Fresh from NBMDA's fall conference, Al Harrison of Intermountain Wood Products describes the mood at the event as electric. In the midst of all the energy and excitement, however, he couldn't help but notice the limited discussion about emerging opportunities in the industry. As vice president of the distributor’s industrial division, Harrison doesn't downplay the struggle of trying to find new avenues to growth and profits. "There's just not a lot of "new" left," he says. “It’s not like any new wood species have been introduced.” Moreover, the number of business markets not already overrun with distributors is shrinking fast. Add to that a lack of supply that has hamstrung the U.S. market of late as the export trade has decelerated. Producers are cutting less in response to overseas dynamics, creating a domestic supply shortage. Where, then, in the midst of all these challenges, does the opportunity lie?
Robust merger and acquisition activity suggests that some players see consolidation as their saving grace, but Harrison says this is not a viable option for everyone. While Intermountain is a multi-million dollar company, he admits the industrial distributor—which caters to cabinet manufacturers in the small and medium range—is not in a position to embark on a buying spree. What it does instead, according to the executive, is look for “new twists” on its merchandise. Unique textured wood products and textured melamines, for example, have allowed Intermountain to create some of its own new opportunities.
The 80-year-old-plus firm based in Salt Lake City, Utah, also has carved out a niche for itself through its reclaimed division, Antiquus. "We bring authentic reclaimed lumber into our facility and we re-manufacture that into wall paneling and flooring,” explains Harrison, who says the end product is sold to a few of the big-box retailers and also reaches consumers through websites like Pinterest and Houzz. “It really sets us apart in the business.” That isn’t the only aspect that distinguishes the industrial distributor from its peers, however. While distribution firms generally choose one facet of the market and train their focus there, Intermountain boasts a separate flooring division. Each of the company’s 11 industrial centers throughout the Mountain region and Midwest includes flooring, housed under the same roof but operating as an independent entity. And that’s in addition to five stand-alone locations, including Intermountain’s brand-new facility in Portland. The flooring division accounts for about 35 percent of the distributor’s work and the reclaimed division represents about 10 percent, making industrial operations its bread and butter.
Having fingers in three different pies isn’t all Intermountain does, however, to create opportunities for itself. While Harrison insists that ferreting out new ways to get ahead is one of the more challenging aspects of his job, the company’s commitment to consistency may open it up to opportunity simply by building customer loyalty. The distributor’s website and marketing materials promote “Consistent Product, Consistently on Time.” Intermountain boasts a 98.7 percent on-time delivery rate, Harrison announces proudly, no doubt helped by the two “circuit trucks” that run between its distribution points each week, shifting products from market to market as needed. As a result, inventory is moved through the system very efficiently, allowing customers to be serviced within a very short window of time. That, Harrison points out, is crucial against a backdrop where customers want to order a product today and have it in hand tomorrow.
Consistency of product is also important, he says; and, at Intermountain, it is achieved by carefully managing relationships with vendors. While it might be easier to work with a lot of different suppliers and simply choose the one with the lowest cost for any particular product, the Intermountain approach involves cultivating partnerships with an exclusive cluster of vendors and working closely with them to create a consistent product. With just seven hardwood lumber vendors, for example, Harrison says “when I order something, I know I’m going to get a very similar product every single time. So we limit the vendors and we educate and work with the vendors through relationships to create consistency.”
Some of those connections may be made through NBMDA events, which Harrison notes are heavily attended by suppliers. “You go to these conventions or conferences, and you chat with your like people and try to see what they’re doing,” he says. As an organization insider—Harrison is a member of the group’s steering committee—there is a special appreciation for these interactions with similarly minded individuals. “You’re with like people in the business and you have the opportunity to offer your opinions and thoughts on different topics, on ways that we believe the association can help the distributors and vendors,” he explains. “We’ve got some very wise individuals, good experienced individuals on the committees—and they’re also very dedicated.”
From a member perspective, Harrison sees a great deal of value in NBMDA’s materials. In particular, he points to the Quarterly Sales Trend Report, which provides a snapshot of the industry’s collective experience within the current economy based on members’ input. Another example is the employee compensation survey distributed in the past year. “We were able to take from that what people are paying, what kind of motivators people are using intrinsically or extrinsically, and what the different positions within companies are paying, plus a lot more,” Harrison notes. Then, he continues, there is the parade of NBMDA guest speakers—from economists to demographers--who share their knowledge and expertise verbally. What’s fresh in his mind at the moment is all the shop talk about Millennials and how they will influence the way that the industry operates going forward.
Intermountain is already thinking ahead in that respect. Its one-year-old online order system is a service that is available to all customers but may be especially attractive to the tech-savvy Generation Y that prefers to conduct business over the Web rather than place a phone call. “Our customers are able to go online, see live inventory, live pricing, and then place their orders with us as well as see their individual company financial data,” Harrison explains. “They have access to every invoice, every statement—current as well as from a long time ago. As far as I know, there are maybe only five industrial distributors that have this kind of system in place. It’s pretty innovative.”
Just because it’s making it easier for customers to make a purchase without face-to-face contact, Harrison stresses that Intermountain still, and always will, cherish the personal touch with its customers. “We still have people that do in-person sales calls—we think that is key,” he says. “That personal relationship is pretty valuable. Service is still a big component in taking care of customers.” That comes down even to attitude, something he has learned after four decades in the business—20 years as a cabinet manufacturer before joining Intermountain and 20 that he has spent with the industrial distributor. When looking at vendors, therefore, Harrison makes it a point to always be cordial and never be demanding. Rather than playing the bully, he says, the distributor strives for a plan that benefits both sides. “You get treated a whole lot better, I believe, if you are a partner—a team player,” he emphasizes.