Denver, Colo.—ProBuild, headquartered here, is one of the nation’s largest suppliers of building materials to national builders, local contractors and DIY’s.
With more than 400 locations nationwide, this sizable organization came together in the late 1990’s. “ProBuild began coming together in 1997 when Devonshire Investors acquired the Strober Organization, which was a leading supplier of building materials for the Northeast,” said Paul Dodge, senior vice president of ProBuild’s supply chain. “When ProBuild was becoming ProBuild, I was with Centex Homes and ProBuild was our largest single supplier across the country. At that time they were still operating under the legacy names of Dixieline, Williams Bros., etc. They were known in the industry as ProBuild before they were officially ProBuild. At Centex, we recognized that all of those entities were really one company and we started calling them ProBuild for our own internal purposes. By 2008 the decision was made to operate two of the legacy companies under their names, Dixieline Lumber in Southern California and Spenard Builders Supply in Alaska. These two entities continue to operate under their banners and everything else was converted to ProBuild.”
ProBuild purchases about 2 billion board feet of Southern Yellow Pine, Douglas Fir, Western Spruce and other Softwood species annually. In addition, the company purchases approximately 1 billion board feet of panel products, including OSB and plywood.
The operation manages and maintains their supplier master data in a call center environment. “When we set up a supplier, all the information is submitted into the system,” Dodge explained. “Once the supplier is entered into our system, a new widget will be set up and beyond the master data management becomes the maintenance. We set up all products we buy from that supplier in our item file. This department is also responsible for maintaining all of the information, so if we get a new cost change on roofing, etc., all of those changes come from our suppliers to this group. They enter the cost changes for every location we have for those particular items. This process gives us the ability at the location level to place an order, know that it’s priced correctly, and that the purchase order is going to the supplier. So it all starts with data quality management.
“Essentially we have category managers for each major product group: forest products and millwork representatives, building materials representatives and category managers,” Dodge continued. “The category manager works on supplier selection and negotiating programs. So, for example, if we were going to set up Owens Corning as a roofing supplier or Jeld-Wen as a windows supplier, etc., these individuals would negotiate our entire program. That would include any kind of incentive that we might get from those manufacturers. Then we would negotiate upfront pricing for particular items in specific markets.
“When it comes to ProBuild’s Building Materials and Millwork, we hold line reviews where key stakeholders participate with supply chain to select the right supplier. So, when we are selecting our door suppliers for example, we would have several of our large door shops sit in on the line review. They would listen to a Masonite, a Jeld-Wen and other door manufacturers and then decide what we need out of a door program,” he continued. “We decide which supplier can best meet our needs and then we select and agree that in this location, we’re going to use ‘this’ supplier and so on and so forth.
“But from that point forward, each location places their own orders for these categories. We have people who are only involved with windows. Some are specific to doors and others with lineal mouldings or roofing, gypsum, insulation, sidings, hardware and hard lines. So again, these people are supplier and category focused to specific products, each of them specializing in their particular field.”
John Mikkelson, vice president, added, “Our forest products group is organized differently. Here, for all truckload and larger quantities, we have centralized forest products purchasing. Our buyers report into a category manager for a specific type of lumber, such as Spruce/Pine/Fir, Southern Yellow Pine, Western lumber, or oriented strand board. Besides handling a specific product category, supply is handled by region with each representative handling specific locations, which are in their assigned territory. So our buyers are automatically in line with those primary suppliers for their regions. To help them manage our inventory, the buyers have assigned locations and they have access to the location’s inventory so they understand how many days we have on hand, on order, etc.
“We recently made a significant investment in a demand planning and replenishment tool, JDA, which will bring significantly more sophistication to our inventory management. With JDA, we will be able to provide a weekly forecast for the next 52 weeks, and over time, will measure our accuracy. Today this system is operational in 130 of our ProBuild locations in the eastern U.S.”
