Pulling the plug on a customer

Are there some orders you wish you never had? Are there some buyers you wish you could never speak with again? Are there some customers who are just not worth the grief of dealing with?

Admit it-the sad fact is that we all have them. We are all looking for the next sale, but often ignore signs that a certain piece of business or certain customers are simply not worth it. It may be because there is no real profit, the customer always finds something to complain about that costs you, you cannot trust them, or they do something unsavory. Down the road, we live to regret our decisions, and then when the phone rings the next time. we go and do it all over again with the same customer. The hardest thing for some people to say is "No."

Once in a prior life, a very national wholesaler sent us shortage credit invoices after every shipment to the point it was clearly not true-every one written, I may add, in the same hand. After a while, I decided to have every shipment reviewed by the warehouse manager before we shipped, and yet shortages on every shipment continued to be claimed. I personally called them and carefully advised them that we were concerned about their request for shortages and had taken steps to have every shipment triple checkedthinking that would stop them. Still the claims came, along with slow payments. I made a tough decision to discontinue all shipments to this company, which represented about llVo of our business. I held every order for about six weeks before their c.e.o. called me personally and demanded that I meet them at their Hq. and explain myself. I did, and I laid it out that I saw no value to our mutual relationship due to slow payments, high credits resulting in low or no profitability, and poor communication, and saw no reason to continue doing business in the future. I vividly remember my knees knocking together under the table at the time. After a heated debate about. "How could I not trust them?", they agreed to meet our terms of business, and we started shipping again. Miraculously, we rarely saw another credit claim.

On another occasion. a wholesaler became totally untrustworthy due to some very questionable business practices. While our competitors capitulated to them, I refused to supply them for about two months, before a clearing of air, releasing of orders and keeping them on a very short leash. Their c.e.o. later moved on, and I recently noted that he has resigned from a publicly traded company that is under investigation by the SEC for accounting irregularities. Not a surprise!

Looking back over a number of jobs and industries, there were several companies that I decided were far more trouble than they were worth. Time and effort would be better spent on developing other or new customers. Marginal customers who want, want, want are rarely worth it. If you find the customer insufferable, a time-wasting nuisance, remember what's Iikely to follow.

I think one of the hardest lessons to learn in business is to cut your losses and walk away from negotiations-or from a customer. I am a great believer in the old adage that 20Vo of your customers give you SOVo of your revenue and profits. If the tough customers are in the 80Va, I think there is good reason to question whether you really want their business at all. Generally, most people who are difficult to deal with during negotiations rarely change. Experience has taught me that when it does not feel right, listen to your instincts and walk away. Part of the reason for writing this column was based on dealing with a potential customer today, and the bad taste left in my mouth after two recent communications.

I have had many difficult customers over the years, but many were fair and many were right. You learn a lot about people by how they act, their demeanor under pressure, and how they negotiate. Difficult negotiations do not mean the customer should be ignored, but one factor rarely included in your price is the transactional cost of just doing business with that client. Any disproportionate time on managing a sale or customer depletes profit from that sale. Marginal profit deals invite Murphy's Law to take hold (whatever can go wrong, will go wrong). When you feel you are being bled, it is time to sav. "No thank vou."

Less In A Cull Pile Means More In Your Pogket

It's simple. The more usable wood your customers get from a load, means fewer returns and more money for you in the long run. Heck, you'll make money even in the short run. That's why Canfor lumber is optimally kiln-dried and carefully wrapped - to ensure greater stability and straightness. Which means you deliver lumber that goes straight into a wall, and not straight into a cull pile. Demand a higher level of lumber'".

I-IRIENTED strand board is now \-fcoming close to capturing nearly all of its core market. Seventy-five percent of North American homes built are sheathed with OSB floor. wall and roof panels. Further growth in this market is possible, but limited due to a minority of home builders and owners who will only use plywood.

"In order to see the sort of growth that OSB experienced from the early 1990s when it began to overtake plywood in the residential construction market, OSB makers will need to focus on developing value-added specialty products, and most importantly, expand into new non-residential markets," says Mark Angelini, Structural Board Association.

Because OSB is an engineered product, it is uniquely suited to be adapted for new specialty applications requiring lighter weight, smoother surfaces, durability and moisture resistance. The product is made of tree strands that are oriented horizontally or vertically in different layers that are pressed into structural board with waterproof resins. The strand or flake orientation, dimension and length of the flakes, and resin content can be adjusted to develop more flexible or stiffer panels that are suited for different applications.

More resin, for example, increases stiffness, durability, load tolerances and resistance to edge swelling. Specialty OSB panels for flooring have a higher resin content. Research findings have also shown with longer, thinner strands will improve most board properties by providing more actual contact area and better stress transfer.

The recent spread of specialty OSB products also coincides with marketing advances in which several products incorporating an OSB member or panel are sold and promoted as a single, branded package. The most successful specialty OSB product introduced nearly l0 years ago was the Ijoist, made of wooden or engineered lumber flanges connected by an OSB web. I-joists now are combined with OSB panels and marketed as complete flooring systems. Additional packaged OSB specialty products, providing greater value than separate panels, parts or members, are making a strong mark. They include:

High Performance Subfloor

Sheathing

More producers are penetrating the subfloor market by offering products

OSB Capacity & Production 2004-2009 Forecast

Capacity shown is structural panel at yeat-end. Fot new mills, the full annual capacity was included in the year of start-up. Capacity includes a forecast of new mills as well as capacity resufting from nill modernization and mill closues