BD[T@RIAL

Tluly Fearless Forecasts

Inside this issue are experts' prognostications of business changes in the next few years. On this page, however, we relate to our breathless readers a forecast fable from 25 years in the future. That's right, what it will be like in the year 2020.

FORECAST #1: The oh-so-fragile Environment, after 7,000 years of battering by humans, just simply dries upand blows away.

FORECAST #2: President of the United States Sonny Bono, using accounting techniques learned during his Hollywood days, decrees home mortgage interest rates can't exceed one percent per annum.

FORECAST #3: Earlier shortages of old growth timber are solved when scientists find that Douglas fir and southern yellow pine trees grow to 100 foot heights in three weeks when fed on a diet of Geritol, Jack Daniels andZantac.

FORECAST #4: The Great American Public, tired of shopping at big box warehouses, now only

DAVID CUTLER editor-publisher

patronize local lumber dealers with three or fewer employees.

FORECAST #5: The Sierra Club and The Wilderness Society, finally exposed as self-serving commercial enterprises with no real interest in Saving The World, have been sold to a consortium of five big forest products companies. Early reports indicate the two enviro groups will soon begin selling aluminum siding.

FORECAST #6: Treated wood, known for decades as a valuable and safe product, additionally has been discovered to be good to eat and so nutritious and delicious it now comes in chocolate, vanilla and lemon-lime flavors.

FORECAST #7: Frustrated by slow truck and train deliveries, all lumber is now shipped by air freight, with local deliveries exclusively via helicopter.

And there you have it, the 2012O foresight for the year 2020. Stay tuned, film at I 1.

I fretumberand hulldlng materidls industrg has probablg ffranged rrmre in the last 15 Uears than In tfrepr ng 5tr combined.

A dtlvingfurce hffi h€n trorrputers. Theg have transformed thewau everu business is run - frorn manufucE-nen tfr-,rgh distributor to retaller. Theg have made manu tasks faster andmore efflctent. ellmlnated mdnu positions and sometlmes created others in theirplace. TheU have also created mdnu new thlngs tn sFnd morq;trr. while promising to sErvE manu tlmes their investment.

Yet the technological revclution does not seem to be slowing. Sgstems offering new andgreater capabllitles are being introduced constantlg. ensuring that our industrg is in store For continuous change.

How. how sBBn and how drasticallg will our businesses change? The Merchant Magazine asked the trBmputer experts that specialize in our industrq to Foretrast Dne. five and lO Uears into the fi-rture. to predict what lies ahead in computer technologg - and what our industrgwilllook like as a result.

Innovation$ ot hand

Richard A. Gulermuth Computer :Syslem Dpamics (CSD) Denvei; Co,

CSD has been ploiiQing,,computer solutions to lhe, buiuing', naterials,industry exclusively since 1983, with nearly 1,100 installations nationwide.

As we move through the final years of this century, we will see significant advancements in the use of computer technology in the building materials industry. In the '70s, we focused on back-office accounting functions; in the '80s, point of sale and inventory control; in the early '90s, the emphasis has been on purchasing. What we see in the future is a focus on the use of advanced computer technology to improve customer service and to speed up communications at all levels.

A few examples of the more advanced computer technology we can expect to see being utilized to improve customer service include:

Wireless "RF" (radio frequency) hand-held terminal units will be used for on-line data entry of sales orders, purchase receipts, physical inventory, and price and cost inquiries. Access to your computer will no longer be limited to the CRT in your office or at the sales counter.

. Electronic catalogs in a CD-ROM format will soon be available by all of the major hardware co-ops and wholesalers. Customers will be able to view the entire inventory offering, both in stock and special order items, in a graphical and color presentation. These CD-ROM systems will interface with POS computers for ease of special order processing and other important functions.

Order and delivery tracking systems will be implemented by a growing number of contractor yards to improve customer service. These systems will track an order from the time it is entered into the computer until it is delivered to the customer site. A variety of analysis reports and inquiries will be available regarding vehicles, promised times, drivers and other important information.

Laptop/notebook computers will see an increase in use by outside salesmen for the preparation of quotes and the transmission of sales orders. Additionally, notebook computers, with pertinent inventory information, will also become more prevalent at trade shows and conventions to assist with show purchases.

Electronic credit card and check authorization systems will be integrated with the in-store POS function. As a byproduct of a single swipe of the credit card at point of sale, the system will automatically dial for an authorization, print the credit card ticket and complete the entire transaction. Customer check-out will be quicker, bad checks will be reduced, and day-end settlement will be easier.

