With or without the pandemic, the construction and building products industry has found ways to evolve. Companies are leveraging technology to differentiate themselves, which has the added benefit of creating more collaboration in an industry typically divided into silos.
I spoke with experts from all facets of the supply chain who shared how technology has impacted their business this year and what the expectation is for the year to come.
Bert Stephens, senior vice president of operational excellence and READY-FRAME at national building product supplier Builders FirstSource, is not only putting a lot of emphasis on collecting data and making it useful, but optimizing it to improve the design process.
“What we have done is connect 3D design and BIM together,” Stephens said. “We are looking at digesting the plans from our customers into our systems. And, actually, we want to be able to design for manufacturing to pull out exactly what is in the design. Ultimately, it will make a plan more useful, we will be able to share it with other parts of the business, and go back and forth with the customer instead of redrawing a plan a number of times and spending a lot of time and resources.”
In 2021, Builders FirstSource also invested in improving its pre-cut framing system, READY-FRAME. By using 3D design, problems can be identified and addressed beforehand, and the overall process of pre-cutting has proven to be 30% faster than stick built. Stephens says the program also reduces scrap rates, eliminates unnecessary cuts in the field, and makes framers faster.
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“It’s all proven out,” Stephens said. “It may be a little more in the beginning, but if you look at it overall, there is a total cost savings. There are some companies that have embraced it and know the full life cycle of building the house and not looking at one individual piece. You have to look at the full line of the project to see how it is increasing quality and reducing errors.”
Stephens isn’t sitting still with the progress of this technology. The company is launching a program in 2022 to add QR codes to the product so that when it is shipped out it has a set of plans with it that framers can scan and see directly from a device on the job site. Plus, he’s exploring the potential value of building cassettes, which would mean adding panels and READY-FRAME together.
Another part of the value of digitizing the design is being able to have the data long term.
“Being able to analyze the data will give us the capabilities to streamline the supply chain better,” Stephens said. “If I can know exactly what’s in the house and put all my data together to know the size and type of window, it’s a lot easier to go back upstream to manufacturers and actually start making pre-orders. That’s what the shortages have shown us.”
Robotics and Automation
At the Midwest-based distributor group Palmer-Donavin led by CEO Robyn Pollina, machinery was installed for increased safety and efficiency. The company invested in the MaxxReach Telescopic Conveyor that can reduce unloading a cabinet shipment from a three-person, eight-hour job to just two hours.
“While this was a huge success, as a company we always strive to continuously improve our processes,” said Hunter Hudgins who serves as the operations management apprentice for the distributor. “There are currently two main avenues to improve the process. First, automating more of the process with automated palletizing, unloading robotics, and automated guided vehicles to assist in put-away. Also, streamlining the put-away workflow by minimizing movement and condensing cabinet locations to the ground floor.”
Palmer-Donavin also made investments in its door production facilities to remove issues from the manual handling and moving of product and manual high precision machining that had many inconsistencies and repeatability issues.
“First, we added automated movement of product throughout our pre-finish department that allows employees to concentrate on value added tasks rather than logistics of product,” Hudgins said. “Think of an assembly line process rather than single piece flow. Battery-powered automated carts make all the necessary moves while employees are dedicated to value added tasks like painting and staining.”
The company also removed all manual machining operations and bought CNC machinery to improve accuracy and repeatability, plus decrease training time. During this process, three risky handling steps were removed due to opportunities for product damage, sprains, strains, and other injuries.
The key to the evolution of data analytics as Ben Beachy, executive director of information technology at Ohio-based lumber and building materials dealer, Keim puts it is creating a culture of evidence-based decision making, a process that has been beyond difficult to manage for dealers because of the massive variety of data sources that they are managing.
“I see two broadly extreme approaches to data in the industry,” he said. “One is to ignore it as confusing, over-hyped, and irrelevant—instead just trust the gut sense that’s brought us this far. The other is to trust reports, algorithms, and analysis too much—to just blindly follow whatever data we have wherever it seems to lead. I want to strike a middle path, combining the wisdom of industry veterans and decades of experience, with the data we collect in our systems. Testing one against the other to refine them together. We may be measuring the wrong things. We may be trusting wisdom that’s out of date. But we won’t know either until we critically evaluate both.”
He recognizes that data offers a competitive edge as well.
“The large customer interaction databases of the big players in the market give them an advantage in per-user customization,” he said. “Time will tell whether smaller players can catch up.”
