How you can save on delivery costs Gt

ELIVERY PRACTICES was one of the five Dealer Services Workshops presented at the convention of the National Lumber and Building Material Dealers Association on Monday, Oct. 10, at The Pointe, Phoenix, Az.

The program was a review of three delivery studies commissioned and published by the NLBMDA for the benefit of its membership. It was a "Texas Size" opportunity to present the highlights of the three manuals in one hour.

To provide the attendees with a frame of reference in the delivery world of the dealer operations studied, the Delivery Practices Questionnaire presented in this publication last month was given to all. There are no right or wrong answers. The whole idea was to let everyone answer for themselves what was go- ing on in their companies. No one was asked to reveal his answers. The answer provided by hundreds and hundreds of delivery experiences and evaluations and the three studies conducted for the sponsor was given.

The answers to the first three questions follow:

(1) Does your firm periodically identify profitability of its delivered sales?

Typically the answer is no. It is unfortunate because in the sales mix between delivered and non-delivered sales there is about al5 9ocost/margin differential. First, delivered sales currently cost about 790 to make. Secondly, receivables are primarily generated by delivered sales. Thirdly, anywhere from 5090 to 10090 ofany company's shrink is generated by delivered sales and theft has historically found a major nest within the broad range of the delivery activity. Finally, most non-delivered sales have a higher retail price and mark up as opposed to the volume pricing and lower margins offered the contractor customer who also wants and expects and gets delivery. When profits on delivered sales are measured, most dealers are surprised at how little profit and/or how much loss is involved in a major portion of their sales activity. How do you stack up?

(2) Take 6090 of your total sales last year and divide it by the number of delivery trucks you operate. If the result is under $1,000,000 check "NO", if over $1,000,000 check r.YEStt.

In almost five years of asking this typeofquestion,no one has everindicated that they were able to answer "YES" Most yards open at T am and close at 5 pm during the week. Many operate Saturdays and a goodly number open on Sundays. But just dealing with five days a week, ten hours per day, is 2,600 hours per year when each truck will be in the delivery process. This means a $1,000,000 per year per truck could be achieved if it could average $385 per hour in executed deliveries. If your annual delivery rate is $750,000, your truck averages $288 per hour. If your annual rate is $500,000 per truck, your hourly average delivered sales per truck are $193. Experience shows the typical dealer to be averaging between $500,000 to $600,000 per truck per year. Where do you stand?

(3) Do your yard people generally work eight hours or less per day most of the time?

It is indeed the rare operator who has no overtime in his yard. Everyone works overtime and taking care of the "delivery customer" is the reason most cited for overtime. Those from whom we get answers say to this question an emphatic "NO", that they must work overtime, and many schedule all employees from 7 am to 5 pm daily 12 months of the year without reason or need. The only reason for such a permanent overtime posture is a union contract under which management guarantees overtime. Fifty hours a week is25s/o overtime but is 37.590 of the cost of the forty hour week.

Answers to the remaining questions will be provided by Lynch in future issues-ed,

Willamina Strike Settled

Willamina Lumber Co. reports the International Woodworkers are abandoning their strike. (See The Merchant Oct., p. 39) "We are pleased that the union has decided to end this strike which has led to so much violence," said Willamina president John C. Hampton.

The union had also demanded that the company discharge all employees who were hired during the strike. "This demand has been rejected by the company," said Hampton. "We will stand by our commitment to these 110 replacement employees who have performed so well under these adverse conditions, as well as the 86 striking workers who crossed the picket line to go to work.

"The company intends to fulfill all its legal obligations regarding the return to work of striking employees. Of the six job openings still available at the time of the union's abandonment of the strike, all have been assigned to those striking employees who held them before the strike. As new job openings oc- cur, striking employees will be returned to work."

Hampton said the Portland, Or., based company will respond to the union's request for an early meeting and will continue to bargain in good faith. Meanwhile, the company's last offer remains in effect, including the profit sharing and productivity gains featured as key elements of the package.

Research Raises Productivity

Researchers in the forest products industry have come up with a new technology for producing lumber that is bigger than the logs it is cut from.

EGAR (Edge-Glue-And-Rip) is a five-step process that saws, rips, glues and rerips small-diameter logs. Forest Service economists estimate that it will increase overall lumber yield by about $20 per thousand board feet of output.

Pretreating wood with water repellants is another active area of research. The Forest Products Laboratory also is testing chemicals to develop a protection for wood against termites.