November 2005

Wood & Wood Products' annual WOOD 100 Report is populated by some of North America's best and brightest companies, many of which have achieved growth in leaps and bounds. Indeed, each of the 100 wood products companies earning a berth in the 16th Annual WOOD 100, published in August, enjoyed at least double-digit sales growth from 2003 to 2004.

For the third year in a row, W&WP editors took a closer look at each of the companies ranked and profiled in the most recent WOOD 100 Report with the arduous goal of selecting the best of the best for full-blown case studies. The verdicts: Showplace Wood Products of Harrisburg, SD, and Ovation Cabinetry Inc. of Salina, KS.

Learn more about how each of these WOOD 100-Best companies has managed to make its mark in the crowded and highly competitive cabinet market. Associate Editor J.D. Piland's report on Showplace Wood Products starts immediately below; Assistant Editor Andy Jenkins' profile of Ovation Cabinetry starts here.

Calling the group that started Showplace Wood Products overachievers would be an understatement.

It is not too often that the five-year plan - whether in personal or business life - is completed in less than three years, but that is what Tony Bour, Paul Sova, Emery Lee and Scott Korsten have done at Showplace, located in Harrisburg, SD.

Of course, they do have just a few years experience in the cabinet industry under their belts - nearly 90 years among the four of them. And if you count the rest of the managers and directors, the total years of experience tops 170.

"We've had a great economy, but for us to grow at three or four times what the industry has, it's indicative of the experience that all of our managers came to the company with," says Bour, president of Showplace. "We were fortunate in starting with a clean sheet of paper, but having said that and having said we've had a great economy, you still have to take advantage of those things."

And take advantage it has. Established in 1999, Showplace exploded out of the recession, has already topped $40 million in annual sales and has appeared in Wood & Wood Products' WOOD 100 Report for three consecutive years, including this year. Add to that a projected sales volume of $52 million for 2005 and one question begs to be asked: What does a company do now, after it has accomplished so much in so little time?

Apparently, it keeps expanding - to the tune of 213,025 square feet.

Going Up

The need for expansion became evident right away at Showplace. There was a point, just six months after full production of its semi-custom cabinetry began, that the managers decided the company needed to branch out.

After building a large dealer network, thanks in part to the many connections the founding fathers had in the industry, a plant in Beresford, SD, was purchased. At this plant, Showplace makes its own cabinet doors and drawer fronts, something that was not in the original plans.

"Our intentions were that we would buy pre-manufactured doors in volume, and we would have a small cell in our plant to make custom-sized doors as needed," says Korsten, director of marketing services and IT. "What we found very early was that our dealers saw us as a custom manufacturer and they took advantage of all the different options we offered in our catalogs.

"We envisioned we would buy about 80 percent of our doors, but we ended up making 80 percent of our doors," Korsten adds. The Beresford plant measures 20,000 square feet now, but an expansion of 10,000 square feet is underway.

The founders did plan for growth in Harrisburg, however.

Showplace offers semi-custom cabinetry in several species, including cherry, red oak, maple and hickory. Also available are 18 door styles and numerous finish options.

The original facility, finished in December 1999, measured just 70,000 square feet. The walls for the plant were made of concrete, but the north and south ends were built so they could be removed easily and the walls extended, if need be.

By May 2002, given the amount of cabinets being produced, one of those easily removable walls had to come down.

"When we started to sense we were not going to be able to fill the [dealers'] needs, we needed to start on an expansion," Korsten says. "It [did] not mean we were having any difficulty at all supplying the product on time, but we were going to get to that point fast enough that we needed to get the expansion process started."

Before, as Sova, director of manufacturing, describes it, the machinery stations were tightly packed together. They were virtually butted up against each other and there was little room for raw materials and finished products. In fact, the finishing room also served as storage of raw materials.

The extra 43,000 square feet, completed in December 2002, meant the machinery and workstations could be spread out. Furthermore, the extra space let Sova continue with his projected floor layout for a streamlined factory. Sova has a large blueprint of the shop floor on his office wall of where every last piece of equipment is located and where, within each station, multiple machines can be placed when purchased. It is quite the illustration of how streamlined the process has become.

Instead of products going back and forth across the length of the factory - as they once did - the raw materials start on the north side of the building and are processed in a standard machining sequence until they reach the south side, where they are shipped.

One of the telltale signs of Showplace's expanded space is that a semi-truck can pull into the building, which the company planned for due to the inclement weather the state can encounter, Korsten says.

Just recently in Harrisburg, 68,500 square feet, of which 29,750 are dedicated to finishing operations, were added. In September, Showplace officially moved into the new room, which, when fully occupied, will house five paint lines. Along with a full-size oven, two overhead conveyors and a towline have been installed in the new addition.

