Supply Chain Squeeze Might teach us how to be
More Efficient in how we order
hardwoods and millwork
The supply chain is severely stressed right now as we pass the 1 year mark since the world shut down for the COVID-19 pandemic. The construction trades are reeling and trying to get lumber and millwork as fast as they can, but they are constantly running into empty shelves everywhere they look. This is not news to anyone reading this, but it is also not something we can just resign ourselves to and throw up our hands in disgust. The fact is the lumber is there to be used, but we all need to be more careful and specific about exactly what we need. The days of ordering generic sizes and larger quantities that can be sorted in the millwork house or on the job site are over.
To continue to move our projects forward and make our customers happy, we need to think about sourcing materials differently than we have in the past. Value engineering our lumber sizes can suddenly make an un-fillable order something that we can have on site next week. Moreover, passing more of the work on to your supplier can allow them to find the materials from within their existing inventory where a more generic order would be impossible to meet. Greater partnership with your lumber supplier will change how materials are sourced and, in most cases, shorten the lead time while (gasp) actually improving the quality of the end product.
Do you want to keep your projects on schedule and continue doing business when your competitors are still struggling to get their materials? Read on!
The construction industry is booming, and new projects are starting up every day. The lumber and millwork being crafted to supply those new projects is also in high demand, so every day we hear from customers who can’t find the lumber they need to get the job done. The softwood and especially the dimensional construction lumber got hit first months ago, but the hardwood market was slower to feel the pinch. We all knew it was coming, but I don’t think anyone could anticipate just how tight things would get and exactly why.
It is a perfect storm really of fewer trees being felled from plantations and concessions due to short staffing all the way down to fewer people at the ports to receive and load the ships that move the exotic species around the world. Even once lumber and other materials are on the water, they are stacking up at the destination ports to be unloaded for the same short staffing and COVID restrictions. Locally, the Chesapeake Bay looks like a parking lot as container ships are backed up waiting to unload at the port of Baltimore or Norfolk. Likewise on the west coast hundreds of container ships wait to unload in Los Angelos. The hardwoods on those ships are pretty much already sold too. Earmarked for orders that were written months ago.
On the domestic front the lumber yards and millwork houses face the same restrictions, and lead times are going up for routine “run of the mill” operations. Even domestic lumber species face the same pinch. While they are not facing massive port delays, transportation and logistics by rail and truck are just as tricky causing massive delays throughout the entire supply chain.
Now looking within your own organization and on your own job sites: COVID protocols have slowed production and caused delays where there were none before. Not to mention if something should go wrong or if that material you have been waiting on for weeks finally arrives and it isn’t quite right or you need more.
Hardwood Lumber is Not in Short Supply
It’s maddening and you can start to lose it when yet another great project comes in the front door that you would love to bid or get started on. Here is the interesting point of all of this. Lumber is not in short supply. It is out there; it is just the moving it around that has become difficult. Certainly supply from the sawmills has slowed, but there are also stockpiles in many lumber yards as well as new material being milled every day.
The thing is the construction trade has grown used to ordering in excess and figuring out what is needed after the fact. As a furniture maker, as far back as I can remember I was told to order 20% more material than I needed. When I started working in the commercial construction world, I realized that the 20% number was more like 50-80%. I would visit job sites and see massive piles of offcuts destined for a dumpster. The construction world has gotten used to rounding up the sizes needed and placing orders for all wide and long boards that can then be cut into the actual parts needed on the job site.
A good example is found every day in the decking world. Here is a product that isn’t sold as rough lumber but rather a moulded surfaced on 4 sides (S4S) and eased on 4 edges (E4E) product. Perhaps it is grooved for hidden fasteners, perhaps not. Those attributes along with width and thickness are specified up front and are pretty standard in the industry. The variable is the volume and especially the lengths of the boards. Everyone wants long boards. They don’t want seams in the deck. So they order all 12 foot or 18 foot or 22 foot boards.
In reality the actual deck may only require that half of the boards be that long, and on the job site the carpenters are slicing and dicing those long boards leaving not just 12 inch offcuts but 6 or 7 foot long offcuts that they have no use for in the project now. In reality a detailed take off plan specifying exactly how long each deck board needs to be would save time on the job site. It would eliminate possibly all the saw cuts and turn the install into just screwing the deck in place. This detailed buying plan would allow the lumber yard who says they can’t supply 36 pieces of 18 foot Ipe decking to suddenly be able to fill the order when it’s actually 4 pieces of 18 foot and a sampling of other lengths.
