Q: With housing and remodeling doing very well in most markets, what would you say is the biggest opportunity for LBM dealers?
A: Optimizing business and construction processes is right on top. The skilled labor shortage, across most trades, but especially in framing, continues to constrain home builders. The shortage is stretching out cycle times, and limiting their ability to build and sell homes, even in a strong sellers’ market. From a ‘framing package’ perspective, LBM dealers can offer prefabricated solutions, like roof trusses, sub-components and wall panels. Solutions that reduce construction times or skilled labor onsite have immediate impact, and the LBM dealer can serve as the provider of solutions to increase the builder’s speed, inventory…and his margins and sales.
Q: On the flipside of that question, what do you view as their single biggest challenge?
A: Internal process efficiency and a fragmented team approach to estimating is clearly a major challenge. There have been dramatic advancements in estimating technology available to LBM dealers; this technology can pull BOMs (bills of materials) off of CAD and BIM models, and integrate that data directly to the dealer’s POS, pricing, and inventory system. This technology can also be linked directly to the home builder’s estimating and purchasing software. The remarkable uptake we have seen at MiTek for our SAPPHIRE® Supply solution—a dealer’s BIM-based estimator, and much more—is clear evidence that dealers see the advantage of adopting these solutions. The challenge to the dealers? Embrace this tool internally, leverage the capability to collaborate with home builders. Sometimes that process starts with the dealer simply making home builders aware the technology exists, that it’s highly developed with solid integration points, and that it’s available to them as a foundation for strong operational effectiveness and bottom line benefits.
Q: Homebuilders nationwide are struggling with a serious shortage of carpenters and other skilled laborers. What, if anything, can LBM dealers do to help?
A: LBM dealers can offer solutions that significantly help this problem by improving the builders’ onsite workflow and speed. It also measurably boosts efficiency and accuracy of materials used in construction. Combining 3D estimating and optimization with the speed and accuracy of prefabrication can bring bottom line benefits to each house, with real ROI for builders. It’s great for the LBM dealers, too, as it improves their own internal efficiency and control—with supremely accurate quantities and quotes (thereby reducing overages, damage and returns), as well as delivery/logistics staging that puts the right quantities on the right site at the right time. It eliminates unnecessary waste and enhances margin control.
Q: How can dealers leverage rapidly advancing technology to better serve their customers and to grow their business?
A: Any home under construction is a very complex combination of “parts and pieces,” assembled by a wide range of trades and suppliers. Days lost or materials wasted due to lack of collaboration are likely guaranteed to be a loss of earnings for the home builder. For LBM dealers, advanced collaboration means that everyone should be working from the same lot-specific house plan. They can do this through advanced collaboration systems like SAPPHIRE®, which allows a single BIM model to be effectively used as a collaboration platform for the structural framing, not only for the dealer and component manufacturer, but for other trades as well.
Q: Strong single- and multi-family construction and remodeling markets and record-high home prices have some observers suggesting that the next bubble has arrived. What do you think?
A: I have to agree with most of the reputable forecasts. Generally they agree that pent-up demand for new households, low inventories, and relatively low interest rates will continue to support a strong housing market for the next several years—at least until we reach that point of balance again. But the fact is that we may still see some volatility along the way. That only underscores the point that builders and their LBM dealers should implement better technology and more efficient processes to capitalize on the upcycles. And the efficiencies attained during the upcycles can also help mitigate risk and help them navigate the impact of the down cycles. I think both the LBM dealers and their builder customers can leverage these newer processes, to run on a leaner operation, with better accuracy, and to be in a strong position to scale up, or scale down, depending on the current level of demand. It’s a good position to be in.