November, 2006

Special Report: LBM Dealers Get Wired

New computer technologies are making dealers more efficient, helping to reduce costs and boost customer satisfaction.

By Craig A. Shutt

New technologies are helping lumber and building material dealers become more efficient and productive, which helps them provide better and faster service that satisfies customers, increases sales and reduces operational costs, resulting in higher margins.

To be sure, such systems seldom offer plug-and-play ease of use. Advance planning and employee training are needed to ensure programs are introduced well and employees become comfortable using them. Once they do, they see that the programs can relieve them of tedious chores and help them become more useful to their organizations. Computerized aid is available to help dealers in a wide range of activities, including inventory management, accounting, vendor procurement, estimating, invoicing, credit processes and dispatching. Often the systems can be complex enough that dealers become comfortable with the basics and then gradually extend into additional functions to improve their efficiencies.

On the following pages are some of the wide range of technology options available to dealers today, with reports from the field on how dealers across the country are making use of the programs. Their success stories show that new tools can help dealers better serve their customers while creating a more productive staff and reducing costs.

ACTIVANT-FALCON

Dunn Lumber uses Activant’s Falcon system to improve efficiency in many ways

Executives at Dunn Lumber in Daytona Beach, Fla., spent more than two years analyzing their needs and evaluating computer systems before they decided on their upgrade in May 2004. The new system offers so many productivity enhancements—and ways to measure those changes—that the company has introduced competitions within departments to encourage employees to find ways to help boost productivity gains even further.

The system they chose was the Activant Falcon program, a business-management software solution for LBM dealers that improves customer order-management operations, tightens inventory management and production processes and streamlines vendor procurement. A suite of accounting applications and a suite of analytics and reporting products help manage problem areas while providing the tools to increase business.

"The inventory controls that were offered were phenomenal,” says Gary Farber, CEO. "And they were further advanced in millwork and production scheduling than the other systems we saw. But the biggest plus in their favor was their willingness to listen and modify things as we needed.” That included integrating third-party applications, such as their window and overhead-door operations, notes Alex Bingham, manager of information technology. "They could make our other operations more efficient, too.”

The order-management system saves about 15 to 20 minutes per order, Bingham notes. "That’s a lot of manpower we are saving,” as well as eliminating any rekeying errors that could occur. The inventory-reporting package also is a key to increased efficiency. "It gives us flexibility with data, so we can use their reporting packages for reporting data and even manipulating it in third-party applications. It gives us advantages and leverage that we didn’t have before.”

The system includes deployment, dispatch and delivery software, including global positioning system (GPS) technology. "We can track our orders pretty much just like McDonald’s does,” explains Jeff Hawk, operations manager. "We can see on the screen where our orders are—if they’re being built, if they’re being delivered, if they’re already delivered and if they’re invoiced.”

Adds Bingham, "We’ve imaged as much as possible: accounts receivable, accounts payable, customer credit records and applications, and purchase orders.” As a result, operations have gone virtually paperless, resulting in the elimination of about 20 file cabinets. Best of all, the data can be accessed from any of the company’s seven locations. "Before, we had to make a lot of phone calls and hunt down paper,” he says. "Now, we could be at a café in Paris and have access to all our documents.” More likely, sales people can access the information, even when with a customer, to check pending orders or review inventory.

Because of the measurements, Dunn now can use the data to show employees how productive they are. "We can measure the number of loads built, the number of dollars loaded on a truck, the dollars delivered by employee, the miles covered for deliveries, and total number of deliveries, etc.,” Farber explains. "So we can create competitions among employees to improve productivity.” It also lets employees see where efficiencies arise and learn how to overcome bottlenecks.

ACTIVANT-EAGLE

Activant’s iNet e-commerce system helps Parker Lumber interact closely with customers

When Parker Lumber in Bremerton, Wash., decided to consolidate its computer systems in 2002, it selected the Activant Eagle system because of the efficiencies it offered. The company later became one of the first dealers to install Activant’s iNet e-commerce product, giving customers online access to their accounts. Parker now has added more Eagle upgrades, including electronic signature capture, electronic document management, advanced receiving and radio-frequency handheld devices.

"We’ve used every upgrade they’ve offered,” says Kyle Kincaid, CFO. "The online account management is a key element for us. We have a lot of customers who use it to manage their accounts and to check products.” The company doesn’t offer an online ordering service, however, nor does it want to add Internet-only business. "We see the Internet applications as a way to gain closer communication with our customers and to give us more tools to manage their accounts,” he explains. "It’s not a way for us to market products or generate new business.”

