Not Listening to the Voices...

Before the rise of online shopping, the retail world was shaken up by the creation of giant corporations and “big box” stores. Scores of stores, such as Mom & Pop places, and regional chains, found themselves facing competitors with a larger selection and lower prices. One industry especially hit hard was building supplies. And I had a front row seat.

After getting caught in reductions in the Air Force, I ended up at a Military Job fair. There, I was interviewed for, and offered, a job as a manager-trainee for Wickes Lumber. At the time there were 110 Wickes building supply stores. They were the largest suppliers to building contractors east of the Mississippi. But they’d begun a downward trajectory by the time I joined them.

Home Depot and Lowes had been growing and had reached the point where they were cutting into Wickes business. Wickes business model was to have a small retail presence at their locations, with the focus being on supplying large builders and contractors. They highlighted their personal service, with orders picked and deliver to work sites. Home Depot and Lowes were primarily retail stores, but with their selection, and rock-bottom prices, contractors began going to them, even if it meant less service. And it was hitting Wickes hard. I was training at two different stores, and both had downward revenue trends. But there was still hope. Wickes was losing contractors at a rapid pace, as contractors were more likely to forego delivery and go to a box store. So Wickes began to focus on large regional and national builders. The personal delivery services Wickes offered were heads above what Home Depot could provide. But Wickes didn’t listen to the Voices of the Customer, or the Voices of the Business. And it all started with a new CEO.

The guy they hired to right the ship had the last name of Woods…a perfect name for a building supply company. But Mr. Woods did not have a construction background. He was hired from a company that manufactured golf cubs (and even better name for that job!). Evidently, he’d done some great work in turning the Golf company around in the face of foreign competition, and so they thought he could do it for Wickes. He took over during February.

One of his first acts (as many new CEO’s do) was to look at personnel costs. Any stores with losses in the last quarter had to layoff staff. All the stores in northern states, had decreased sales starting in October until April, as winter shuts down most building. With the CEO looking at a little window of December through February, quite a few stores appeared to be in the red; even though they were profitable over the course of the entire year.

Many stores carried employees over the winter months, when sales were low.? This ensured the employees would be there when building season began. These were the folks that picked the orders, drove forklifts, and made deliveries. While it may seem rather menial, there was quite a bit more to it. These folks knew what hinges certain builders used, and where to find them in the stock room with hundreds of hinges. If an order came in from one customer they knew it was for rough framing of the house and the quality of wood didn’t have to be so pretty, as opposed to another customer that did the finishing work and needed higher grade lumber. They knew not to drive the forklift on the left side of the aisle where there was a drain cover that would tip the lift and drop the load. All the little things that came with experience.

But because we had low sales of building supplies over a period that included the Christmas Holiday, and Wisconsin winter weather, we had to fire all those folks.

Of course, when April came around, and the orders started rolling in, we had to hire folks…and, of course, our experienced employees had gone out and gotten new jobs. And so the new people spent extra time trying to find hinges, or sent the wrong wood, or tipped over forklifts. There was a marked loss of efficiency with new workers.

But there was more. Under pressure to increase sales, stores began partnering with “questionable” builders. One such builder approached Wickes with a request for 2x4 studs that were 8 feet and 1 ? inches long. That’s an inch and half longer than a normal stud used to frame the walls in a house. The builder wanted them longer as they were using only one top cap. When building a house, the vertical studs (usually a 2 inch by 4 inch piece of wood) have two “top caps” also called a “double top plate.” These are two 2x4s laid horizontally on top of the studs. Most building codes require TWO such top pieces of wood. But this builder had a development in an unincorporated area and had gotten approval to have only 1 top cap. So they wanted extra long studs to make up the height. Wickes was only too happy to oblige. This builder had also skimped in other areas; cheap hardware and third rate siding. They also spaced the studs as far apart as possible while using the thinnest possible drywall. The combination meant the walls began to warp even before the house was even finished. They were horrible houses, but they were cheap, and so they sold. And Wickes was eager to supply them. Until the builder went under. An anticipated revenue stream disappeared overnight. And the company was stuck with a stock of odd sized studs, cheap hardware, and other crap supplies nobody else wanted.

Wicks did try to innovate, and I was asked to help. Some VP at Wicks Headquarters, which was about an hour from where I lived at the time, had an idea. He noticed that delivery was charged by the size of load. But there was nothing to account for the distance of the delivery. The same sized load would cost $X to deliver, whether it was 5 miles, or 50 miles, away. This got the VP thinking back to his MBA classes and he recalled a professor talking about variable costs. Of course, he was too busy to research it, and, as I had just finished a Master’s in Economics as I came out of the Air Force, I got tasked to figure it out. So I spent a couple of months making the long commute to Corporate HQ to try to figure out how to capture additional revenue from deliveries.

One of the first things I did was talk to some customers (I’d never heard of Voice of Customer at this point, but just seemed like right place to start). I tried to get an understanding of their wants and needs regarding delivery of building supplies. One of the first things I found out was they wanted consistency in deliveries: whether it was quality of goods, being on time, or price. They wanted to have things as promised. A lot of construction is about scheduling. If a delivery is not made on time, it can screw up a timeline; increasing costs. And cost is king in building. An extra dollar for a set of door hinges may not sound like a lot but when there are 15 doors in a house, and you’re building 500 houses…it adds up. Same with delivery. A few more bucks for a delivery, multiplied by the 20 or so loads needed for each house…was not a welcomed idea.

Trying to pitch to the companies the fact that costs could be less if sites were closer to the store didn’t go well either. Feedback was we should build more stores then. Or that we should average the mileage to keep a standard delivery charge (as long as it wasn’t more expensive then current price). The builders bristled as the thought of different charges base on mileage.

I reported this all up to the VP. In my report I recommended that variable delivery charge not be implemented, as it would be very unpopular, difficult to implement, and likely to lose customers. From my research, I did recommend we had an opportunity to improve the quality of delivery. We could tighten schedules and create improved methods to reduce damage during delivery. The VP did not take it well. He was convinced that variable delivery pricing was the way to go.

I was dismissed and returned to my manager training program and I heard he continued to keep crafting his idea. A few months later, I was wrapping up my training and I had to write a summary of my year with the company and provide ideas for improvement. I wrote honestly; pointing out the wastes I saw and the opportunities for improvement. And I also mentioned the poor corporate leadership; especially the laying off of people. After submitting my report, I was expecting them to ask me to leave. Instead, I was offered an assistant manager position in Jackson, Mississippi. To me, this was worse than being fired. Not because of the location (I love southern cooking) but I’d met the regional manager there, and knew it was not going to work out. So I left for greener pastures.

Wickes didn’t last much longer. A few years after I left they began selling off assets, and then filed Chapter 11 Bankruptcy. They then became just a memory.

My view is one from the bottom…I worked at two stores and spent a little time at the corporate offices. So I’m sure there’s much more to story, but it’s clear they did not heed the voices of the customer or the business…

#quality #lean #leansixsigma #operationalexcellence #processimprovement #totalqualitymanagement #storytelling innovation? #lean #leantraining? #leanthinking?