Skip to content
Principia/Blog/Market Insights/Growing Revenue in Lumber and Building Materials Distribution Networks

In our previous blog we discussed how to ensure that you have the best coverage to drive revenue as a building products manufacturer, distributor or pro dealer. In this piece we show how to manage resources to optimize revenues in existing and prospective distribution networks.

Many building industry suppliers today are data-driven and metrics oriented. Yet, data from feet on the street often can be conjecture or anecdotal without a formal and disciplined system to set performance targets and assess progress. Best-in-class performance requires an understanding of current and potential demand at each distribution location to assess the share opportunity of that location as a single point of sale comprising the total served market.

By looking at the relative size and associated market share at each distribution point, a best practice assessment performed at the top locations can support translation to the lower performers. However, in the current market environment, it is tough to get a grasp on exactly how much opportunity there is.

Take the case of one distribution point located in zip code 30092 shown on the bottom left of Figure 1. Based on the Principia BuilderSeries® platform, product demand is calibrated at nearly $2.8 billion within a 25-mile radius of this point just outside of Atlanta. This means that of the $200 billion in LBM channel revenue tracked, this single location accounts for more than 1% of total demand.

Figure 1

Product manufacturers, LBM dealers and distributors can assess the size of any given served market or territory, the share they current hold in the territory, and the opportunity potential to deploy resources most effectively including inventories and personnel.

An assessment of the strength of a building product manufacturer’s distribution network on a regional basis can illustrate the use and value of this strategic approach to growing revenue and share. Looking at the right side of the figure, all of the LBM distribution points for building products are shown within that same 25-mile radius of zip code 30092. For suppliers and distributors, this system can identify customers to grow share. By cross referencing current customers against Principia’s market comprehensive customer database  with over 45,000 distributor and dealer locations nationally, suppliers and two-step distributors can determine where to most readily expand, with whom, and the value of the market opportunity. For dealers, it is an effective way to assess key competitive position within their served market area at a branch or yard level. Whether using Principia BuilderSeries® or an alternative, the prospects are greatest for those who have a well-defined distribution strategy with specific objectives for each served market and point of sale customer. After all, “what gets measured gets managed” and can drive revenue and share growth in the building products industry by calibrating your current market position, setting future customer-level targets, and laying out the tactics needed to reach your growth targets.

More information about building materials distribution is available for purchase in three product offerings designed to meet your specific distribution needs: LBM Dealer Locator, SupplyBuilder®, and BuilderSeries®.