Shelter - June/July/Aguust 2009

Volume 48, Issue 4 - June/July/August 2009

AMD Headlines

A Time of Learning
Business Can’t Be Managed in the Traditional Way in Today’s Conditions
by Audrey Dyer, president ECMD and the second vice president of the Association of Millwork Distributors.

Most of us in the millwork industry are learning that we can’t control the impact of today’s global economic environment, and that our sales are no longer strong enough to make our businesses work in their traditional manner. We’re beginning to accept that our country has changed and that business may never be exactly like it was in the past. We’re seeing the economic downturn expose those that haven’t managed some aspects of their companies very well even though they appeared to be solid when the industry was booming. We’re all dealing with the good, the bad and the ugly, but on most days it works in reverse, and we are learning that we must recreate who we are in order to survive and succeed in the future.

As the housing industry downturn spurs companies to slash costs and reinvent themselves, one positive aspect of this negative atmosphere is emerging. Suppliers and their customers are again having open conversations about the state of their respective businesses. We’re re-learning how important it is to know more about the companies and individuals we depend upon because, now more than ever, we must choose our business partners carefully. And we are re-learning the wisdom of basing business decisions on more than a price.

Suppliers are taking more time to fully understand the financial condition of their customers, and now, the customers are taking interest in the financial strength of their key suppliers. Both are paying attention to their own operating efficiencies as well as to the operating efficiencies of their supply-chain partners. Even once-strong companies that felt immune to industry ills find themselves fighting to survive, while the weak ones have been, or are being, identified quickly.

"Suppliers are taking more time to fully understand the financial condition of their customers, and now,
the customers are taking interest in the financial strength of their key suppliers."

Hard Questions
It is a good time to know the owners, the CFOs, and the entire management teams of our suppliers and customers, and more importantly, to understand their long-term commitment to success. We’re learning that a commitment to innovation is as important as reducing waste, and that we must right-size without cutting the resources we’ll need during the future version of the “good ole’ days.” And we’re learning that neither the customer nor the supplier can be totally responsible for the other. Today, both must be strong and efficient in order to survive. If one implies the other is responsible for getting them through this downturn, it won’t work. In this environment, one weak relationship may jeopardize a strong one, so there’s just no cushion for “propping up a buddy.” Does that sound heartless, or should we allow business failure because of a buddy’s poor operational practices? We shouldn’t have to learn the answer to that question.

As we gain this understanding, we’re learning even more about ourselves and our own companies. And we’re learning that we all have weaknesses. Not long ago, I was asked: “Are you operating efficiently?” My quick answer was a clear. “Yes.” I’ve learned my answer more correctly should have been, “Not really.”

Helpful Notes
Accepting that performance we previously considered “good” is no longer “good enough” is the first step toward significant progress in every corner of our business. I’ve made note of some things we’ve had to learn, or re-learn, quickly as industry conditions deteriorated over recent months—maybe some of them will prompt thoughts that others will find useful:

• Accept and communicate that business can not be managed as usual;
• Decisions can’t be made on the same basis as in the past;
• Understand and communicate your own vision of the future;
• Plan both for immediate and future
conditions;
• Move finances up the priority list. Understand your own and those of your supply-chain partners;
• Be innovative to help break current routines and position for the future;
• Move swiftly. Don’t wait to change;
• As your plan is implemented, support those who must carry it out;
• Remember that human kindness is still important. Don’t rely only on staff reduction to reduce costs;
• Realize that relationships change along with business priorities, and accept that individuals are necessarily affected;
• Eliminate unnecessary positions;
• Know your people and their true contribution to the business;
• Remember that loyalty to an employee can’t exceed their loyalty to the company;
• Communicate honestly. Negatives can become positives when knowledge is gained; and
• Expect your managers to be leaders, and recognize it takes more than one person to take a company forward.

The millwork industry is resilient and it will recover from the current challenges. But even if it doesn’t return to the high levels of times past, that will be okay, because our millwork industry has produced some incredible leaders, and will continue to do so. Are you one of them?