Some of the computer technology we can expect to see in the near future that will speed up and improve communications will include:

EDI (electronic data interchange) and vendor communications programs are fast becoming an essential element of our industry. Dealers can electronically transmit purchase orders and receive acknowledgments, invoices, hot sheets, price changes and other vital information directly from the manufacturers, wholesalers or their co-op.

Computer fax allows you to automatically send purchase orders, quotes, invoices, statements and other documents directly from your computer system. It will be used by the majority of dealers in the next few years.

. E-Mail is increasing in use as an important communication vehicle for inter-company messages and announcements. As computer (PC) workstations become as common as telephones, E-Mail will become commonplace.

. The Internet with all of its hype and intrigue will be the most significant technological advancement over the next several years. We will see building material dealers on-line and "surfing the Net" for such things as commodity prices, product information, building starts and permit data, answers and instructions relating to their computer systems, and much more. We will even see some building material dealers with their own "home pages," so existing customers and potential customers can have easy access to information and messages that will help improve service and attract new business.

By the year 2000, we will see significant maturing within the building materials industry as it relates to the use of computer technology. Computer proficiency will not be optional, it will be a requirement for all dealers in order to do business and survive. The good news is the industry is fortunate to have a number of quality computer companies with which to partner and help apply this technology.

Micro-rhips

Randy:P2ils

Dimensions/Computer Advisors, Inc.

Salt l-ake City, Ut.

Founded in 1 968, :Dimensions/Compute r Advisors specializes in computer solutions for wholesale and retail building material dealers throughout the United States and Canada.

TI he past decade has seen barcode technology grow from staple status in our grocery stores to virtually all large retail concerns. With checkout lanes expected to keep pace with rising national speed limits, consumers and business alike prefer the benefits of faster, more accurate accounting of their purchases. But wait - the best is yet to come.

Recent advances in radio frequency gadgets promise change for anyone engaged in stocking, counting, tracking and selling inventory. Barcodes are nice, but what if you could sit at your desk and single-handedly "count" your entire inventory with the press of a button? Such technology exists today in the form of tiny radio transmitters that emit a constant signal to receivers in the store.

These devices, about l/4" square, are imbedded into products at the time of manufacture, and each device carries its own unique "signature," much like the electronic signature of a cellular phone. A hammer, therefore, would have a chip implanted into the handle which would identify it as a specific make and model just as barcodes do today.

Here is where the similarity ends, though, because in addition to broadcasting the make and model, these tiny transmitters also send a unique identity code letting the retailer know which Stanley Model X Deluxe Hammer is running through the checkout or sitting on the shelf. Imagine every item in your store broadcasting all day long to your computer in the back. You always know how many, and where they are; this is perpetual inventory in its truest form.

Let's let this technology solve a couple of other problems while we're at it. You like the speed of barcodes at checkout, right? How about placing a shopping cart under a specially designed "garage" and having the entire contents scanned in less than a second. Once scanned, those radio devices imbedded in the products "know" they've been sold, and their electronic signal changes slightly to allow the product to slip out the door without setting off your security scanner. Clothing and electronic retailers have implemented security tags on high-priced items for years, but there's been no simple, cost effective solution

.,.,',..'...Gomp.Uter.it€lk ....i.iiii'i.i.Neffi 0iqhg,',,b;btween cornpUlsfS..i.Will,,,becom e eUeini:.itAs!Uit.j.jafld,;,1rn o re u seiif ii.end.!$iiii.....'ii..i'M.os t popul$I,;,;witl l,ueriii$Wlernp that mn,nAke;i{rffiOikr ing fuftX:i:j:]:::t:::i:i:]:]:;:::i:t:i:]:]:]:|]::i::iji:]i:]i::i]i:i.]::::i: *.,PB..entFuti|irg for the majority of items that populate the shelves of a typical hardgoods retailer.

There are other benefits as well. Since every single item is essentially coded with its own "serial number," the origin of returned goods would never be in question; either that particular hammer was once in your inventory or it wasn't. Receiving product at the back door would be as greasy (that's great and easy) as slipping it out the front. And of course, the savings in beer and pizza costs associated with all night/weekend inventory "parties" would fund a company get-together that people would actually like to come to.

