Proactive Range Management : A Timber Supplier’s Efforts to Influence the Product Assortment of Builders’ Merchants

Abstract: Different builders’ merchants demand a variety of products, and no effort has yet been made to coordinate these demands. Therefore, suppliers of timber to builders’ merchants are facing a problem in terms of requirements for a product range that is too extensive. Timber is a commodity product that is sold at low margins, which means that the costs of keeping such a wide range threaten the economies of scale in timber suppliers’ operations. A suggested solution to this problem is for timber suppliers to use proactive range management (PRM), meaning that the supplier influences the product assortments offered by the builders’ merchants. The purpose of this thesis is therefore to explore the concept of PRM in the dyad between a timber supplier and a builders’ merchant. To fulfil this purpose, research questions are formulated regarding the drivers and prerequisites for PRM, and how suppliers can use it.A broad theoretical perspective that considers roles, exchanges and power is used to explore PRM. Data has been collected through a single case study of a timber supplier, its builders’ merchant customers, and the customers of the builders’ merchants.The driver for PRM is the timber suppliers’ potential knowledge about costs and demand in the supply chain. The knowledge can be used to coordinate the supply chain, and thus increase efficiency and effectiveness; it also creates a power base for the suppliers, enabling them to increase the share of value gained from the dyads between themselves and the builders’ merchants.There are several prerequisites for PRM to be realised. The suppliers must possess a power base in the form of knowledge about costs and demand in the supply chain, and be able to communicate the value of this knowledge. The suppliers and builders’ merchants are also required to have close relationships. Further, the builders’ merchants must trust the suppliers and be open to influence from them.When using PRM, different degrees of influence can be exerted depending on the extent to which the prerequisites for PRM are fulfilled. In addition, suggestions on how to manage the product assortment can be either individualised for the builders’ merchant, or take the form of a more general suggestion, depending on which builders’ merchant is approached. The degree of influence and the individualisation of the suggestion create a 2x2 matrix, in which four different ways of using PRM are proposed.