A Brief Analysis of the Hayward Lumber Company’s Environmental Strategy (Case Study)
OM 671 – Supply chain environmental management
“Green” Building
A Brief Analysis of the Hayward Lumber Company’s Environmental Strategy
1/23/2014
HLC initially looked into FSC-certified wood when custom home-builders began to generate a demand for the material. This consumer base is generally providing a service for luxury home buyers who tend to be less price-sensitive and willing to pay the higher rates in order to claim environmental friendliness. The other portion of their customer base, low-cost builders, did not show an interest in such expensive products despite the ecological appeal. In order to meet the demands of the luxury home buyers HLC dedicated a portion of their inventory holding to FSC-certified lumber, spending twenty-five percent more on the ‘green’ wood. This company was the only one in the region to take on this endeavor. The ability to provide the eco-labeled FSC wood to builders in the area allowed HLC to set themselves apart from the other suppliers in the area that had refused to lay out the capital for the eco-label. HLC was able to effectively separate themselves from the other suppliers by providing this new and unique service and the consumer base had no other options, ensuring sales. The initial direct investment for FSC-certified lumber was $500,000, giving the firm just over a million board feet. However, as the firm would have stocked non-certified product instead, the extra cost to HLC was an estimated hundred thousand dollars. The firm was able to sell a large portion of the eco-labelled good at five percent mark up, selling the twenty percent excess at the price of regular lumber. Taking a small loss on the extra inventory affected profit less than allowing the product to spoil. Outside of the direct investment, there are other costs to consider. Pursuing these green interests and infiltrating the company’s culture with “Hayward’s Green Manifesto” would take time and money, not to mention advertising
“Green” Building
A Brief Analysis of the Hayward Lumber Company’s Environmental Strategy
1/23/2014
HLC initially looked into FSC-certified wood when custom home-builders began to generate a demand for the material. This consumer base is generally providing a service for luxury home buyers who tend to be less price-sensitive and willing to pay the higher rates in order to claim environmental friendliness. The other portion of their customer base, low-cost builders, did not show an interest in such expensive products despite the ecological appeal. In order to meet the demands of the luxury home buyers HLC dedicated a portion of their inventory holding to FSC-certified lumber, spending twenty-five percent more on the ‘green’ wood. This company was the only one in the region to take on this endeavor. The ability to provide the eco-labeled FSC wood to builders in the area allowed HLC to set themselves apart from the other suppliers in the area that had refused to lay out the capital for the eco-label. HLC was able to effectively separate themselves from the other suppliers by providing this new and unique service and the consumer base had no other options, ensuring sales. The initial direct investment for FSC-certified lumber was $500,000, giving the firm just over a million board feet. However, as the firm would have stocked non-certified product instead, the extra cost to HLC was an estimated hundred thousand dollars. The firm was able to sell a large portion of the eco-labelled good at five percent mark up, selling the twenty percent excess at the price of regular lumber. Taking a small loss on the extra inventory affected profit less than allowing the product to spoil. Outside of the direct investment, there are other costs to consider. Pursuing these green interests and infiltrating the company’s culture with “Hayward’s Green Manifesto” would take time and money, not to mention advertising