Showplace's current finishing operations include more than 30 spray booths and six overhead conveyors that snake through the finishing rooms and out over the machining areas after traveling through the ovens. On the towline, Showplace finishes large assemblies or long mouldings, which also are run through the ovens.

"I hope that what we've done right now will carry us for the next two years," Bour says.
Some of the most recent equipment purchases include a rear-loading Giben Prismatic 301 panel saw, a SlipCon DiscMaster sander, Dodds SE-200 CNC-TS dovetailer, a Morbidelli CNC machining center and CNC door equipment for the Beresford plant.

Sova notes that the company previously made capital equipment investments of $500,000 in both 2003 and 2004, and has planned $800,000 in equipment expenditures for both this year and next. With all the expansions - and the subsequent equipment purchases - Showplace manages to churn out more than 3,600 cabinets a week.

Down to Business

Korsten admits that there really is nothing "secret" about Showplace's production methods, but the managers have made their experience work for them in other areas of the company. Bour and his associates have learned how to run a successful woodworking business through their many years together, including their days at Starmark Cabinetry, which Bour also founded.

"Starmark was in a lot of our backgrounds," Korsten says. "Tony Bour has had a long history in the cabinet industry and he was pretty well known, so that certainly helped us attract attention when we first started."

The founders have put several business practices they have learned over the years into place at Showplace.

First and foremost is the company's dedication to its 730 dealers in 47 states. "Our strategy is to take care of our customers," Bour says.

Korsten likens the company's efforts for its dealers to a "heartbeat."

"A consistency, a liability," he says. "It's kind of like the way your body works with the heart and then your breathing. Those are things that just kind of happen and we kind of take them for granted. When they don't work like they need to, things fall apart. That's how we try to be for our dealers. We want to be that part of their business that happens automatically, so they don't have to worry about it. But they definitely know if it's not working.

"We have made commitments to dealers and we have lived up to them," Korsten adds. "We're very concerned with delivering product on time and complete. There's a lot of attention on that servicing aspect."

Showplace further strengthens the bond with dealers by staying away from big box retailers; the company only sells through its kitchen and bath dealers. Korsten says the benefit in this setup is that the dealers offer expertise that not all big box retailers possess. That is not to say that Showplace has not had its fair share of big box suitors, but Korsten says the commitment to their dealers supersedes the offers.

Another business strategy Showplace has implemented is to work only one shift. This makes it easier to perform quality control; otherwise, with two or more shifts, finger-pointing is inevitable, Korsten says. Plus, communication can be muddled - or non-existent - between the various shifts, something managers and supervisors want to avoid, he says.

Showplace keeps these potential communication breakdowns under wraps by training each employee, regardless of experience, one week before he or she even touches a machine. A multimedia training room was incorporated into the Showplace Kitchens showroom, which is located in a separate building in front of the production facility. This room, complete with Showplace-constructed tiered seating, has everything from DVD players and Internet connections, to video conferencing and overhead projection capabilities; the room also is used when meeting with dealers. Three full-time employees have been hired to assist in the training efforts.

In July of this year, Showplace began offering the Lyptus species, shown here. Based on Lyptus orders to date, Bour predicts Lyptus to be the No. 2 or 3 product line for the company this time next year.

"Our team of senior and junior managers, they really work very hard," Bour says. "We are bringing along junior managers all the time and adding to our management staff. We focus a great deal on leadership development."

With more than 390 total employees in the Harrisburg plant, only a few are in managerial positions. As Sova terms it, the organizational structure is "very flat."

"It's because it was what we were used to before, and we knew that it could work," Bour adds.
"We expect a lot from our production people," Sova says. "It allows for flexibility. We like them to have influence over their co-workers and keep it an essentially open structure. We trust them completely."

One business philosophy that trickles down to the newest of employees is "act like your back is against the wall, even when it isn't." By this, Korsten says they never take for granted the business they have, because it could be gone tomorrow.

Into the Future

Showplace continues to act like its back is against the wall, or at least it seems that way with some of the new ventures it is pursuing.

Korsten says the newest venture comes by way of a new species: Lyptus. He adds that Showplace is one of the first companies in the country to offer this environmentally friendly species. While Showplace had several different species to choose from, Lyptus was chosen because of its quick harvest time (about 15 years) and because it would take the business to a new level, Bour adds.

"You can tweak your offerings with new colors or new door styles, but you don't get as much punch as when you hit the right species," he says. "No one geographic area is better than another. It's popular straight across the board."

Introduced in the product line this July, Lyptus orders keep rolling in at Showplace. In fact, Korsten estimates that there has not been a day since its introduction that Lyptus has not been in production. It has become so popular that Bour predicts in just over a year it will be the No. 2 or 3 product line in the company's repertoire.

Another of the new ventures Showplace is undergoing is the integration of an Enterprise Resource Program (ERP).