The chips are small, the benefits huge. Today's price, however, is still bigger than the benefits. These little chips cost about fifty cens apiece, affordable for big ticket items only. As with all high+ech inventions, though, the price is headed south. In the next few years, manufacturers ofthe chips are confident they can produce mass quantities for a nickel or less, at which time everyone in the food chainmanufacturer, wholesaler, retailer and consumer - will save time and money far in excess of the costs of these little jewels.

Paperless businesses are a reality. Wireless warehouse automation systems are being adopted by progressive building product distributors. When combined with EDI document transmissions and electronic storage of documents (invoices, delivery tickets, etc.) on optical disk, paper becomes unnecessary.

Salesmen laptops are common. Retailers won't see too many distributor salesmen, but those they do see will be toting laptops. The salesman will be able to determine up to the minute product availability and pricing as well as place orders. Cellular modems will make this easy to do.

10 Year Forecast

EDI is old hat. Everyone is doing EDI to some extent. Paper is the exception, not the rule. Not much paper around most retailers or distributors. PCs with l0 times the power of today's are on everyone's desk running a Microsoft operating system.

I nro rmatio nr n'r ? n?gers

Jim,HassChstab, DistribUtioh: ManagementSystems, Inc. Omahb,,Ne, : ,

OUStiS a sWlieroliottware to the wholesale building pr^dnds :distibntion industry.

II believe the winners and losers in the building products distribution industry will be determined by who does the best job of managing information that is pertinent to their business. The winners will have real time information about all aspects of their business and will make getting that information by employees, customers or suppliers convenient. Following are my predictions as to the impact of technology in this area over the next one, five and l0 years.

One Year Forecast

Windows 95 will become the standard on desktop PCs.

More and more building product retailers, distributors and manufacturers will embrace EDI (electronic data interchange) although it still will happen slowly.

More manufacturers will be labeling their products and wholesalers will increase their use of barcodes for controlling their inventory. Barcoding is a slow but sure technology.

Use of the Internet for E-mail and information exchange continues to increase at an ever faster pace. Manufacturers and distributors will communicate product specs, pricing changes, etc., to retailers via Internet.

Five Year Forecast

EDI explosion. Everyone is getting into the act and the Internet backbone is one of the reasons as it is carrying a lot of EDI documents.

Graphical workstations are in, dumb terminals are out. PCs are the prefened desktop workstation. Distributors are able to pull up a map of their trading area and see the exact location of their delivery trucks at any point in time, enabling them to communicate precise estimates as to delivery time to their customers.

E-mail to anyone, anywhere. From your desk you can send messages to and receive messages from anyone in the world, even if you are traveling. The Internet has evolved into a worldwide network with oversight by an international governing body that sets standards for its use. All the large phone companies are involved since long distance phone calls are being placed by instantaneous E-mail. There is no question that technology is going to change the way building product retailers and distributors run their businesses. By embracing change as a way of life, you will be able to succeed in a world that is changing at a very rapid pace.

Trenos for..lomorror^l

JerryrL, MarChbanks ,: CBM Systems Gompahy;: lnc. San Anlonio, Tx, "

CBM,Sysfalns gqnpmy :provides applica; tion software and systems integration seruice %' to the building producrts intdustry nationally.

IIt seems that every morning we awaken to startling new advances in information technology, computer systems and communications. Yet every day the problems and opportunities of running a business stay the same. In the turmoil of information technology change we still must purchase and market with wisdom and provide services to customers that keep them as customers.

If we stop and look it is not hard to see the future because it is being formed today. The building products industry is a mature industry with a high level of heritage and stability. The fascination with change is in many ways just that, a fascination. From that base we can see that the trends which will form the future are being molded now both in the industry and in information technology. Some significant factors in both of these areas are:

(1) Centralization. There appears to be increased centralization of both markets and the scope of products and services offered in the building products industry.

(2) Commonization. Building products have always tended to be a commodity-based industry and centralization requires more "look alike" qualities that make it even more difficult to be different.

(3) Service. Customer service has always been touted and revered as a necessity for business success. The reality of what customer service is will become a necessity.