As for logistics, Dodge said, “We have four transportation coordinators that handle logistics. We also have the origin reload in a dock where we barge lumber out of Portland, Ore., down to San Diego, Calif. Hal Fay works with John remotely out of Portland with the green Fir mills out West. In the Lakewood and Seattle, Wash., area we have another person who handles all the buying of lumber for Spenard Builders Supply coverage in Alaska.”
He continued, “Another part of supply chain aspect is indirect spending, which includes travel, computers, phone systems, and rolling stock—essentially anything that is not an inventory item. All those things fall under the supply chain group. In this group we’ve got demand planning and replenishment. So with demand planning, 130 of our locations in the East are on an Oracle system and they’ve made investments with a system called JDA, which provides us with a demand plan where we can look out 12 months in advance and have a weekly forecast by item to help understand what it is we have to buy.”
Dodge explained, “Another one of the more forward thinking and value-add programs we developed for our customers is Pro Earth. Proworks Pro Earth is a program designed for Pro Build to help our customers understand building science and how it applies to the homes they are building. It also helps them meet the green energy program requirements in their homes. If you take a look into managing energy, air flow and water properly with solid building science, and how that operates within the home, and address each of those areas to building science, you’re about 80 percent along the way of meeting any requirements of any of the residential green programs in existence.
“Essentially we’ve created a format that has two parts. The first one is a ‘university’ that we put on, which lasts several days and the other is out in the field on a one-day basis. The latter is obviously not as extensive as the first, but it is specific to market and through one format or the other, with these two programs we’ve touched thousands of associates, as well as our customers and helped educate them in those areas.”
ProBuild has 19 distribution sites. “Our sites range from a true lumber reload, a destination reload like we operate in Kentucky, or it could be an origin reload like we have in Oregon,” Dodge said. “ProBuild made the decision to provide internal distribution through an organization, which still retains the name Timber Roots. With Timber Roots we have eight locations, which service rural markets and we supply anything from basic building materials to fasteners to some of the commodity forest products to yards that are pretty rural. Our distribution sites are quite varied at this point, for specific business needs. We also have three millwork reloads that we operate to service high volume door shops around the country.”
With a focus on procuring sustainable products, 42 of ProBuild’s locations are Forest Stewardship Council (FSC) chain of custody certified. Dodge, who has an undergraduate degree in forestry explained, “John Mikkelson and myself went to the ground level in the woods with the foresters and we looked at Canadian Standards Association, Sustainable Forestry Initiative and FSC managed forests. We feel that forests managed under any of these three programs are really sustainably managed.”
On a corporate level ProBuild supports its community in a variety of ways. One is through support of the cancer research hospital, City of Hope, located in Southern California. The company also encourages its employees to get involved with charities such as Habitat for Humanity and other local charities. “City of Hope is a cutting edge cancer research hospital that we support,” said Dodge. “We have a dinner with a number of our suppliers in attendance and a golf tournament the next day with the purpose of raising funds for City of Hope. All proceeds of that event go to the City of Hope.
“We are also involved with Habitat for Humanity on a local basis in each of the communities that we serve. We have discretionary funds for local charities and each manager decides which charity they feel is important to their community and that they feel a need to be involved with.”
When asked about measures ProBuild took to combat the economic recession of 2008, Dodge said, “At that time I don’t think anybody really foresaw the depth of the cutbacks and/or how long it would take to recover. So for us the focus became working with every location on every line, controlling expenses and trying to maintain both our sales and our profitability margin.
“There’s no question that we’re now in our third year of significant recovery from what was our bottom. We see that trend continuing and we see the recovery continuing. I think what’s going to assist ProBuild more than a recovering market is the focus that we have in our CEO, Rob Marchbank. He brings a focus on our customers, our associates and winning locally.
“It’s nice to have a scale of 400 locations, but that is not what really makes us win—we win when we take care of our customers in the markets that we’re servicing. That’s what drives us today, getting clarity in that direction—whether it’s a corporate function or a location finding what it really means to take care of your customers and your associates. We’re focused on doing right by both of them and we’re getting better at it everyday,” concluded Dodge.