Visitors can log on to the company’s product catalog, where they will see the retail price for products they can buy at the store. Each customer, however, has its own password-protected site where it can access its account and its own pricing levels. "We were pretty impressed with what Activant could do to set up the online system,” he says. Parker also uses the system to send invoices via e-mail, an approach many customers prefer, explains Justin Heinitz, information technology director. "Previously, they’d receive invoices in person or by mail. Now, the invoices are sent with every purchase, so it’s easy for them to track them.”

The system has to be capable of handling a variety of store formats with Parker, as the company operates everything from a high-volume, low-SKU contractor framing yard to high-SKU, low-ticket hardware stores.

The company uses the radio-frequency devices for inventory counting and bin-tagging, as well as during receiving, says Kincaid. "It’s nice to be able to roam through the store and count sections and update prices on new bin tags on the spot,” he says. Employees use 10 wireless laptops on rolling carts to take inventory. Salespeople in the field also use laptops.

The efficiency of the system has helped the company move employees to more productive types of work, Kincaid notes. "We used to have a bookkeeping staff of five to six people for a single location doing about $5 to $6 million,” he estimates. "Now, a location doing $25 to $30 million has a staff of four or five people. It gives employees the ability to take on more work and be more productive.”

The most significant area of improved efficiency, he says, has come in the document-management system, which includes signature capture. The company saves about $10,000 per year by eliminating preprinted forms and simply printing records on plain paper. It also eliminated the work of one person at each location to collate and send out statements.

"Now all of our statements go out in two to four hours instead of two to three days, and it’s done by two or three people, not five or six,” he says. "It also means we bill faster, which means we get paid faster and with less effort.”

PROGRESSIVE SOLUTIONS

Chinook Lumber uses Progressive Solutions’ system to boost employee productivity

In installing a 55-user bisTrack management software system from Progressive Solutions, executives at Chinook Lumber in Snohomish, Wash., had one key goal in mind: reducing FTEs, or the full-time employee equivalents required to complete various activities. The company’s ability to measure its key operations and determine the added efficiency ensures it knows its payback on the system and helps it continue to boost productivity.

"Our goal is not to eliminate staff but to make them more productive,” says Joost Douwes, vice president and general manager. "Our company is growing rapidly, so we need to shift our employees to other, more productive areas and keep them away from doing repetitive jobs that slow things down.”

A key reason Douwes liked the bisTrack system is that it’s relatively new, he notes. "It has been developed in the last few years and built from the ground up on a 100% relational database. There are no skeletons in the closet this way. It’s a powerful system, but the core interested us the most. It’s not a legacy system with a few bells and whistles added.”

The system’s automated workflow-management system reduces redundant data entry and keying errors. "The time it takes us to do our daily processes is drastically reduced. It takes less time to process sales orders and POs, less time in AP, and decision-making is faster at all levels.”

Douwes is measuring the system’s benefits in many activities. With automated invoicing in place, about 80% of one employee’s time—or 0.8 FTE—has been eliminated, allowing that person to shift to other duties. The ability to create a paperless operation has knocked out more FTEs. "We don’t have to dig into files and hunt for past paperwork,” he says. Chinook also has gained "countless hours” by eliminating the need to enter material quotes into estimating bids and blueprint takeoffs.

Chinook also takes advantage of the instant-messaging application in the system, which alerts appropriate users in real time of events, transactions or communications, so that personnel can respond and react quicker. "The concept of pushing real-time information to users is an enormous advantage,” Douwes says. "It’s a radically different approach. Everything is at your fingertips.”

The company isn’t done finding efficiencies or adding new ways to boost profits. The next addition, coming this month, is an integrated package for operating an equipment-rental business. That will be followed early next year by the addition of electronic data interchange (EDI) through the system’s value-added networking. "That will take automated purchasing to the next level,” he explains. Currently, it takes about 1.3 FTEs to maintain the vendor files to create accurate documentation, and EDI will eliminate that.

"These productivity gains will allow us to continue to grow without adding FTEs,” he says. The system gives the company a competitive, strategic advantage by gaining productivity without adding to the labor cost.

SPRUCE

Training helps Mountain Lumber add SpruceWare.Net modules quickly and easily

Mountain Lumber has been a satisfied customer of Spruce systems for 14 years, so it was quick to add the company’s new Document Viewer module, going live in June. "We have an excellent track record with them, and we’re impressed with how they do business,” says Sandra Simmons, owner of the Boone, N.C.-based company. The installation and training that were provided showed that trust paid off.

The Document Viewer system is one part of the company’s SpruceWare.Net system, representing more than three years of research and development, Spruce officials say. It provides an on-screen report of every transaction, which is bar-coded so the links related to that document occur automatically. The information isn’t purged at month- or year-end as some systems do, ensuring an archival capability.

