What waiting does.
How to react to falling markets in peak season
JUST IN TIME INVENTORY
Treated buyers watch the lumber market to get the best possible price. Historically, they hold back on purchasing inventory if the market is trending down. So, what happens if the market is trending down in the middle of peak season? Retailers start heavily depending on last minute inventory. Because Random Lengths prints a new copy every Thursday evening, treaters like Madison Wood see a build up of sales on Friday and Monday mornings during down markets. The orders are usually followed up with a sentence such as "NEED ASAP" or "WHEN CAN I GET THIS?". Buyers come in frantic for material knowing they've held off until the last minute.
MADISON'S LEAD TIME AND PRODUCTION CAPABILITIES
Madison Wood has the world's largest indoor treating facility in terms of physical size (4.5 acres indoors) and capability. We can treat up to 1 Million BDFT a day! Our team operates the cylinders nearly 23 hours Monday-Friday. This allows MW to act fast towards specialty items and emergency loads. "When we see the market trend down, especially during peak season, everything becomes an emergency load as buyers start running "just in time" inventories. Treating every load as an emergency eliminates our ability to continue treating normal stock items in bulk. Instead we are forced to treat based on immediate needs. In order for our production team to perform at our maximum capacity, they have to be able to treat in a way that builds inventory. Before you know it, true emergency loads with pcs or specialty items can't ship because stock loads are in the way. It is a self inflicted problem that forces treaters to react instead of act. Just like the stock market, it is nearly impossible to pick the bottom. Averaging inventory prices down is a better solution and insures that you consistently supply your DIY + Contractors on time." says Brad Knighting, Vice President of Purchasing.
WHAT CAN BE DONE?
- Be in constant communication with your representative from Madison Wood over lead times.
- Limit "just in time inventory" whenever possible and save the quick ships for real emergencies.
- Be aware that there is a time stamp on every order that dictates where it sits in the lineup. Waiting until Monday to place your orders puts you at the back of a very big line.
- Consider the sales lost due to not having the inventory on the ground the moment the contractor walks into the store.
- Average your prices as you buy down.
