Richard Wilson of Craftsman Specialty Products, The Businessman with the Value-Added Plan
I had the privilege of interviewing Richard Wilson, Owner of Craftsman Specialty Products Inc. based in Delta, B.C. He overviewed critical business concepts that help inform his strategy and provided key insights on the type of discipline and versatility you need to be a world-class outsource supplier.
“The company was formed in 1976 to be an outsource supplier. I had partners at the time and we purchased the business in 1992 from the original founders because they were essentially at the end of their careers,” says Wilson.
“They had been a traditional wood products company in the 70s, 80s, and were retiring. They had not invested in technology and had not brought the company into the 90s, in that case. So we modernized, brought in CNCs in the early 90s, computerized beam saws, angular systems, and spent a lot of money getting the company ready to grow. We restructured in 2008, I became the sole owner, and I continued to invest in the business.
Our vision sort of in mandate to our customers has not changed from the original founders. When you look back at the history of the company, we’ve done a lot of different things for a variety of different markets, but one thing that is a common thread through everything is that we take wood-based panels to some form of value-added state.”
Value-added and Share of House
Richard Wilson explains that he is a firm believe in looking outside our industry for the best metrics and information due to how technologically advanced some are compared to the wood industry. “I’ve made a point through my career of always learning from other industries, whether it be our ERP system that we run comes from the metalwork job shop industry. At the time I chose it, it was light years ahead of anything that I saw in the wood industry. Now it’s a very entrenched ERP system in the wood industry called GlobalShop.”
“But the value-added metric that we use actually came from the printing industry. It was a business acquaintance who toured me through a shop and showed me his value-added metric that he posted and tied to their profit share program. It’s essentially that we could have very high sales with very low value-added, and that’s deceptive.
“A great example of this is if you take a truckload of OSB stair treads where we don’t own the wood, we’re just doing toll manufacturing. We produce a $30,000 wholesale price truckload, but our value added is only maybe $4,000 of that. So, versus doing a truckload of cabinet components where we own the wood, $30,000, and our value added is maybe five times that. But what we’ve done is we’ve climbed the value-added ladder over the last decade.
“It boils down to how much we show up here with our skills and our machinery base and our building and employees. And how much do we actually convert the materials we handle into some form of a higher state of value.
Wilson also uses a concept he has termed “share of house” as a guide for the company’s strategic direction. “Originally when a customer would come to us, and he’s maybe a developer or a builder who’s building a house, we would supply just the dovetail drawers in the house.” Wilson explains, “So, our share of house was, say, $1,500. Over time, we’ve introduced a custom cabinet program online. We’ve introduced cabinet doors. We’ve introduced closet organizers. And with each step, our share of house went from $1,500 to $8,000 to $12,000 to $20,000, maybe to $30,000 by supplying them what they needed when it came to case goods and wood products in general.”
Their Cabinet One web portal is a powerful tool that drives this house of share concept for Craftsman Specialty. “We sell only B2B, and so we become the outsourced supplier for cabinet makers, millwork companies, furniture companies, builders, renovators, even restoration companies. They show up to our website and they can buy what they want. If they want just dovetail drawers, or closet organizers, complete kitchens, they can buy that through Cabinet One. As well as commercial millwork, the portal can be used to buy case goods for, say, a dental office. Our configurator is custom and if they’re doing a commercial job, they may want Accuride slides versus an undermounted Blum slide. If they’re doing a residential, and they want to customize the edge banding or box material because it’s specified by an architect to be a Wilsonart laminated panel versus a melamine versus a plywood, they pick.”
The shop at Craftsman Specialty is highly versatile at just under 30,000 square feet. With around 40 employees between the shop and the office, the organization sports an average tenure of over 14 years.
At a high level, their machinery is split into three divisions run on separate P&Ls. Each division has a separate supervisor, all reporting to an operations manager. Extensive cross training ensures that the shop has the skilled labour it needs when a division is particularly busy.
Division one is essentially the cabinet one division, which includes dovetail drawers and all the products that can be bought through the web portal.
The second is the industrial division for large volume cutting and shaping. One ongoing program takes 4x12x1” OSB, cuts it to 11×7/8th, bullnoses one edge, and becomes a stair tread that goes into new construction by multiple truckloads a week.
The third division is called decorative and deals with more millwork, store fixtures, and a lot of the OEM business, such as RTA-type furniture parts for a unique type of furniture used in recording studios.
Engineering B2B Solutions
“One of our core competencies here is solving problems and engineering solutions. Our hallmark here is engineer once, rinse and repeat. The machinery just becomes the tool to do that. It’s more about the problem the customer has given us and how to solve it given the equipment base we have and the skill base we have in our people.
“For example, we had a recreational vehicle company come to us and say they’re having problems with the floors and their RVs taking too long and having the seams being a real problem when they telegraph through the vinyl floor. So, we engineered a CNC solution for them for their floors. But then we also put in a tongue and groove joinery where the panels met each other. Now suddenly, they have a joint that is similar to what you’d find in a home using underlayment rather than just your old plywood picked up at the local building supply store. They’ve since gone on and become a big customer for us.”
Wilson explains, “Materials are often a significant part of whatever the solution is. We have a very strong team here that has years of woodworking experience. Myself, I’m a businessperson. I don’t use power tools, but I have a wealth of knowledge on process, materials, and on how business to business relationships should work.”
Solutions Begin in the Office
“A big, big part of what we do, what makes us different is that when people bring needs to us, we put them through sort of a track” says Wilson, “A key part of this is looking at what we’re about to embark on and asking, ‘where are the pitfalls?’, knowing those pitfalls before and dealing with them as a form of discipline so that you don’t have relationship-busting events because you forgot to ask or sign off on a drawing or you assumed, that they knew it was 15mm, not 5/8ths or what have you.
“It would be so easy to not use a drawing, not have sign offs. You know, it’s just cutting plywood and putting a groove in it. Why do you need to go to that extent? Well, you need to go to that extent because there’s 13,000 sheets at stake and immediately questions start coming up. Something as simple as which side does the groove go on? If you don’t ask those questions in the form of a drawing and get a sign off, you end up dealing with it as a site problem and a lot of faulty products. So we know how to onboard programs, we know the questions to ask and, we understand those things are a necessary discipline.”
Having concepts and language to describe the process of adding value to materials, or consideration of what your offerings are in the larger context of your market sector, such as share of house, along with being aware of the discipline required when onboarding new clients and programs are all a part of smartly directing your business. We at Wood Industry thank Richard Wilson of Craftsman Specialty Projects for sharing his expertise and look forward to hearing more from him.
Tyler Holt is the Editor of Wood Industry / Le monde du bois magazine. He has a master’s degree in literature and publication, and years of experience in the publishing and digital media industry. His main area of study is the effect of digital technologies on industrial and networked production.