In our little town called the Kitchen and Bath Industry, there are some new cabinet manufacturer houses that are being built. There are still some larger mansions on the corner, but you never really see much of their owners. They stay mostly indoors, struggling with their own issues and rarely seen about town.
But recently some interesting neighbors have been taking up residence. They’ve been around for a few years, but you haven’t heard much from them in the past. They stayed in smaller communities and never really ventured too far from home.
I’m referring to some interesting, smaller manufacturers who have been on the move lately – and boy have they been busy trying to reinvent themselves. While the mansions continue to grow vines on their roofs and settle in to a state of disrepair with their dealer communities, these manufacturers have been gobbling up market share quickly.
They’ve also been cherry picking key employees from their wealthier neighbors. As the dust continues to settle, an interesting market dynamic is taking shape. Before I tell you all about that, I want to remind you of a story from the Steel industry.
They’re called Nucor Steel, right here in North Carolina, and many of you know their legendary name from just about any book on management you’ve read. While the steel industry was imploding, Nucor was restructuring, rethinking and revisiting the ways of old. While older steel mills changed and bolstered management ranks, Nucor stripped away layers of management. While older steel mills made decisions at the top, Nucor pushed decision making down to the lower levels. While most of America’s steel mills clung to older technologies, Nucor partnered with industry-specific vendors to adopt new technologies.
Today, Nucor stands as a clear industry leader. They’ve never had a layoff for lack of work and over the past 5 years they’ve averaged a 371% return for their investors. Wow.
There are some interesting parallels to what is happening in the cabinet industry. Smaller manufacturers are thinking differently, radically in some cases. So who will be the next Nucor of the Cabinet Industry? Time will tell, but there are some exciting prospects.
Before you make your next move, do your homework. Neighbors may look exciting at first, but be careful of the same old story underneath that fresh coat of paint. Below are 8 characteristics to look for before you move to your next neighbor’s community. If you pick carefully, you may just team up with a partner that could net you huge returns in the years to come:
- Philosophy. Is your manufacturer overly concerned with how much volume they have in relation to your overall volume? Your manufacturer should be more concerned with the overall health of your dealership, and not just their volume with you. They should be trying to help you make the pie larger, not arguing over their share of the existing pie. Check to make sure this philosophy extends all the way to the top and not just with the reps.
- Marketing programs. Your manufacturer should already be revisiting their co-op programs and chatting with you about creative new strategies for marketing. These newer programs should incorporate social media and strategies that extend beyond just taking an ad out in a newspaper or magazine. If you still have to fill out paperwork for rebates on advertising with your manufacturer’s logo, it’s a good sign your manufacturer is behind the times. About five years behind the times.
- Decision making structure. Pay particular attention to how the manufacturer makes decisions. If it’s decision by committee, be careful. That means when a quick decision is needed, you’ll be waiting for weeks or months for the committee to get together. By the time the decision is made, it runs the risk of being too late for you to respond adequately. Our next Nucor cabinet manufacturer empowers their reps to solve problems rapidly by giving them wide latitude (and budget dollars).
- Connectedness. How often do you hear from your manufacturer? Regularly, or only when there is a problem that may affect them more than you? Your cabinet manufacturer should already be plugged into the ways in which you like to communicate (email, social media, phone, text, etc.). Our next Nucor cabinet manufacturer is taking it a step further – they’re already investing in ways to communicate with all the individuals (and their unique preferences) at your dealership.
- Technology. Is your manufacturer just polishing up old technology that’s a decade old or are they investing in new technology which can net you immediate gains? Most manufacturers in this industry want electronic orders from you because that’s a huge benefit to them. But they’re still faxing you confirmations – a huge drag on your resources. If all they are doing is sprucing up their pricing program for their benefit (and your long hours of re-keying), watch out. Any software should be web-based and designed to work with your entire business – not just their brand. Remember, using their proprietary software makes it harder for you to change in the future.
- Costs of doing business together. Does the manufacturer make life easier for you – or is working with their ordering systems painful, time consuming and error prone? Our next Nucor cabinet manufacturer is not only going to be the easiest to do business with but will also be able to process your order with the least amount of excess cost. Be sure to ask your cabinet manufacturer to follow an example order from start to finish and witness first hand all the places where mistakes might occur. If you really want to have some fun, calculate the total cost of processing an order with each of your brands. The numbers will surprise you.
- Catalogs. Do you still receive faxes from your manufacturer about price updates and catalog changes? If so, do you actually believe all these changes are remembered by your sales and purchasing staff? Faxes mean errors – period. Nucor manufacturers are investing in tools to streamline their catalog data and make quoting for their dealers a snap.
- Electronic Commerce. Are you still emailing or faxing orders in? If you’re electronically submitting orders with your manufacturer, are you keying these orders in? Your cabinet manufacturer should already have eliminated re-keying in your dealership for more efficient kitchen purchasing — without requiring you to use their pricing program. Our next Nucor cabinet manufacturer takes it a step further — they’re trying to communicate back with you electronically (leads, confirmations, delivery notifications, invoices, etc.) in the system of your choice.
If you’re manufacturer missed the boat on some of the items above, pick up the phone and start the dialog. You have a lot more power than you think right now and that power can be used to make real improvements to the way you and your cabinet manufacturers work together.