A large, high-margin customer expects you to come to the rescue with immediate deliveries because of his poor planning. What would you do?
Like LBM dealers in many markets, your 2019 is off to a solid start, thanks to a continuing demand for homes and a backlog of projects from many of your builder customers. Also like dealers in many markets, you’re running lean—not by choice, but because you’re having a tough time attracting quality candidates. Because you have limited personnel to get the work done, you understand that it’s up to you to figure out how to help your team work more efficiently. You’ve begun dabbling in Lean processes, with some success, but it seems that each time you take a step forward with process improvements, a customer emergency takes you two steps back. Emergencies are a frustrating but very real element of the construction supply business. But all of your company’s emergencies have the same source. And his name is Bob.
Bob has been buying from you longer than just about all of your customers. In fact, you encouraged him to go out on his own when he was working for a builder that was about to go under. What he lacked in business know-how he made up for in ability and charisma. With your encouragement and support, Bob had no problems selling projects and keeping his ever-growing crews busy. Where he struggled was with organization and project planning.
On his very first project, he called in a panic several times because his crews had nothing to do unless you could deliver next week’s products today. You figured he’d learn to plan his projects better as time went on.
You figured wrong. It has kept happening. You let it slide during the post-recession years, because your team had plenty of time on its hands. But the reality today is that time your crew spends scrambling to cure his emergency is time that takes away from serving your other customers. It frustrates your team and costs your company money.
“We’re going to start losing people over the stress that Bob’s ‘emergencies’ create. When are we going to stop rescuing Bob and start making him be accountable for his poor planning?” your yard foreman asked. It’s a fair question, and you don’t know the answer, because it’s not as simple as it seems.
What you know, and the foreman doesn’t, is that you’ve been battling to keep Bob’s business for years. Two other competing yards, one part of a national pro-chain and one independent that’s aggressively working to grow into your market, have been wooing Bob. He’s stayed loyal to you because you helped give him his start. And you’ve managed to maintain healthy margins on your sales to Bob—largely because of his poor planning.
You’d love to make your operation more efficient and reduce the stress that Bob’s emergencies inevitably create with your team. But Bob is one of your biggest and highest- margin customers, and you don’t want to lose his business over this. What would you do?
- ACCEPT IT. Though Bob’s completely avoidable emergencies create havoc with your staff, it is what it is. It’s time to accept that this is how Bob does business, and just move forward.
- HELP HIM. These emergencies hurt him and his crews as much as they hurt you and Why not offer to help with his project planning, to help avoid these avoidable emergencies?
- MAKE IT STOP. In this tough labor market, you can’t afford to lose good people over a customer. Tell Bob that his emergencies have to stop, and the other yards that want his business wouldn’t put up with it either.
- MONEY TALKS. Sit down with Bob and help him understand that these emergencies cost you both money, and show him how much he could save by getting his act together.
If you’d take a different plan of attack, email your suggested solution to Rick@LBMJournal.com. If we publish your reply, we’ll send you an LBM JOURNAL mug.