called Baghdad Battery could produce about one volt of electricity when it was filled with vinegar. And while there remains some debate as to the device’s exact function, one thing is clear—it was built to simplify some type of ancient process.
More than 2,000 years after the battery’s creation, we’re still developing technology to make processes easier. Take for example the lumberyard. Technology such as ERP systems that integrate an LBM dealer’s financials, supply chain, operations, commerce, reporting, manufacturing, and human resource activities have become commonplace. And while that topic has long been a focus of our November/December In Depth feature, there are so many more technology options—some integrated with ERP and some not—that can help the LBM dealer work smarter and more efficiently.
COVID-19 as a change agent
It’s doubtful anyone would argue that the global COVID-19 pandemic has had a tremendously negative impact on business. From shutdowns to labor shortages to supply chain disruptions, the pandemic has brought about intense problems for LBM dealers that have forced the industry as a whole to develop new technology solutions.
“As LBM dealers continue to face staffing shortages due to the ‘Great Resignation,’ fluctuating lumber prices and supply chain unpredictability, they’ll lean into technology to help solve for these problems,” says John Maiuri, president of the LBM & hardlines group at ECI Software Solutions, a creator of business management solutions that provide real-time visibility into every area of an LBM dealer’s operation. “As a result, solution providers will look to update their offerings, specifically with tools dedicated to solving pain points such as using advanced replenishment algorithms for purchasing, and integrated e-commerce enabling their web presence to service more customers while managing staffing shortages.”
Steve Yates, executive vice president of enterprise sales for Buildxact, creators of estimating and project management software that assists builders in managing construction projects end-to-end, shares similar views as Maiuri, pointing out that LBM dealers are realizing the impact that technology can have on their organizations after their hands were forced to adopt more of it because of the pandemic. “Several dealers we have been communicating with are using these new tools to create efficiencies in their organizations that lead to cost and time savings, and with those time and cost savings, they are providing more value to their customers through more consultative services,” he explains. “For instance, in the past, much of the technology that dealers invested in was limited to driving benefits exclusively to their business—across the country, businesses have been adding ERP, WMS, CRM and a variety of other acronym systems to help them be more efficient in their business operations. This technology and its adoption have been in place for quite some time, but it’s evolving in a way that allows the various back-office systems to integrate and to provide more comprehensive, smarter solutions, such as Buildxact, and that means huge advances for both the dealer and the builder.
It’s an environment that has accelerated the need for LBM dealers to embrace change to match customer expectations in a post-pandemic world. As Paul Dean, vice president of sales and marketing for Builderwire, Inc., one of the LBM industry’s oldest suppliers of e-commerce and digital integration solutions, points out, “The pandemic has altered the way virtually all LBM businesses are able to operate. Dealers are really pushing to adopt a more powerful, user-friendly, and well-merchandised online store.”
Flexible solutions for changing dilemmas
With everything the LBM dealer is facing, it can be easy to feel overwhelmed by both the challenges and the intricacies of the solutions. Luckily, there are many technology tools at the dealers’ disposal, and the tech creators stand ready to assist in technology implementation. “Now more than ever, it is important to use technology to provide a differentiated customer experience,” says Ryan Ayers, co-founder of Suppli, a payments and accounts receivable platform purpose-built for building material suppliers. “As demographics evolve, the customers of tomorrow demand that dealers provide them with the tools to make doing business easy. Invest in tomorrow or risk being left behind.”
With that in mind, we’ve gathered some technology options for LBM dealers. While those presented here are not meant to be the only ones available for the problems they solve, they illustrate some options at hand for the LBM dealer who is looking to succeed tomorrow while tackling the challenges of today.
If there’s one area that tech companies agree is here to stay, it’s e-commerce. Because e-commerce continues to be a huge trend, LBM dealers need to find efficiencies in warehouse and inventory management to support e-commerce growth. “As customers’ journeys shift into a more omni-shopping direction, dealers must ensure that their inventory is being accurately and efficiently displayed on all platforms,” points out Zachary Pfeil, industry marketing principal at Epicor. “For those with multiple locations, this becomes even more important because from purchase to delivery, you want to make sure your various locations are working smarter, not harder, to get product out to customers as efficiently as possible.”
To support that e-commerce growth, Epicor provides customized solutions for LBM distributors and continues to optimize its BisTrack platform, provide tools for responsive business intelligence, and support the ability to accept payments both online and in stores.
“The pandemic upended the way consumers shop and, as a result, e-commerce has become a lifeline for many,” says ECI’s Maiuri. “Contractors and consumers want to research and purchase items at their convenience, and without a proper web presence dealers risk losing valuable customers. Those who are looking to remain competitive and are eager to evaluate and modernize their business models should ensure the right e-commerce solution is part of that plan.”