The Frontier software system by Friedman Corp. will give the company a detailed report of output from a production standpoint, be able to key in orders for cabinets and to modify them. "Even as the cabinets changed by a fraction of an inch, we'll be able to produce them [quickly]. Showplace is in testing mode now, and about a year from full integration and production capabilities through the program," Korsten says.

If history - albeit a short one - is any indication, the recent moves should prove positive for Showplace, which is poised to continue growing.

"We like to believe that the challenges of growth we've seen are transparent to our customers," Korsten says. "They don't see any negative aspects to what we are doing to accommodate increased production. It's a lot of work. It takes a group of people that are committed to not only Showplace as a company, but also to making our growth transparent."

Ovation Cabinetry, a custom cabinet manufacturer, sits on 8.8 acres in Salina, KS. Salina is located in the dead center of Kansas, with no coastline in sight for about 1,000 miles east or west. With that said, it is even more impressive that Ovation's CEO Joe Lorentz spends a fair amount of his time selling cabinets to markets in New York, and recently, California.

The reach of the $10 million-a-year Ovation is just one sign of the success the company has found since Lorentz came on board in 1998. Lorentz has placed a strong emphasis on people. He has built a reliable production team in Salina, led by his brother Bill, and utilized the talents of seven different sales and marketing representatives across the country.

"Business, in my opinion, is about relationships," Lorentz says. "We want to work with people who are committed to doing a good job and growing with us. I have always been blessed to surround myself with good people."

The other main pieces to Ovation?s puzzle are the company's two managing partners. Both Dan Gooden and Brad Bassett have been with Ovation since nearly the beginning. Gooden typically focuses on working with customers to create CAD drawings for all of Ovation?s custom work. He and Lorentz are constantly in pursuit of ideas for new products that will set the company apart from the rest of the industry.

Bassett, on the other hand, handles materials purchasing and a lot of Ovation's customer service work. Lorentz says that Bassett also plays a key role in "maintaining the building and grounds in order to ensure a clean and pleasant environment for our employees, as well as maintaining our positive position in the community."

Along with the people Ovation has brought in, good business decisions, customized ordering software, a unique approach to inventory and practical equipment purchases have all been keys to the company's success over recent years. Success that has nearly doubled the company's sales since 2001, and kept Ovation in the Wood & Wood Products WOOD 100 for six of the past seven years.

What Ovation Does

When Lorentz joined the Ovation team seven years ago, he helped refocus and redesign the company's product, catalog and marketing and sales efforts. Today, Ovation sells its custom and catalog-ordered cabinetry to about 50 different kitchen and bath specialty companies.

Lorentz prides his company on many things, but perhaps most important is the flexibility of its product line. Ovation's catalog offers more than 140 different cabinet door options, nine standard species of wood and a host of different stain options. "Our catalog has a lot of options that are standard for us, but would be custom for someone else," Lorentz says.

Additionally, Ovation is a true custom shop that, Lorentz says, can meet most customer specifications and hold an eight- to 10-week delivery timeframe. "Every job has something that we create custom, outside of the options in the catalog," Lorentz says.

The flexibility of Ovation's line has helped secure its position in markets, that traditional wisdom would say, are far too competitive for a $10 million-a-year company located in the middle of the country. But 18 months ago, Lorentz made the leap outside the Midwest, first to the East Coast. Reluctant at first, Lorentz found a representative he felt comfortable with in the company's new Connecticut, New Jersey and New York markets. As a former cabinet company rep himself, Lorentz knows how important good representation can be.

Ovation's cabinets can be found in kitchen and bath speciality companies in the Midwest and on both coasts. Photo courtesy of Joe DeMaio.

So with good relationships in place, Lorentz and Ovation began shipping eastward in the summer of 2004. As he puts it, the cabinets don't know if they are being shipped 15 or 1,500 miles. Which is probably a good thing, because starting this fourth quarter, Ovation has begun breaking into Northern California markets, again after Lorentz became comfortable with a rep in that region.

"California obviously has a lot of people, so there's a lot of money, too," Lorentz says. "We chose to go to Northern California first because of the representation and what we could put together up there. So far, we're excited about the move and the response has been excellent."

The OPTS Software

Ovation created a computer software specifically designed to allow dealers, no matter where their location, to communicate orders to the factory via e-mail or fax. Lorentz says the Ovation Pricing Time Saver software (OPTS) allows dealers to order Ovation's pre-existing cabinet options by choosing either numeric descriptions or pictorials of each cabinet the company offers. Each order is tallied as a line item on the orders final list.

If a given job requires custom work, dealers will send in designs of what is desired and Ovation will create a CAD drawing, which is then approved by the customer to ensure that all of the details have been worked out. The custom work is then entered as its own line item, and the dealer can price the entire job from start to finish.

