Challenges pave way for future of material handling and inventory management

There's a famous yet apocryphal quote attributed to Abraham Lincoln who supposedly said, "Give me six hours to chop down a tree and I will spend the first four sharpening the axe." While most historians doubt Honest Abe ever uttered those words, that insight is still great advice, especially for LBM distributors. In this day and age of post-COVID-19 challenges, skyrocketing lumber prices, and an extremely diminished workforce, it's more important than ever for the building materials dealer to be able to do more with fewer employees in the most efficient fashion. The solution? Modern material handling and storage systems that mitigate those escalated materials and manpower costs from being passed on to the end purchaser.

When COVID-19 first began shutting down large segments of the country's businesses, there was a general fear that the building industry would suffer a similar downturn as it had during the Great Recession of 2007-2009. As is now apparent a year and a half after the pandemic's emergence, the real effect was radically different from the expectations. "COVID-19 had exactly the opposite effect that everyone thought," says Clint Darnell, vice president of Sunbelt Rack/CT Darnell Construction. "Lumberyards are busier than ever all over the country, and they are looking to improve their facilities."

Unfortunately, LBM dealers are caught in a perfect storm of radically increased demand for lumber, a diminished labor force, and a resultant skyrocketing increase in lumber prices. (The National Association of Home Builders estimates that lumber prices increased more than 300% between April 2020 and May 2021.)

As Chris Krauter, president of Krauter Auto-Stak explains, these challenges are a significant driver for LBM dealers to develop methods for better protecting their inventory investment and increasing their ability to more with fewer hands.

"COVID-19 was able to affect both ends of the economic cycle by first stimulating demand and concurrently restricting supply," he explains. "The demand side was supported by low interest rates, the boom in real estate and home improvement, and arguably by the stay-at-home workplace development and acceptance. The supply side was constricted by the government mandated stay-at-home restrictions, the reluctance of lumber manufacturers initially to continue normal productions operations, and the resulting labor shortage. This behavioral development created the fertile environment for the parabolic rise in lumber and other commodity prices. The result now places lumber and similar building products into a high value category. The need to better organize and protect lumber inventory has never been greater. Toss in the prevalent labor shortage of which is across the board in all industries, and one finds that improving material handling via high density racks, semi-automated lumber storage systems, and machinery enables fewer personnel to achieve greater results."

In years past, LBM dealers might have shown reluctance to invest in enhanced racking and handling equipment as a solution for the above-mentioned challenges, most commonly citing the necessary capital investment versus more immediate returns. But according to material handling and storage manufacturers, that narrative is changing for the better. "Those barriers have been torn down now," says Darnell. "We are no longer running up against those challenges. People are investing in their facilities to make them better." Chris Krauter agrees. "We are seeing this reluctance abating, as the lack of labor and need to improve throughput is taking precedence," he says. "There are several funding agencies able to write equipment leases with reasonable rates on a term of five up to seven years with a $1 buyout for final possession. Should an LBM dealer wish to preserve their operation capitol, this is a viable alternative."

This doesn't mean, however, that large investments are always necessary to improve efficiency. Oftentimes, a more analytical approach is a best first step, one that evaluates the efficiency of an LBM dealer's existing storage options. "The cost and process of new building construction is protracted, whereas the ability to improve storage density and throughput with a modern Auto-Stak System achieves a positive result in a much quicker timeframe," points out Krauter. "Many times, improvements to existing facilities can be a ‘bolt-on’ event, with minimal disruption to ongoing operations. Take a step back and look at every corner within the facility and determine whether it is fully utilized."

Just as each LBM dealer is unique, their challenges often require unique solutions. By turning to the material handling and storage manufacturers and utilizing their expertise, distributors can create individual solutions to their needs. "There is not a one-size fits all answer," says Darnell. "Each dealer has their own strengths and weaknesses. There are some lumberyards that do great with windows and doors for example. Every dealer that contacts us comes to us looking for a solution to their particular challenge. Every contact who comes to us has something they can/want to do better."

But while some problems require customized solutions, others are more universal in nature, and material handling and storage manufacturers have solutions for those as well. "One main challenge in our industry, like so many others, is manpower," says Darnell. "With less manpower you have to get smarter with storage and handling processes. This has been driving our Power Bin systems and portable millwork racks as well as all of our storage buildings. Another reality is commodity pricing has increased significantly. Lumberyard inventory is costing more than ever before, so protecting that product is as important as ever before. You want your shrinkage rate as low as possible with all of your inventory."

Chris Krauter shares similar thoughts regarding efficient use of racks, and points out how utilization of stacking frames for high density storage and transportation of doors, windows, and cabinet orders can greatly improve efficiency. As he explains, "A stacking frame is essentially a modular, transportable, stackable fixed and assembled pallet rack. Millwork orders are placed in these stackers for various customers. These racks are stacked vertically and horizontally adjacent to each other in a high-density pattern and are fork-liftable from all sides. The millwork orders come into the lumberyard, are sorted and hand-handled one time when loaded into the various stack racks. They are marked and transferred to the jobsite via flatbed with a tail-mounted lift truck where they are unloaded from the flatbed, placed in the garage or similar, signed off by the customer and returned to the lumberyard empty. This is a one-man operation. With the labor shortage, these improvements will significantly upgrade the efficiency of all personnel to get more tasks done faster."

High density storage goes beyond efficient transport to the jobsite, Krauter points out; it incorporates systems that allow for better organization, less physical handling, and being able to store more without increasing square footage. "Access/egress travel patterns within existing lumberyards are being re-evaluated and improved for quicker in-and-out of incoming inventory, outgoing deliveries and customer traffic," he explains. "Existing static rack systems such as pallet and cantilever types are being re-evaluated and replaced with the higher density, semi-automated Auto-Stak System, which increases the SKU count within the same area, more closely clusters SKUs for faster picking operations, and can in many cases eliminate traffic aisles. Recent trends have seen these systems continue to evolve, now with a third level of storage above the grade and catwalk levels. This third level becomes an open bulk mezzanine for storage of insulation, hardware, special orders, and other items. The floor-space used for the Auto-Stak System is collected back with this mezzanine platform."

As the country emerges from the worst of the pandemic and business starts to swing back towards a sense of normalcy, demand for improvements to efficiency still remain. Lumber demand is predicted to remain high as are labor shortages. "In the past pandemic year, we have been on full speed to keep ahead of the demand for our products," says Krauter. "Historically, these improvements have been passed over, as frankly operations can get done without them. With the rise in commodity value and the robust demand, however, LBM dealers are taking notice of their weaknesses and are reaching out for solutions." It's the smart LBM distributor who will use this time to upgrade their material storage and handling capabilities to set them apart from the competition by best serving their customers while decreasing required manpower.

Michael Berger is the former managing editor for HANDY magazine and has been writing about home improvement and construction for the past 20 years.

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