E-commerce is far from a static environment, and tech makers constantly search for ways to improve the shopping experience. For example, in November, ECI acquired eCommonSense, an industry-specific e-commerce and product data management solution developed specifically for independent LBM dealers who were struggling to create an online experience on par with national chains. “The unified PIM, ERP integration, and customizable web templates help dealers efficiently build a customer-friendly shopping experience that fosters loyalty and drives growth,” explains Maiuri. “The solution includes value-added features for pro customers including access to account history, accurate contract pricing, project calculators and a professional quote builder. Plus, it’s industry specific, so accurate units of measure pricing and lumber features are already cared for in the software.”
Builderwire’s Paul Dean sees the development of e-commerce as a vital additional sales channel that provides 24-hour self-service sales. “This is not a new concept,” he explains, “as most everyone has purchased a stack of firewood or pumpkins at a roadside stand. Self-payment is the usual method of commerce, and delivery of the product is handled quite efficiently. Fast forward to today’s e-commerce world and the concept is the same. Customers want 24-hour access and hassle-free delivery. This applies throughout the LBM supply chain as B2B from manufacturers to distributors and retailers to professional contractors. And of course, as B2C from suppliers to consumers.”
As Dean explains, a major issue early on for LBM dealers in the implementation of e-commerce was the lack of data contained in the dealer’s ERP software. “Most major ERP companies hadn’t thought about giving external access to data using web services or APIs to pull the data,” he points out. “The younger generation has influenced their company leaders to apply technological change and e-commerce capabilities. APIs and web services have become robust in being able to access dealers’ data, and, e-commerce software has become less expensive, more functional, and easier to deploy. The thinking now is: you can buy anything online, why not building materials?”
In the case of Builderwire, it not only takes the lead on providing the industry’s deepest e-commerce capabilities that integrate with virtually all of the major ERP providers, but now offers a complete digital marketing services division for its customers that provides one-on-one consultative services coupled with metrics, goal setting and performance analyzation.
“Unlike digital consultants that offer observations and recommendations,” Dean says, “we actually fine tune your Builderwire e-commerce webfront utilizing your data, including point-of-sale velocity results. Nobody else in the industry offers this integrated package.” As well, Builderwire will help the LBM distributor learn all of the intricacies of SEO, online reputation management, and integration of social media platforms into the LBM dealer’s digital marketing plan.
Rather than one-size-fits-all solutions, tech developers build tools that can be customized to LBM dealers’ specific needs, and software is available that can provide answers to very specific problems. “There is a trend away from relying on a monolithic technology platform to cover every aspect of the business and toward an adoption of more focused and specialized tech solutions for specific areas of the business,” says Stephen J. Huson, head of marketing for Seattle-based Yesler, whose software aims to eliminate extra transactions and material movements between lumber suppliers and lumber buyers.
“Last year was a difficult year for commodity price risk, and a lot of lumber operators got caught with high priced inventory when prices rapidly fell,” he explains. “Price volatility is continuing and managing this risk is critically important. We recommend that lumberyards invest in closely managing and planning commodity inventory, gaining executive visibility into inventory levels and working capital, and implementing buying tools that keep the history accessible in order to support ongoing improvement and transition as individuals retire.”
To that end, Yesler offers a variety of products including Handshake, a targeted solution for executing LBM buying that allows the user to build a request, invite sellers to quote, receive, and compare those quotes, and confirm loads. “Most lumberyards today utilize email and the telephone to execute truckload or railcar lumber purchases,” says Huson. “Handshake is faster and allows for much easier communication with a large number of quoting suppliers, leading to faster and better buying. Because all the records of the quotes, etc. are in the system, it also makes it much easier to transition to a new buyer when one retires or to share responsibilities for buying.”
Specialized tech solutions even exist for specific building and construction applications. For example, SmartBuild Systems provides the construction industry’s only design system created specifically for pole barn buildings and residential metal roofing and reroofing. “Our SmartBuild system can be embedded on a lumber yard’s website to empower visitors to ‘design their own’,” says Keith Dietzen, the company’s CEO and owner. “Design software that can automatically generate accurate take-offs is important to stay competitive in the post frame segment. SmartBuild generates accurate takeoffs in addition to generating a 3D model and a full set of construction drawings.”
Technology isn’t just for getting products into customers’ hands quicker and more efficiently—it can also significantly aid in the LBM dealer getting paid in a timely fashion, and can even help with providing financing for their customer. “Technology needs to do more than make a dealer’s life easy. It also has to make their customer relationships stickier,” says Suppli’s Ayers. “A good example of this is payments and A/R software. Customers are used to making payments and managing their accounts online elsewhere, yet the status quo payments and A/R process at most LBM dealers remains paper-based and hamstrung by unnecessary friction. Requiring paper credit apps and job sheets leads to lost customers and missed sales.”
