Purchasing softwood lumber

Ero* rHE NEXr three months. .a' NAWLA's volunteers will offer their perspectives on purchasing, starting with how they buy lumber in this issue. Future columns will focus on how buying behavior varies by region and how you can evaluate the success of your efforts.

There are many schools of thought about how to purchase lumber, from the highly academic to gut instinct. In my opinion, successfully buying lumber in an office wholesale context is about having a great plan

About NAWLA

NAWLA (North American Wholesale Lumber Association) is the association that delivers unparalleled access to relationships and resources that improve business strategy and perform\ance through sales growth, cost savings, and operational efficiencies for wholesalers and manufacturers of forest products and other building materials that conduct business in North America.

Learn more about how NAWLA can help your business at www.nawla.org.

and then making sure it is executed effectively.

As with most business functions, the first thing you want to do is set clear goals and objectives. You need to look at every individual sawmill and build a marketing plan for each one. In doing so, you must determine which mills are a good fit for your business, given their geographic location, their product mix, and each mills' individual marketing strategy. You need to ask yourself and the mill whether your business model jives with the channels the mill wants its lumber to flow through.

In determining these things you must bear in mind that a friend to everyone is a friend to no one. If you can't buy a certain pre-determined volume of lumber from any given mill, you shouldn't be talking to them. It's far better to focus energy on the mills that fit your business model.

Once you have decided which mills to focus on, you need to determine who on your staff is best suited to buy from each particular mill based on experience, personality fit, and the strategic importance of the mill for your business. It is critical for the buyers to receive constant coaching and training, be it in house or from outside trainers, to improve their skills as purchasers in order for the business to effectively grow.

Now it is important to determine the appropriate volume targets for each mill you have decided to allow into your buying funnel. This is done by determining each mill's production and comparing that to the volume of product your customers buy and how much you can realistically sell given your trading staff.

From those volume targets you need to determine how many times per week and when you want to call the mill. Some mills you will need to call multiple times a day, others you may only need to call once a week.

Now you need to know what to ask when you do call the mills. It is critical you understand the mills' functioning in depth. You need to know how much they produce in any given shift, what the production schedule is, which dimensions they are running and when, how big each run will be, how much of each run is pre-sold on contract, how much they typically like to pre-sell into order file, how much is committed for export, what percentage of each grade they will get, and how they

A $peaiau$ $eriles freirEr North American Wholesale Lumber Association

typically like to price their lumber. Each mill will use a somewhat different formula.

In addition, it's critical to under- stand the mill's inventory levels. What is on the ground ready to ship? Which items are sold out for weeks in advance?

You also need to have an in-depth understanding of the logistical situation for each individual mill. On which rail line are they? How good has the rail service been? Are they dependent on trucks? Are their primary truck markets areas out of which truckers are struggling to get back hauls? What impact are these factors having on the mills' cash flow?

You need to understand all of these factors before you can even begin to talk about price with the mill. Once you have all the information, you can effectively market the mill's lumber to your customers.

Working in conjunction with them, you can effectively determine how much inventory you want to own from each mill and for what kind of delivery times.

Registration Open for NAWLA's 2015 Leadership Summit

Want to hear more from industry-leading wholesalers and manufacturers about how they buy and sell lumber?

Join them at NAWLA's Leadership Summit, March 2224 at The Westin Kierland in Scottsdale. Az.

The event brings together mid-level managers and executives and industry-leading companies to discuss top-of-mind business topics and solutions for driving revenue growth and streamlining operations.

View the agenda and register at www.nawla.org.

2015 NAWLA Regional Meetings

Feb.3 - Boston

Feb.25 - Birmingham

March 3 - Portland

April 9 - Vancouver

May 6 - Toronto/I{ississauga

NAWLA's Leadership Summit delivers two days of relevant education and opportunities to establish relationships or re-connect with industry leaders in one of the world's most highly-rated resorts.

You'll gain resources to grow your business through: r Networking and idea-sharing oppofiunities with peers at leading industry companies

. Educational sessions about management topics, best practices and industry trends

. Connections with current or future business partners