Take this example one step further and have your supplier actually mill all the parts of the deck and essentially assemble it on their factory floor, and they can stage and deliver your material in sequence and ready to be screwed into place eliminating the time to size everything or to do a bunch of time sucking planning and measuring, marking and flipping boards.
On the supplier side we can actually provide better quality when we have the license to pick and choose the boards knowing exactly how each one will be cut and used in the final project. Walk around our own lumber yard, and you will see A LOT of decking. But it can’t all be used when the length spec is super long or for that matter just a single length spec. Even if that is a shorter length like 8 feet!
You would be amazed at just how much lumber your yard will actually have available when you let them pick the boards based on the actual blueprints. Yes, this will cost you more. It’s a lot more time on the lumber supplier’s ledger that has to be accounted for, but I’d wager the time savings in reduced lead time, and time on the job site sorting through a stack of lumber instead of screwing those deck boards in place will more than make up for that cost up front.
And guess what? Reducing the waste on the order is going to make your supplier that much more able to supply the next job in a timely manner, because we haven’t exhausted our inventory sending you boards that might end up having a sizable percentage cut up and discarded in the dumpster.
This decking example is just one example and, frankly, the simplest. Imagine now a more complex job with interior mouldings or flooring or siding with a lot more variables than just length. Picture partnering with your supplier and having them not just run that crown moulding, but also run it to the actual blueprint takeoff, and then assemble not just a stack of crown but a stack of crown for the master bedroom, a stack for bedroom 2, etc. This staged approach to the millwork makes install suddenly more like assembling Ikea furniture (without the Allen wrench and confusing picture instructions).
Value Engineering Makes Impossible Possible
Going further upstream, the architects are specifying a certain species and a certain profile or width/length that just isn’t possible today. (or maybe never). But if one were to reduce the width by 1/2″, suddenly it is possible. Or if what is really wanted is a reddish wood, then perhaps it doesn’t need to be Mahogany but any of the hundreds of other species with a red color profile. This is what has always been called “value engineering.” Principally, we value engineer in order to control costs. But today value engineering isn’t just controlling costs but making the impossible possible. Or perhaps less sensational, the 6 month lead time becomes 2 weeks.
Let’s take the decking example from above. You need 20 foot Ipe or Jatoba deck boards. That’s what the blueprint calls for. It’s a big deck, and there aren’t a lot of angles or shorter sections. It is what it is: “I need 20 footers; nothing I can do about it.” Enter value engineering, because guess what, we have some 20 footers, but we also have an entire shed full of 10 footers or 11 footers. We can also supply those at a cheaper cost per linear foot and get them on a smaller truck that happens to already be heading your direction, saving you on lead time and shipping.
Oh, and even better, those 20 foot boards are nice, but like any long board will have some side bend that needs to be muscled out during install and is going to introduce tension into the deck that could be unpredictable with seasonal movement. But those 10 and 11 foot boards we have coming out of our ears? Oh, they are straight as an arrow and completely clear of defect, and we have so many of them, we can even pick for color match to give you a more cohesive look to the deck. Yes, there will be visible seam, but is that actually a show stopper when you have a color and possible end matched seam in a deck that overall is more stable, easier to install, faster to deliver on site, of higher wood grade, and possibly even cheaper at the end of the day? This is value engineering at its finest, and in this COVID world it makes that impossible 20 foot board order something we can deliver next week with an even better quality finished product.
Or maybe you need wide plank Teak flooring. The customer wants wide! Really wide flooring. It’s going to have to be an engineered floor for sure, but the face veneers maybe need to be 18-25″ wide. That is a tall order even when there isn’t a global pandemic. But what is really important to the architect or to the customer? Is it that the floors be Teak or that they be wide planks? What if they were wide plank floors but made from Iroko instead, which has the same honey blonde color as Teak. Oh, and by the way, Iroko is easy to get in huge slabs that can be sawn by us to produce the highest grade and best color match from plank to plank. This is the essence of value engineering: primary goals are met while executing a better product with lower overhead and easier sourcing.
Switch Your Thinking from Material Supplier to Manufacturer
I think you may be starting to get the point. COVID sourcing is tough – of that there is no doubt. But does it have to be? Could it be that this pandemic might actually teach us all a better, more efficient, less wasteful way of doing business? The principles of value engineering could dramatically change how you work with your suppliers. Maybe partnering with your suppliers and letting them do more of the work with picking and sizing and milling can actually save you money, time and produce a better product. The lumber business is no longer just about boards, we make parts too.
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