In Brief:

• Nearly 20 years in building materials distribution, Mike Farmer led through multiple mergers, industry disruption, and large-scale growth.
• His leadership philosophy is a “one-two punch” of people and financials: enable your people and give them the right tools, and you usually win.
• He believes distributors are still underusing data for wallet share, pricing, and customer experience—especially in low-margin, high-pressure environments.
• On AI, Mike’s take is simple: pick two or three focused use cases (customers, products, pricing) and prove value before trying to use it everywhere.
• Despite today’s headwinds, he sees this as a great time for well-run distributors to use data and analytics to separate from the pack.

A Q&A with Mike Farmer, Executive in Residence at ProfitOptics

Mike Farmer didn’t set out to be a distribution executive. He started in psychology, fell in love with leadership and servant-led cultures, and then got a crash course in business fundamentals from a CFO who walked him through the financials every month over lunch. That blend of people-first leadership and hard-nosed understanding of the P&L eventually carried him into senior roles at Stock Building Supply, BMC, and Builders FirstSource—where he helped navigate multiple mergers, rapid growth, and shifting customer expectations.

Today, as Executive in Residence at ProfitOptics, Mike brings an operator’s mindset and a career of hands-on experience to the problems distributors face every day. He’s been the leader in the chair making the decisions—now he’s helping shape solutions that actually work in the real world, not just in a slide deck. We sat down with Mike to talk about why data is still so hard for distributors, how to think about AI without boiling the ocean, and why he thinks this moment—tumultuous as it is—might be a surprisingly good time to be in distribution.

Q&A

ProfitOptics: You’ve spent most of your career in distribution. When you look back, what’s the common thread that’s shaped how you lead?

Mike Farmer: For me it’s always been a one-two punch of people and financials.

Early on, I had this great setup: I’m in HR, but I’ve got a CFO who’s willing to sit down once a month and walk me through the full financials of the business. That combination—understanding the P&L and really caring about how people work and win together—shaped everything.

If you enable your people and give them tools and resources to make smart decisions, you’re going to win more times than not. Especially in distribution, which is so relationship-driven.

ProfitOptics: You’ve joked that homebuilding and distribution were second-to-last in tech adoption—just ahead of hunters and gatherers. Why has data been such a struggle for distributors?

Mike Farmer: A big part of it is underinvestment. A lot of distributors have tried to get by with older systems for a long time.

Then you layer on mergers and acquisitions. Now you’ve got multiple ERPs, different ways of structuring data, and a lot of people bringing their own assumptions to the table. That compounds the problem.

There’s also the reality that distribution is a low-margin, cyclical business. When you’re growing fast or dealing with market swings, your best people get pulled into immediate revenue and operations issues. Those are the same people you need to run system conversions or data initiatives. So the long-term projects get pushed off “until later.”

The irony is: the bigger you get, the scarier it is to rely on an old solution.

ProfitOptics: When a distributor is thinking about bringing in ProfitOptics, what would you tell them as a former operator?

Mike Farmer: I think one of ProfitOptics’ biggest advantages is the people. You’ve got a lot of leaders here who have actually run distribution businesses.

I’ve seen plenty of projects where you bring in smart technical folks who don’t understand day-to-day distribution reality. That’s where you miss things and make mistakes that hurt the business or the customer.

With ProfitOptics, you’re working with people who know what you’re dealing with. They’re not trying to “solve everything” in one shot. They come in with a very specific, surgical focus: improve this process, solve this data problem, support this pricing or inventory decision.

That’s how I would coach a colleague to think about it: look for a partner who understands your world, has done it before, and is willing to go after targeted wins instead of a giant rip-and-replace.

ProfitOptics: You mentioned AI as “low-hanging fruit” for distributors—if they use it the right way. What does the smart use of AI look like in this space?

Mike Farmer: The smart use is focused.

The low-hanging fruit is usually around customer and product:

• Identifying customer opportunities
• Finding buying patterns
• Surfacing pricing opportunities

Once you hit a certain scale, the data is there. You just need a way to get it out and present it in a useful way. AI and machine learning can help you do that—spot patterns and surface the next best action—without asking people to live in a giant spreadsheet.