Adding the Document Viewer system didn’t change much about the way the company accessed its system, she notes, but it added a variety of new options. Previously, it could track orders by sales person, stock number, job number and other attributes. But now, it can pull up an order and track it to the purchase order, when it was received, when it was sold and all the other paperwork in any way connected with it. "Before, we couldn’t connect to other things, and that caused delays.”

The company also has added Spruce’s signature-capture system, with three of the signature pads placed at the front counter. Simmons anticipates adding the same system for its delivery drivers, so signatures will be captured at the site. "That will be wonderful, because it will eliminate paper,” she says. "We’ve already gotten rid of half of the paper records we used to keep.” Mountain still keeps proof-of-delivery copies signed at the site, she notes, but there are no carbon copies and no printers.

Although the new installation produced "a massive upgrade” for the company, it went very smoothly, she notes. "They preloaded the new server at their plant and shipped it to us. So when they arrived, the installation took about two hours. We did a few connections and downloaded a couple upgrades, and we were ready.”

Training employees on such a new system can be difficult, as people will resist change even if it ultimately makes their lives easier. But Simmons says the new system was not difficult to learn. "They stayed with us for one week, and we did preliminary training beforehand. We felt very ready when they arrived. They gave us enough information ahead of time that we could play with it and learn to do things before they came in. Companies don’t often take that kind of time with you.” About 17 of the company’s 29 employees were trained on the system.

DMSi

Professional Builders Supply began life with the DMSi Agility system

When Professional Builders Supply opened its doors in 2003, owner Van Isley knew he needed an account-management system in place—one that could grow with the company to avoid the need for later changes. Isley worked closely with a consultant who owned a lumberyard to find the best system and decided on Agility software from DMSi.

The Morrisville, N.C.-based company was "under the gun” to find a system that would help it hit the ground running, says Isley, and one of the persuasive points about the Agility system was its use of a Windows platform. "There are some inherent efficiencies in a Windows platform, because it allows us to flip among a variety of windows and modules.” In addition, many of the company’s new employees are computer literate and familiar with the Windows system, which aids in learning the new techniques. "We figured we’d end up having to convert to a Windows system at some point, and we didn’t want to have to go through a conversion.”

The Agility software provides the company with a range of business processes that help streamline daily operations. They include order entry, inventory control, production management and remanufacturing, purchasing management, e-commerce and online catalogs, accounting functionality and integrated document-management solutions. "This is our complete operating system,” he says. "We do everything on it.”

Order entry, for instance, provides all of the needed order-management and processing tools to handle all types of orders, including those from the warehouse, directs and cash sales. It also maintains multiple price points on items, provides instant inventory status, handles multi-branch inquiries and ordering, creates quotes and converts them to sales and provides customer-history access.

The inventory-control module provides up-to-the-minute inventory information to help maintain ideal stock levels. Fill rates can rise and products move faster while providing the in-stock level customers require. The software tracks items at the lot, tag or content level, allowing queries to be answered about units of measure, random lengths, square or other specific measurements. Inventory can be grouped by relevant product classes for easy analysis of hot-selling items, performance by vendors, seasonal demand and other variables.

Production-management functions allow every component entered into the order to be evaluated against the production load to calculate a completion date. Alerts are provided to warn of unrealistic delivery dates so customers can know their state immediately.

Back-office accounting is handled with features tailored to the company for accounts payable, accounts receivable, general ledger and reporting tools. Each feature is tied to the order-entry system, allowing management of customer accounts and creation of reports in easy steps.

Currently, about 15 employees out of the total staff of 36 use the system for some functions, he says. "I’m hoping to invest more time and training now that we are up and running smoothly and are familiar with the key parts of it. There are sizable efficiencies we can still tap into. We’re just now beginning to drill down further to get intimate with the variety of options we can use.”

DQ TECHNOLOGIES

DQ’s delivery tracking optimizes resources

The DQ ODT System from DQ Technologies provides accurate delivery and scheduling information for dispatch, sales and management departments aimed at increasing revenues, reducing costs and risks and managing daily operations. The system can be accessed by anyone in the organization, eliminating the need to call the dispatch office.

The product combines GPS tracking technology with Sprint and Nextel handsets to allow real-time tracking and management. The program can integrate with an in-house computer system and automate current business processes to improve operations. It also can provide detailed shipment loading and delivery-tracking statistics on each order.

The software captures the complete order lifecycle, tracking the order from creation through delivery. It helps provide immediate improvement of loading efficiency and production processes and can be customized to the company’s business processes to help improve workflow as well as to meet each dispatcher’s own needs. Each user can restrict his view to only those orders at his location, while a sales person can view just his customers’ orders at a particular location.

