This piece was written and provided by FTMA Strategic Partner, AKD.
Most businesses want to operate in a growing market, which they would typically define as healthy, but as 2021/22 showed us all uncontrolled growth, without the capability to deliver is both dangerous to your business survival and a threat to your customer loyalty long term.
Coming out of 2020 and early 2021, where AKD had dealt with bushfire impacts at our Tumut operation in NSW and fire and floods at our Caboolture Qld site, we probably had a slightly conservative approach to the commitments we were making in terms of programmed sales to customers. This was coupled with a market opportunity for timber, especially structural, that was up around 30% with detached and medium density housing new builds at some 174,000 in FY21.
So, the pressure on us to supply more was enormous and in many instances, we worked with partner customers on growing with them, in a planned program.
AKD’s key customers in the Frame & Truss segment told us how well we did this in late 2021, when we asked them and demand was still on a sugar high:
- Our delivery reliability (agreed quoted delivery dates are met) – we were rated slightly over “Very Good”
- Our delivery lead times (when not in stock, lead time is suitable) – we were rated right between “Good” to “Very Good”
- Our delivery flexibility – we were rated between “Good” to “Very Good”, above mid-point between the two
- Our sales and customer service personnel (their responsiveness and accuracy of information on deliveries) – we were rated right between “Very Good” to “Excellent”
- Our personnel’s responsiveness and accuracy with information on product availability – we were rated between “Very Good” to “Excellent”, just below mid-point between the two
So, what were the results of those efforts and the ongoing benefit, now that we are experiencing a market in transition, with some downside in demand in the medium term? A market transition from the peak of FY21 was always to be expected and we continue to plan for this in our business.
So, whilst we’re not sure whether we can accurately tell what the state of the market is currently, we can say that we think we’ve worked hard over the past 2 years to be consistent and do what we say we’re going to do. We hope our service record and our approach to relationships put us in good stead for the medium term.
Taking a long-term view and with FY30 forecast to have similar demand levels to the peak of FY21, we believe that our partner customers, who also take a long-term strategic view, will value our supply security and growth capability.
So, the long-term outlook for timber framing, especially for pre-fab and offsite construction is very promising in Australia. Enduring supply partnerships will be key to unlocking future growth and new business opportunities.
To help recognize these enduring relationships with framing partner customers, AKD will be sending out a co-branded video DM pack for Timber Framing. The Ultimate Renewable, which Kersten recently bragged about as one of the best timber framing marketing tools ever! Thank you on behalf of the whole Timber Framing Collective for her compliments on this.
The AKD pack will contain some customized information about partner structural timber total purchases which we hope makes your businesses proud of the role you play in providing a building material that stores carbon!
We know that the environmental credentials of timber framing, which are increasingly being recognised by the build and design part of our supply chain, puts us all in good stead for a healthy market in the decades to come.
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