After buying exclusively from one supplier for years, your loyalty was rewarded with a sharp cut in supply so they could build relationships with other dealers. What would you do?
With more than 20 years since you went into business with your own lumberyard, you’ve been through enough to understand how the world works. That’s why you take care of your people, and make sure they’re paid well, treated respectfully, and that they have the flexibility they need to live their lives. That’s why you take care of your vendors, by paying your invoices promptly, communicating when there’s an issue, and not constantly shopping other vendors. You know how it feels when a builder customer is always beating you up on price and threatening to take their business elsewhere, and you’ve vowed to never treat your vendors that way. While you may be able to save a dime here or there, the damage it does to the relationship, in your view, just isn’t worth it.
From your perspective, life isn’t that complicated. Live honorably, do what you say you’re going to do, treat others the way you want to be treated. Most people and companies do the right thing, but unfortunately, sometimes the temptation to cash in leads people astray. As it apparently did with one longtime supplier.
When the product shortages hit hard in 2021, you believed that the vendors you’d been loyal to would take care of you the best they could. Unfortunately, one supplier who you’d been buying mill-direct from for years, saw the opportunity to sell to dealers who they’d been chasing unsuccessfully. But to meet the needs of these other dealers, they put you on allocation—cutting you to 60% of your prior year’s sales. Plus, instead of continuing to sell to you direct, they made you purchase through local distribution.
“Tough times call for tough choices.” That’s what your salesperson told you when you called to see if there was some mistake. “Business is business, and we have the opportunity to serve more customers than we ever have before. We appreciate your loyalty, and we’ll do our best to continue serving you, but our company has decided this is the best move for our shareholders and our bottom line.”
This smack across the head with a 2×4 has you rethinking the way you treat vendors and, since you’ve relied on one supplier for years, wondering where you’re going to source the materials you and your builder customers so desperately need. You’ve already decided to never, ever again put all your eggs in one basket. In addition to that, what would you do to navigate this crisis?
– GET BUSY. As with any crisis, you need to do whatever’s necessary to secure the products you need, from whatever vendor will sell to you.
– LEVERAGE. By doing business the right way, you’ve got a strong business and a good reputation. Leverage those assets and your existing relationships to open new doors.
– COMMUNICATE. Let your builders know that you are navigating an unexpected supply disruption, and work to get estimates of their material needs as far out as possible.
– PUSH. Use your history with this long-time supplier and push to get as much material as you possibly can. Then, once the crisis passes, move all of your business to other suppliers.
If you’d take a different plan of attack, email your suggested solution to James@LBMJournal.com. If we publish your reply, we’ll send you an LBM Journal mug.