The system also offers integration of mapping/routing software, which allows dispatchers to assist with order combinations, routing and fleet tracking to more efficiently manage dispatching operations. In addition, by adding java and GPS-enabled wireless devices, dispatchers can visually observe the exact location of a delivery vehicle or retrace its movements to determine delivery time, route verification, etc.

DEACOM

Deacom aids component manufacturers

Since 1995, building-component manufacturers have used Deacom accounting and enterprise resource planning (ERP) software to manage complex job costing and business-process issues. The software is designed to handle a variety of unique requirements without costly customization. Built with its own integrated accounting and financial systems, it provides seamless and real-time transactional posting.

The company’s ERP system has been upgraded with the integration of engineering software. This feature allows building-component manufacturers to control multiple engineering systems, including roof, wall, floor and other design systems directly from the business software, making it the main control for all aspects of the job.

It creates the engineering directory structures and launches multiple design systems directly from a quote or sales order. It then can import information about the job, including a complete bill of materials for each component and selected information to identify components for delivery and production.

Scheduling of design, fabrication and delivery of multiple product lines all can be controlled from one source. Through the design link, the system’s job costing and accounting operations are closely tied to the engineering process. By linking all of the aspects of the job, Deacom allows building-material dealers to streamline their manufacturing processes, particularly when building the entire framing system.

SELJAX

Seljax ‘Wizard’ facilitates deck designs

Dealers are using the Project Wizard 3D Decks design software from Seljax as a key selling tool with their customers. When customers ask for help in designing a deck, dealers can sell them this program, which allows consumers to design their own deck at home, taking as long with the process and reviewing as many options as they want.

Once the design is completed, the customer clicks on a link in the software that sends the deck design back to the retailer via the Internet. The retailer then views the design on his own computer and sells the customer the specific components needed. Consumers benefit from designing in their own time and in a style with which they’re comfortable, while the retailer benefits by selling the deck materials from a completed design.

The system can accommodate a variety of custom requirements, including pools and hot tubs, angled or herringbone decking, angled beams, custom railing systems, multiple foundation types, ramps and bridges, vertical or horizontal joists and other aspects.

The estimating system is built into the program, providing a complete package that allows the dealer to design the deck and calculate the estimate based directly off the 3-D drawing.

PROBUILD

ProBuild’s BuyMetrics speeds commodity buying

BuyMetrics from ProBuild allows high-volume commodity buyers to communicate more closely with suppliers and spend less time on administrative chores, allowing them to make more informed decisions faster.

Buyers use BuyMetrics to collect information on price and availability from their suppliers, send and confirm receipt of purchase orders and automatically create purchase orders in their POS/ERP system. Formula-based contract POs are priced automatically. The efficiency allows buyers to focus on business decisions and shop secondary suppliers more consistently.

Subscribers also receive daily market price statistics on key commodities compiled from purchase orders issued the prior day by the universe of BuyMetrics users. This timely market data can be used to analyze current offers. It is also stored along with all the buyers’ shopping history in the BuyMetrics data warehouse for use with the reporting and analysis tools.

BuyMetrics is a hosted web application, so users do not have to install or maintain software. It also interfaces with most POS/ERP systems, allowing many third-party applications to be tied into the system.

SILK SYSTEMS

Silk helps integrate business management systems

Silk Systems, which provides sales, training and support for fully integrated business-management information systems, has introduced several new products recently aimed at using communication technologies to improve operations.

The SAGRO system allows dealers and their customers to access their Silk System through the Internet from any location. It is fully integrated with the software, allowing business to continue at any time. Customers can place orders, view their account status and print statements and invoices without having to wait for business hours or have the dealer’s staff become involved.

The company also has introduced wireless mobility, linking the workforce in any location to real-time corporate data. The application uses two-way data communication via the local cellular-data network and wireless handhelds.

The system reduces operating costs by making business processes more efficient, improving productivity. It also can increase revenues by allowing workers to be more productive and responsive to customer queries. It improves the quality and speed of decision-making and resolves issues through quick, secure sharing of information.

The system can make you more efficient at various activities, including field services, sales-force automation, field-data collection, performance criteria and contact-relationship management. Overall, It can improve communication among employees, customers, partners and suppliers throughout your network.

LUXWOOD

Luxwood helps dealers design

The Design Tools suite of designing software options, formerly known as Lumber Pak, has been significantly enhanced since its owner, Luxwood Corp., purchased the software last year. The company has boosted development, support and sales, quadrupling its programming staff to add to the program.