Suppli’s solution is to eliminate friction and paperwork with mobile-friendly digital forms while serving as a customer portal made for contractors. The Suppli portal is built for the jobsite, with a simple, mobile-first design to quickly view and pay invoices. Suppli also simplifies ACH/e-check payments for customers to avoid credit card processing fees, and provides customizable collection workflows so that LBM dealers can instead focus on sales and higher-value accounts while automating routine tasks like invoice reminders via email and text. As well, the software delivers project-based accounts receivable management and automatically organizes invoices to allow for project-by-project accounting and payments.
“Digitalization and automation is a general trend that is enabling industry players to reach younger builders and contractors, as companies in the industry led by millennials are every year a larger part of the market,” points out Yaser Masoudnia, CEO and founder of BlueTape, a payment and financing platform designed for the construction industry that enables building material suppliers to streamline their accounts receivable, offer risk-free extended financing to their customers, and get paid upfront. “Leveraging on tools that allow online management and reducing the manual burden on the team allows companies to grow their potential customer base and focus their team’s efforts towards the core of their business.”
BlueTape combines financial products and software into one solution. It utilizes technology that aggregates data from a variety of sources to offer credit to construction businesses for their building supplies. According to Masoudnia, when an LBM dealer partners with BlueTape and leverages its technology to automate their Accounts Receivable, that dealer’s customers can then use BlueTape credit to buy supplies at their stores. The dealer gets paid upfront and their customers will pay BlueTape back based on their payback plan chosen at the point of sales.
In addition, BlueTape offers dealers’ customers a wide range of payment plans, including 30 (0% fees), 60, and 90 day terms. As well, LBM dealers can choose to continue offering their net terms and credit to their customers and only use BlueTape to automate accounts receivable and accept online and mobile payments. “Given that 82% of contractor businesses are under 10 employees with no or minimal back office operation, it’s essential to enable them to make payments from anywhere on their phone,” explains Masoudnia. “On average, LBM dealers who use BlueTape are paid 26 days faster for their invoices after joining. This is a significant improvement in the efficiency of accounts receivable.”
As should be obvious, data is at the heart of every tech solution, and having the ability to easily extract that data and properly analyze it is key to success in this ever-changing world. “Dealers should be investing in tools that help them aggregate and learn from the various data inputs and outputs of their business,” says Buildxact’s Steve Yates. “It’s such a ripe opportunity, and since it has forever rested untapped, it will uncover so much about their businesses, the supply chain, and where and how technology will be a good fit for their needs.”
Epicor’s Pfeil also sees investment in tech solutions that ease data analysis as sound strategies for the LBM dealer, pointing out a variety of tools dealers should be considering when looking to make technology investments. “The first is journey planning and delivery,” he points out. “With advancements in technology and GPS tracking, using applications like Geotab, businesses can get a better understanding of where their trucks are, times to load/unload, and when their trucks are arriving and departing from their facilities using geofencing. The next area is advanced warehouse management. It’s costly to businesses to stop shipping or picking and do physical inventory counts. With new solutions, real-time information can be brought back to the ERP for accurate tracking of inventory and locations, and handheld devices can be utilized to drive efficient picking and packing of orders. The final area is configure, price, quote (CPQ) software that allows for 3D visualization so customers can see how their finished product will look in their environment and goes beyond some of the configurators or kits many have available today.”
An example of game-changing ways that technology is improving business through data analysis is the recent integration of Buildxact and Epicor’s BisTrack ERP system. As Yates explains, “This innovative collaboration frees builders to accurately estimate, price and order supplies at a time convenient to them. In turn, dealers spend time earning more business while wasting less time on emails, phone calls, and other transactional activities. With Buildxact and Epicor, dealers can use data to track purchasing behavior and to predict customer demand. This protects margins, fosters price stability, and assures deliveries.”
Likewise, ECI is focused on tools to help dealers uncover critical business trends without time-consuming reporting and analysis. “With our embedded Graphical Analytics,” says ECI’s Maiuri, “LBM businesses can get visual, actionable insights from the data in their ERP system to quickly identify trends and find growth opportunities. In addition, our new RockSolid MAX’s Daily Dashboard provides a snapshot of overall business performance and key metrics through an easy-to-understand dashboard, helping owners and business managers stay informed.”
After seeing the many technology options available, it should be apparent that it’s all about working smarter. As Epicor’s Pfeil reminds us, “With many dealers being forced to do more with fewer human resources, our goal is to make every employee more efficient and give them easy-to-use tools,” he points out, and it’s a thought worth remembering. For it’s by reducing the number of tasks—and the amount of time it takes to do them—that today’s LBM dealer will be able to successfully navigate the unique challenges of today’s environment.
Michael Berger is the former managing editor for HANDY Magazine and has been writing about home improvement and construction for the past 20 years.