Metal Architecture Home
Blog

One Step, Two Step, Three Step, Four

Paul_BlogPhoto

Have you ever tried to map out the building product supply chain for the metal construction industry? It's not a map; it's a web of crisscrossed distribution channels. Contractors may receive products direct from a manufacturer (one-step distribution) or through a distributor (two-step) or through a distributor and a trade contractor (two-and-a-half step) or through a distributor and a local pro supply retailer (three-step).

Often the distribution channel depends on what the product is. For example, metal building systems are likely to come directly from the manufacturer, while metal roofing may be ordered through a specialty retailer. There are, of course, products that lend themselves to a variety of distribution options, and the channel is often directed by the end user-the contractor.

Take metal roofing systems. Large contractors may get the product directly from the manufacturer or at least the distributor, while smaller contractors are probably ordering through their local supplier. Looking at the channel from the other end-metal roofing manufacturers-the end user also includes do-it-yourself homeowners who might get their product from a Big Box store such as Home Depot, Lowe's or Menard's.

A large part of a contractor's effort in building is making sure all those disparate elements of the supply chain work in unison, and that is nearly impossible given how tangled the web is.

A building site is a little like a manufacturing plant with the raw product coming from multiple vendors, delivered to the site, where workers combine the raw product into a finished product-the building. Among many differences, though, is the way those products arrive on-site and how they can be stored. A manufacturing facility can stockpile raw materials, allowing it to purchase when prices are low, but a building contractor doesn't have room on-site for such a solution. They require just-in-time delivery so that materials don't sit around or take up space in tight quarters of many building sites.

This whole system is about as inefficient as you can get. Supply chains in most industries have been streamlined and achieved remarkable levels of efficiency. The result has been reduced costs and increased reliability and service.

In the building product supply chain, though, inefficiency is rampant, and the burden is on the contractor to manage the chain from the bottom end of it, using whatever means they have. Often, the most effective means for imposing efficiency is demanding lower costs. That forces the chain to find efficiency to be able to deliver at the reduced cost. Still, this often works against the contractor who discovers that when his supplier cuts the cost of a product, he does so by removing essential services (just-in-time delivery, technical support or warranty backup) the contractor had come to rely on. Essentially, those services just get passed down to the contractor who now needs to absorb the costs.

Want to make a huge difference in the metal construction industry? Improved products are essential, yes. Better service and support are increasingly important, yes. But finding more efficient ways to get products to contractors through streamlined distribution channels would have more of an advantageous effect on the industry than almost any other change.

Comments

comments powered by Disqus