The software hosts a variety of modules, including:

• Deck Design, which can produce multi-level decks with stairs, pools and other options. Built-in engineering ensures safety and constructability, with economical calculations of materials available.
• Fence Design, which can create designs in modules or by the running foot, with fixed-post or even spacing.
• Garage Design, which calculates every component, including wall framing, windows, doors, drywall, siding and insulation. It can preset building standards to the locality to ensure the design meets building codes.
• Post-Frame Design, which creates simple four-sided, post-frame buildings with multiple doors and windows in under four minutes, including all drawings, parts lists and pricing.

The company also offers integration tools, such as XpressPOS, which integrates design, estimating and POs from one toolbar, and estimating tools including its on-site estimator.

LUMBERGEAR

Unique Data improves lumber buying

Lumbergear from Unique Data Solutions was developed for the hardwood- and softwood-lumber industries to increase efficiency and profits by effectively managing and controlling inventory. It aids with a variety of products, including lumber materials, dimensional wood products, engineered wood products and wood components. It also can be used effectively by flooring distributors for its product lines.

The software provides several integrated modules, bundled together to create a nearly complete enterprise system. Users can perform remanufacturing and processing activities, lumber tallies, procurement and purchasing logistics, inventory bar-coding and production management. It also offers users the convenience of integrated graphs and reporting as well as analysis of sales and purchasing information.

For instance, the Sales module is integrated with the solution’s Freight module, which notifies the shipping department when an order is ready for shipping, ensuring products reach customers as quickly as possible. Users can view previous orders and sales statistics as well. The Purchasing module facilitates rapid completion of the procurement process, with printing of purchase orders as well as faxing or e-mailing vendors turned into a fast, streamlined process.

The Purchasing module integrates with Manufacturing, Inventory and Freight modules so lumber is added to inventory automatically after it is purchased, delivered and received. Work orders also can be created for purchased lumber.

The Inventory module is a core module, allowing for easy maintenance of inventory assets. Tracking and auditing are simplified, allowing for searches by all product attributes, and it integrates with the Barcode module as well. The entire system works with various accounting packages to create an efficient and streamlined management process.

EDGENET

Edgenet creates a one-stop millwork desk

Edgenet’s Pro Dealer Solution creates a comprehensive millwork order desk for building-material dealers, combining all electronic millwork-quoting systems into one platform that does all of the necessary quoting and ordering. It allows builders to be served with a variety of new features that make the dealer their first source for information on products.

Features in the program include Blueprint Takeoff, Custom- Door Design, Flex Pricing and an optional Installed Sales program. In Blueprint Takeoff, windows can be grouped by room, floor or elevation, switching between pages and listings quickly and easily. The program allows the package of windows and doors, which is one of the most expensive portions of the home, to be quoted separately. Options can be created to fit any budget, with totals figured instantly. Past takeoffs also can be changed to new materials and new options to meet new budgets and designs by the builder.

The program also generates rough-opening reports, which supply all of the dimensions for openings needed for each individual manufacturer’s products, even when options are changed within the estimate to another brand. This ensures installation is completed smoothly and minimizes chances for later problems due to incorrectly sized openings.

Flex Pricing allows all orders to be calculated with any required promotional pricing over limited time periods, and it connects pricing on various items being promoted together. It also ensures each customer’s individualized pricing discount program is used.

Edgenet will be introducing an upgraded software-interface package in February, adding functionality and logic prompts that ensure no portions of the project, including tools, are forgotten during the estimate.

WRIGHT EXPRESS

Wright Express monitors fleet costs

The Wright Express Universal Fleet Card allows building-material owners to monitor their fleet costs and to control drivers’ expenses. The card creates pre-determined limits on what drivers can charge as well as how often and on what kinds of products and services they use it with and during what time periods. Its reporting functions also help reduce administration time and expense needed to track transactions and manage fleets.

Cards can be set up to deny access at certain points or to return exception reports, allowing drivers to maintain access but providing information on the breach to headquarters. Dealers can choose the specific exceptions they want to track, install authorization controls by setting card-level limits (such as number of transactions per day) and enjoy more time for processing and paying invoices with the Online Electronic Bill Presentation option.

The card provides online access to accounts, allowing transaction information to be viewed as soon as it posts to the account. New driver identifications can be added quickly, and new cards can be ordered either overnight or by standard mail. Analysis can be done on the past three months’ worth of transactions, making cost-saving opportunities more apparent.

More than 180,000 locations nationwide accept the card, used by 295,000 commercial fleets in various industries.

CRAIG A. SHUTT, senior contributing editor of the magazine, has more than 27 years experience covering the LBM industry.