Lumbermen's Brings Value to the Table

Lumbermen's, Inc. is so much more than a distributor. Ask, and COO/CFO Steve Petersen will tell you why. But first, he'll tell you that too often manufacturers look at the Grand Rapids company — and others like it — to see only inventory and delivery of their product, with no added value to the relationship. In Petersen's opinion, this narrow vision represents a huge knot in the chain that links the two. “Collaboration and partnership between the distributor and the manufacturer is really important; but in our experience, it's very hit-or-miss,” he says. Some manufacturers absolutely understand and appreciate what Lumbermen's can bring to the table, and these companies welcome opportunities to strategize and discuss innovation. Other manufacturers, however, remain fixated on pumping up the inventory in a market as much as possible — typically through multiple carriers — and limit their involvement with distributors to that. 

Petersen, however, would argue that it's much more efficient for a manufacturer to team up with a single distributor and work closely together toward shared objectives. “Our approach is, you really want the one partner that can create the pull-through demand for your product in this market; and that's how you're going to maximize sales,” he explains. “We can bring so much more to a manufacturer than just having local inventory.” Representatives at the firm proactively seek out like-minded manufacturers with which to build those kinds of relationships; and although he admits it's a total shift for some, Petersen believes more and more of them are coming around to the Lumbermen's way of thinking.

NBMDA has helped Lumbermen's in this mission, to some extent, through its various programs and events. As an example, Petersen notes that the concept of channel management and collaboration is a frequent topic at the organization's annual convention, where both distributors and manufacturers have a joint presence at the sessions and presentations. “It's not only the keynote speakers,” he points out, “there's also the Distribution University, so there's more in-depth training about what it takes to be a good distributor and what it takes to be a manufacturer working with distributors. When you go through those kind of things together, I think that really helps — as opposed to a distributor hearing those messages and then trying to convince a manufacturer that this is the right thing to do. When you experience it together, it creates a common ground in which to pursue those objectives.”

As far as what kind of partnerships Lumbermen's is pursuing, they're all ones that stretch the definition of a traditional distributor. “We're thinking and talking about things that other distributors may not be,” according to Petersen. The main avenue through which the firm is trying to differentiate and add value, he reveals, is diversification. One of the biggest ways that it has stepped out of the box is in the area of downstream demand creation. Although this activity historically has fallen under the purview of the manufacturer, Lumbermen's is actively seeking various ways to create demand in the market with the end user. To manufacturers, Petersen says the argument might be: you would prefer to use us as your distributor because not only do we inventory product and offer delivery, great service, and all of the things that a traditional distributor would do, but we're also out there marketing and creating demand for your product in our markets. It might persuade dealers, meanwhile, by reasoning: you have many options in terms of what products you want to carry and who you want to buy them from; but you're going to want to partner with Lumbermen's because we're out there creating demand in the market that's going to pull business through your store. “That's a non-traditional role for a distributor,” Petersen acknowledges, “but in order to make sure that we continue to stay relevant, we think it's important that we demonstrate that we have a whole lot of value besides just providing inventory and logistics.”

Another example of diversification, for example, is Lumbermen's drive to build an account base in the industrial space. Even more notably, Lumbermen's is expanding its role in that niche as a “manufacturer.” Petersen uses the term lightly: the company isn't actually making laminates or particle boards — the same raw materials that it purchases and distributes on behalf of manufacturers ¬— but it is taking some of those materials and bringing them together to create a panel or other product that can then be sold to the office furniture industry or to “case good” manufacturers like display and store fixture companies.

The company also has expanded its menu of services to include countertop fabrication and installation. The company has 20 teams operating in its four markets – Michigan, Ohio, Indiana, and northern Kentucky – that target not only residential kitchens but also apartment complexes, student housing, hotels, and other businesses. Introducing its countertop and cabinet sales to the multifamily market is a strategy that Lumbermen's adopted a few years ago as a way to tap into what it has observed to be an unfolding trend in business growth. “Those are the types of trends that you have to be aware of when you're managing your business,” according to Petersen, who says the firm works with its customers to quote jobs in the multifamily segments and structures its installation teams so they're equipped to handle those large projects. “We're very much attuned to that and trying to stay relevant in that area,” he says.

It's not the first time that Petersen has mentioned staying relevant, which he believes is of the utmost importance as economic expansion offers new opportunities. In down times – like the last decade -- he reflects, businesses are focused largely on controlling costs, tightening efficiencies, and simply surviving; but once business expansion returns – like in the coming decade, if forecasts hold true – people start looking for creative and alternative ways to conduct business and claim a bigger portion of the growth. The big question going forward, then, becomes whether building material distribution is going to be done the same way or whether it's going to adapt. Petersen believes change is inevitable, given the level of consolidation going on, making it imperative to keep a close eye on changes within the different channels and constantly reassess. “If you want to just continue doing business the same way it was done the last 10 years, you're going to find yourself irrelevant at some point. I'm not saying that's going to happen in one year; but you're going to look up and suddenly see that things have shifted,” Petersen warns. “As business grows, there are going to be people coming in that will bring new and different ideas, and I think you have to always be watching what those are and making sure that business didn't move away from your particular channel.” 

Lumbermen's promises to be one of those forward thinkers bringing innovation to the channel. “Manufacturing,” downstream marketing, demand creation, and a new focus on the multifamily and industrial niches are all examples of how it is helping to change the perception of what a distribution company is and what it can do. “We continue to really focus on being a valued-added business,” Petersen sums up. “Our sales and marketing efforts need to be good so that they can bring the whole market to the manufacturer. And when we start demonstrating our capabilities in those areas to the manufacturer and then start collaborating together more on the whole marketing efforts, that's where I think this whole relationship up and down the channel starts to really make a lot of sense.”

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