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Component Manufacturing dverti$ dverti $ er
Don’t Forget! You Saw it in the
Adverti$$er
September 2023 #15290 Page #26
Component Manufacturing Should Not Be Operated as an LBM Supplier
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s an industry veteran who has attended BCMC for many Todd Drummond decades, I’m very pleased to be presenting an educational session on Tuesday, September 19th at 1:00 pm — Component Manufacturing Should Not Be Operated as an LBM Supplier. In this session, I will call upon my 20 years of consulting services experience to share how component manufacturers can increase their profitability by correctly relating their operations to work minutes. In addition, I’ll address overall workforce development and how to attract, retain, and incentivize today’s employee pool. Did you realize how different Lumber Building Material Supplier (LBM) and Wood Component Manufacturer (CM) operations are and that they should not be managed by the same methods? The management of the personnel, accounting, and other processes of CM operation is not and should not be managed with the same methodologies as an LBM. Regardless of whether a CM operation is tied to an LBM, too many CM operations operate as if they are an LBM, such as manufacturing and selling the wood trusses like lumber units. There is a considerable difference between selling a unit of lumber and manufactured wood trusses. Food for thought: Independently owned CM locations average 10 net profit points more than LBM-owned CM locations. o LBM operators often will state that they will sacrifice a few net profit points to capture additional sales of an entire project. However, their actual loss of what they perceive as a few points is inaccurate and is typically far higher than what they supposedly gained. Approximately 50% of CM operations owned by LBM companies have an abysmal and contested relationship between the LBM sales personnel and the CM operations, even after many years of operations.
Quote by a former owner of seventeen LBM locations with two CM locations: “The CM comprised only 10% of the overall sales yet contributed about 30% of overall net profits. What the heck were we thinking about for our resources for the most bang for the buck? We were far too focused on what we were comfortable with, which were lumber sales, not the more profitable component manufacturing sales.” Mark Manis, former owner of Wheelers in GA Continued next page
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