"The OPTS software, tied in with our product, is one of the things that really get people excited about Ovation," Lorentz says. "The comfort [in knowing] that dealers can order and price complicated custom kitchens with accuracy and ease is very important."

Ovation's representatives have been trained and are well versed in the OPTS software, Lorentz says, and they, in turn, help make the dealers feel more comfortable with the system. Once the software has e-mailed an order to Ovation, Lorentz says his company will clear up any remaining questions with customers, and send an acknowledgement back to the customer for signing. Once the customer signs off on the order, the clock on Ovation's production schedule begins ticking.

Just in Time

A walk through Ovation's manufacturing shop will leave you wondering: Who stole the inventory? While Lorentz does not like to mention the exact size of the Salina shop, it is clear that not much of the space is taken up by materials waiting for production. Instead, Lorentz has worked out special partnerships with vendors to allow for just-in-time manufacturing, and keep Ovation's inventory as minimal as possible. While these partnerships may bring a moderate rise in Ovation's material costs, Lorentz says it is a cost worth bearing.

	Custom is the name of the game for Ovation Cabinetry, that offers more than 140 cabinet door styles as standard, and can create custom-designed cabinets based on shop drawings. In addition, nine separate species of wood come standard as well. Photos at top and bottom courtesy of Joe DeMaio.

"Cost of materials is kind of an allusive thing. Our costs may be slightly higher, but is it high in comparison to space in a factory, which can be very expensive?" Lorentz asks. "If you have money sitting in inventory, that is capital that is tied up. We're trying to keep as little capital tied up as possible."

Lorentz says he has worked these partnerships out by simply sitting down with Ovation's vendors, making accurate projections and working out a game plan that allows his company to meet delivery times. While Ovation certainly needs to inventory some materials, the partnerships Lorentz has made with vendors have created an ideal situation in terms of the company's costs, space and schedule.

"The vendors we've been able to partner with are vendors that work with huge national companies, but they have bought into partnering with us, and not just in the short-term," Lorentz says. "They are looking at us in the long term and at the potential growth of Ovation, and they are supporting us and betting that we are going to be the company that we're striving to be."

Again, it seems clear that understanding people and relationships is Lorentz's forte.

Practical Equipment

Because of Ovation's custom business, the company still relies heavily on good craftsmanship. Lorentz's philosophy on equipment, he says, is to purchase it as needed, not as desired. But lately, that hands-on approach has been mixed with some needed new equipment and technology. For instance, Ovation just recently bought its first CNC machine to help create a tighter fit on its calibrated core plywood boxes.

"We're just getting our feet wet with it [the Komo VR 510 CNC], incorporating it into the business and maximizing the machine's capabilities along with our needs," Lorentz says. "But we're pleased with the investment, and we're excited about what it will bring us, as far as capabilities in the future."

Other investments in equipment have come along cautiously, just like Ovation's overall growth. It has been the small improvements and up-grades that have helped meet new demands and keep Ovation's production times where they need to be, says Gooden. Following this year's AWFS Vegas show, Ovation brought home a new Kreg pocket screw machine and TigerStop digital measuring device. Simple additions like these, Gooden says, make all the difference for a company like Ovation.

"It's been our philosophy since day one. When we buy equipment, we always buy new, good equipment, but without going overboard," Gooden says. "We're not getting entry-level machines, just good equipment that is easily maintained and fits our needs."

Just Good Business

For Lorentz, the business tends to trump the product. While products can come and go and change, a successful business, he says, is about getting specific systems in place to not only survive, but flourish in a given market. This philosophy has made its way into various aspects of Ovation's day-to-day operations, including outsourcing.

By utilizing outsourcing, Lorentz says Ovation has been able to maximize each of its employees' productivity. And although he does not like to discuss the specifics of Ovation's outsourcing, Lorentz says that the business practice has enabled his company to keep labor costs down, keep costs well-known, and keep each of his employees averaging more than $200,000 in production per year.

Showing more smart business sense, Lorentz has helped keep Ovation's growth at a steady, and non-frantic pace over the years. While plans are in place to expand Ovation's facility in 2007, in order to handle expected growth, Lorentz is always leery when taking on new accounts.

"I don't want to be fluctuating with ups and downs in manufacturing and delivery, and then all of the sudden we're out of control and our lead times get way out." Lorentz says.

The current facility, Lorentz says, is capable of producing more than $15 million of product annually, but the proposed expansion could allow the plant to handle growth doubling today's capacity.

In the meantime, Lorentz says he is happy to be having another good year. Since he became a part of Ovation seven years ago, Lorentz says the company's sales have basically jumped from $0 to $10 million. Not a bad increase. Next year, Lorentz looks for more of the same: 15 to 20 percent growth. Growth a small, and yet not-so-small company like Ovation can handle.

"Size of a company all depends on whose eyes you're looking through. We just set our standards high, pay attention to the small details and strive for excellence."