But you don’t need AI everywhere. My advice is: pick two or three areas, make a strategic bet, and see what works. That’s what the smart companies are doing.

Even on the nonprofit board I’m on, we’re doing the same thing—using AI to find donor opportunities in a couple of focused areas, not to “replace people.”

ProfitOptics: If you were running a large distribution business today, what’s on your data wishlist?

Mike Farmer: Top of the list would be true wallet share and market share.

For years, that was a huge struggle—especially with national accounts. I wanted to know: What is my real share of this customer’s spend, nationally and locally?

When you understand that, you can make much better decisions about where to spend your time:

• Where are we underperforming and need to lean in?
• Where are we already strong and need to protect?

Then there’s pricing. Understanding how customers actually buy, where the thresholds are, and what elasticity you really have—that’s where I’ve seen some of the biggest value in my career.

If you can keep sales flat and improve price by even one percent in distribution, that’s a big deal. But you need good data and good tools to see that and act on it confidently.

ProfitOptics: You also talked about changing customer expectations. How has that evolved, and what role does data play?

Mike Farmer: Fifteen years ago, hardly anyone was tracking fill rates or on-time-and-in-full performance in a serious way. That still blows my mind.

Now, the more sophisticated distributors are measuring and sharing those things with customers. For big builders, cycle time is a huge metric—how fast they can get a house in the ground and sold.

When you get the right leaders in the room and you can show them, with data, how you’re improving cycle time or outperforming on on-time-and-in-full, price comes a little more off the table. It becomes more about how you create value together.

ProfitOptics: Given all of today’s headwinds—housing starts, rates, margin compression—is it a better or worse time to be in distribution than, say, 10–20 years ago?

Mike Farmer: Honestly? I think it’s a really interesting time—and a good one if you’re prepared.

Yes, housing starts are down. Yes, rates are high. Builders are getting squeezed, so they’re trying to compress distributor margins too. Everybody’s fighting over a smaller pool of opportunities at lower margins.

But periods like this create separation.

If you can:

• Use data to make smart bets on which customers and markets to back
• Understand where to walk away and where to lean in
• Keep your people employed and your operations sharp

…you can set yourself up really well for when the market turns.

I’d be thinking hard about loyalty, buying cycles, and long-term relationships. If I take a hit on margin now, am I setting myself up for 12–24 months of profitable business later? That’s the kind of question you want your data to help answer.

ProfitOptics: You also own a winery in Napa Valley. Quick sidebar: what’s something about the wine business that makes the distribution world look easy?

Mike Farmer: (laughs) The licensing alone.

To ship to all 50 states, I need around 85 licenses. There are only 50 states, but in many places you need separate licenses for wholesale and direct-to-consumer. The laws are old, they’re inconsistent, and every state plays by its own rules.

On top of that, wineries aren’t exactly known for great data. When we bought ours, I inherited almost no real customer information—no lifetime value, no clear picture of who we should be talking to.

And just like distribution, system conversions can take way too long. I was just talking to a friend who’s been in an eight-month conversion for a 15-SKU business. I told him, “Come on, it shouldn’t be that hard. If you’re gonna do it, put focus on it and get it done.”

So yes—messy data, inconsistent systems, customer gaps. Both industries have more in common than you’d think.

ProfitOptics: Last question: if you’re a distribution leader reading this and you’re feeling the pressure, where do you start?

Mike Farmer: Start small, but start.

Pick one or two areas where you know better data and better tools would move the needle—pricing, inventory, wallet share, customer experience—and focus there.

Look for partners who:

• Understand distribution at a deep level
• Will work with you on targeted problems, not a giant, risky overhaul
• Care about giving your people actionable information, not just pretty dashboards

And then give your best people the time and support to actually use what you build.

If you’ve got good people and you put good data in their hands, you’re going to make better decisions. In a tough market, that’s often the difference between treading water and coming out ahead when the cycle turns.

Curious how other distributors are using data to make smarter decisions? Let’s talk through what we’re seeing in the market.