The traditional reaction to increased competition for customers has been focused in pricing or increased product availability. Both of these reactions have a direct negative impact on gross profit and the capital requirements for a business. Improved customer service is a goal that can be accomplished with remarkable economic efficiency. Fortunately, information technology in business can provide a practical and economical path to new levels of customer service. Unfortunately, the technology industry has the same centralization and commonization forces in play that could limit a specific company's ability to be different'

The implications that result from trends in both building materials and information technology could overwhelm us except for the fact that businesses are run by people' People are remarkably resilient and will adapt and even excel in the new opportunities that are presenting themselves. The reflection of this adaptation will be a decline in "techno-fascination" and an increase in the practical ways that information technology can serve the business'

Preoccupation with operating systems, languages, chips, networks and other technical matters will give way to functionality and how information can be used to improve business practices and customer service. We will, for example, be concerned with responsive pricing on quotes and not so much on responsive terminals.

Fortunately, the information services industry can provide these tools if we quit focusing on bits and bytes and start focusing on what companies really need in their business. Along those lines, there are several trends which information technology will not only support but cause to be fulfilled in the way we conduct business. Some of these trends are:

(1) Vendor-Business Integration. Technology provides for systems to enhance vendor relations that will lead to more stable, longer term vendor relations.

These are scary days, but I cannot remember a time when the future was certain. The important thread is to wisely focus on the business and not be distracted by tools or hype regarding the importance of tools.

S,r, wars,technology

JimTurner , Versyss, lhc. : llgsdham;, [4a, , : .....

Vercyss,.iia,, aiubffi1y;of PCN Inc., has been a tetChiology ih@fatdr and supplier of complete,agfiDuter sotutbns, for the building supply industry since 1974.

AUf et ready for Star l4lars technology. Emerging technologies will be commonplace throughout the building supply and lumber industry for years to come.

It is important for building supply companies to take advantage of these new technologies by strategically implementing plans that utilize historical information. For example, in the 1980s more and more lumber companies rapidly expanded their businesses beyond anyone's wildest forecasting abilities. Eventually, there was a shake-out that dramatically affected both the East and West Coast. By the early 1990s, restructuring became the business staple for most companies.

Today, the industry again looks promising, and economists are forecasting consistent growth with low inflation, possible interest rate reduction. and new commercial construction on the rise. One might optimistically predict another boom before the turn of the century. However, this time around the building materials industry must arm itself with quicker, more accurate information to remain competitive.

Rather than looking to survive, companies must implement technological advances to thrive. A good offense is better than a good defense.

Here are a few examples that one should implement now and as the technologies become more available in the next several years.

'Credit Collection Database

- G.A. Wright, lnc.

(2) Customer-Business Integration. Information about customers and marketing that anticipates customers' needs can be supported with information systems'

(3) Business-Business Integration. The conflict between inventory levels and sales levels can be optimized for the company with information systems. In addition' information sharing can bring back team management with a common goal.

A solid building supply business should take heed from the '80s and grow profitably. Your computer credit collections module should allow you to not only place a credit limit within POS on the balance, but also provide you with a warning if the aging is past due on outstanding invoices. Your system should also serve as a tickler file to prompt you daily with a message to call people who owe you money. Computers today have the ability to store lots of data to enable you to have a strong history profile on your customer accounts. Average payments month to date, year to date, and two years running will help you identify your best customers and those who use you as a bank-interest free!

On-Line Faxing

Most software packages today now have the ability to fax transactions including quotes, orders, invoices, credit memos, and purchase orders without having to get in line to send a fax. An average fax takes approximately l0 minutes from the time the fax is sent and the receipt is acknowledged. Those who can send a fax from their terminal, work station or CRT save time since they never leave their work area (desk or sales counter).

Graphical User Interfaces (GUI)

More information at POS and within the back office via blown-out windows, highlighted descriptions, and split screens will empower your personnel to service your customers expeditiously. GUI is a friendly look and feel that will help the building supply industry navigate through a system more easily and quickly than ever imagined.

On-Line Banking

Computers talking to computers are to take effect this year with most of the major banks. Hence, the "float" that contractors may take advantage of in current business practices may be a way of the past. Cash receipts and accounts payable will be electronically transfened on-line with computers with a debit to one bank account and a credit to another.

FIVE YEARS AND BEYOND: World Wide Web

Our kids today look at the Internet as a form of entertainment the way we once looked at television. The Internet connects you on-line to different databases and software programs. The World Wide Web is a technology that may be used in the building supply industry to, build more customer traffic. Picture having access to product catalog information on pricing, delivery and availability that would come from suppliers all over the United States. even the world. Your customers may place orders with you 24 hours a day. Your customers may be able to view and bid on open jobs all in one central database.

The information highway is here. Other industries, such as real estate and retail clothing, have already joined the Web. Don't be surprised if the fabric of your business adopts this technology in a big way!