Beachy is trying to address the very complex issue of how to get the right information to the right people at the right time, and in the right format, so that they can make the right decisions.
“Part of the answer is helping folks understand how the information they collect is used elsewhere in the organization,” he said. “I think most folks want their work to matter and will maintain good data if they understand the big picture.”
“As far as technology goes, my knowledge of it is much greater than our usage of it,” he said. “On the flip side, data driven revenue is something that I am always working on. Some of the biggest things that I do is customer profitability ranking that improves margin, sales strategies, customer relations and time effectiveness. We also participate in a round table and an annual cost of doing business study in which we compare our data to similar companies to find our shortcomings.”
Finding prospects that are the right fit is tricky with all the different connections points that exist today. Rick Davis, sales trainer in the construction products industry and founder of Building Leaders, looks at the most successful sales platforms as the ones that offer a repeating pattern of referrals from happy buyers.
Social media became an even more relevant technology during the pandemic and Davis chooses LinkedIn of all the social media formats, as the one most suited to proactive solicitation.
In product distribution for the construction industry, Davis believes that the mistake made by many distributors and dealers is to allow salespeople to consistently negotiate special deals for buyers as they are being set up, such as pricing discounts, terms, and delivery concession. This leads to difficulties after a number of buyers have unique deals and expectations. The fulfillment process becomes overwhelming because every member of the supplier organization must adjust for each customer protocol.
There are now technologies, like construction project management software models, that “train” customers to operate within the confines of the standard operational model, with the same pricing and ordering protocol, that can produce better business for both the supplier and the customer because surprises are minimized; expectations are clarified; sales cost are managed; and, perhaps most importantly, more efficient operations.
Transportation continues to be a huge part of cost increases, and would be a welcome area for innovation. An industry leader shared that implementing new solutions for transportation will be challenging, but he didn’t want to be identified because of the sensitivity around this topic with the company’s staff.
The industry faces more challenges than most automated delivery programs because of the variety of products and delivery locations. What may be more likely than autonomous transportation is a hybrid approach that includes autonomous trucking on the road with remote-control human delivery off the road.
There is hope from many in the industry for autonomous supply chain vehicles, or a truck that unloads itself to identified drop locations within the company’s warehouse.
Ecommerce has been slowly sneaking into the home improvement space with the very large retailers like Home Depot and Amazon making large investments in it in 2018 and 2019 for the do-it-yourself consumer, which in turn influenced the need for contractors and professionals.
“We started thinking about it in 2019 as we saw that contractors wanted to put in an order online,” said Grant Morrow, the ecommerce programs manager at national hardlines distribution company Orgill. “Then we had the pandemic crystallize all of this. In some locations, curbside pickup became the only option, so ecommerce started gaining speed.”
Then, the industry had to shift to operations only and away from this new focus on ecommerce because of the huge demand for building materials. In mid-2020, many dealers were just heads down working through orders, as wallet share moved from vacations to home improvement.
Orgill distributes to McLendon Hardware, with seven locations in the Seattle area, and its online sales pre-pandemic were fairly low. During the early days of the pandemic, the stores’ online volume increased 25 times. Since then, the volume has settled down to seven times pre-pandemic, but it hasn’t returned to pre-pandemic levels.
“That initial thrust in 2020 moved the needle significantly on what dealers believed that they were able to do,” Morrow said. “Contractors started looking elsewhere in terms of supplies because of shortages and they were able to start ordering things to be shipped directly to the job site. They tried it out and they found efficiencies, which will allow them to do more projects. Time is the enemy if they have to wait on products or make multiple trips.”
This change brings in a new service component for the dealer to deliver; it’s a convenience to have the order ready for their customer, but it’s the next level of expectation of service. Dealers are also working out how to deliver small batch loads to job sites and the fees that will be charged for that level of service.
“Store-to-door is starting to be successful for big retailers like Target,” Morrow said. “This is a service expectation at the end of the day, and is what we are telling our dealers to watch out for.”
Orgill has made a heavy investment in ecommerce, including product information management to enrich product data and normalize it so that the dealers can have better access to it and get more sales from it. The company just surpassed one million items in its catalog, which acts as the underpinning component of the company’s strategy, but that is also a constant work in progress.
Keim is working through that exact issue.
“The online shopping experience is mature, but it has hidden challenges around product data and imagery,” Beachy said. “LBM industry folks know how to merchandise and sell in person; the next step is learning how to effectively collaborate online with our business-to-business customers.”