The Value of Investing in Your Team and Technology with Frontier Building Supply
Participants:
Francesca Halberg – General Manager/CPO of New Media Retailer
Kelly Fox – President of Frontier Building Supply
Video Transcript
Francesca (00:02):
Perfect. Hello everyone. My name is Francesca. Thank you so much for joining me for the New Media Retailer Podcast. Super excited to be joined today by Kelly with Frontier Building Supply. Kelly, thanks so much for joining us today.
Kelly (00:15):
Thank you for having me.
Francesca (00:16):
Yeah, of course. Why don’t we kick it off? You tell me a little bit about yourself, your history with the company, and then a little bit about the company overall.
About Frontier Building Supply
Kelly (00:23):
Okay. Well, my name is Kelly Fox. I’ve been in the industry – gosh, talking with my wife about this the other day – 20 years.
Wow.
21 years, I worked mostly for independent lumber yards all around the Pacific Northwest. It started with a big regional chain and then kind of went off on my own for a little while and worked with ESOP. And now here at Frontier. And I’ve been with Frontier since June of 2019. I currently operate as the president of Frontier Building Supply and then our sister company Builders Alliance up in Bellingham. And we’re all shared ownership or Kodiak Building Partners would be our corporate owner.
Francesca (01:10):
Okay. Yeah. Tell us a little bit about the history of Frontier Building Supply as a whole.
Kelly (01:16):
So Frontier Building Supply was started in 1975 by Mike and Terry Johnson. It originally started as a log yard here in Anacortes and then it kind of morphed into the lumber yards. And so, I mean, from one end to the other, the logs coming out of the forest all the way to the retail end of it, they were involved in it with the exception of actually milling the wood. At least, near as I can tell, the log yard was given up quite a while back, and now we operate retail lumber yards in the Pacific Northwest or more specifically north of Seattle in the San Juan island and Skagit counties. It’s predominantly island markets. I mean, we’re surrounded by water. Saw the sunrise coming over the water over the mountains. It’s a pretty cool place to be.
Francesca (02:07):
<Laugh> Oh, I imagine that’s amazing. Now, what is your prominent customer base? Are you guys more contractor? Are you more homeowner?
Kelly (02:15):
We are 80% pro. Maybe even a little higher than 80%. During the summer months that’ll fluctuate some, as we do we focus on the retail, but very specific projects. We’re not into carrying all the different widgets or some of the home center type stuff. We focus a lot on the DIY deck building projects you know, somebody building a shed or doing their own reroof or whatever might be. Our retail is very project driven. That’s probably the best way to say it.
Francesca (02:49):
Got it. No, that makes total sense. Talk to me about maybe some new things. I mean, I know it’s only January 10th, but new things towards the end of last year or new things you guys are considering for this year?
Use relationships and communication to keep inventory coming
Kelly (03:04):
I’m trying new things. We’re continuing to look for more – especially in the supply chain issues that we all are living through – we’re looking for more partners or have aligned ourselves with more partners that help protect our supply chain, whether that be domestic producers or products that don’t seem to have the constraints that others do. Or when things get on curtailment, we use our relationships to make sure that we’re buying as much as we can. We’ve taken inventory positions that still – my heart’s beating outta my chest even talking about it, you know – are thinking about how much we’ve invested in inventory over this last year and continue to do so into this year with lumber prices going the way they are. It’s about having supply first. And that’s kind of the message we’ve communicated to our customers and to our employees is that job one is to help our builders build it. We’re not gonna be able to do that if we don’t have wood on the ground or we don’t have the siding or the parts and pieces coming in, whether it be the gun nails, you name it. If we don’t have it, they’re not building, or they’re gonna have to find it at a competitor, and I’m just not comfortable with that.
Francesca (04:13):
Absolutely. Talk to me a little bit about that communication process. I mean, even coming up with messaging like that obviously is somewhat advanced and takes some planning to do so, but then getting that message out is second. How have you been able to stay in communication with various contractors and builders to make sure that they’re then able to communicate to their customer at the end?
Kelly (04:34):
It does. So we started, I guess it was, it was last year, maybe it was 2220, it’s all run together at this point. <Laugh> Exactly it blends. But the idea was that just through email communication and then we have at every one of our lumber yards, we have counter mats when we have important messages to get out to the customer base, that’s where we put those messages. So they see in front and center and it’s not just the owner of the business that sees the message that way, it’s the guy that’s working for them or the gal that’s working for them in the field. They’ll understand that, “Oh, wait a minute. This is what’s going on in the supply chain. This is the lead time right now on composite decking.
Kelly (05:15):
This is lead time on windows or whatever it might be.” And by putting all that stuff together or getting those messages out, we’re staying in front of it. One of the hardest things that no one wants to talk about right now is pricing. It’s high. You know, everybody feels like inflation’s just killing us, however it is, or killing the construction process. And so with that, we’re trying to communicate as much as we can as early as we can about the price changes. And then at the same time. It’s not that we don’t have a heart for it, but we’re also unapologetic in the sense that the market’s going up. We have to follow that up. You know, we can’t just be stuck on what we paid for it, or stuck on you know, the future value. We’re really trying to stay fair, stay reasonable within the market, knowing that it protects the upside and it protects the downside because you know, this market and everyone we’ve ever seen that’s gone up has ended in a downturn.
Kelly (06:11):
This will be no different. We don’t know when that is. If we did, we might, well, we would’ve bought a lot of material a long time ago and put a lot of money into the profit column. But that said, you know, we don’t have the crystal ball. And so we’re trying to protect our, our business, you know, first and foremost, we’re protecting it for the employees and then our customers. We wanna make sure we’re a viable employer for a good long time and taking really good care of the people that take care of us. And so to do that, we have to protect price.
Francesca (06:38):
Yeah, absolutely. Oh, I’m sorry. Go ahead.
Kelly (06:42):
Oh, no. I was just gonna say, and we have to communicate those changes or that need to our customer base. And I think by putting the employees front and center up, our customers rely on those employees. And so by putting our employees first, customers see that and understand it. They may not always like that price, but they understand why we do it.
Francesca (06:58):
Right. Absolutely. And there is so much value in transparency. I mean, it is what it is at this point. You know, this situation is out of everybody’s hand, but being transparent, being easy, open and honest with communication and having a philosophy of putting your employees first. I mean, I can’t imagine setting yourself up for success in a better way. It’s something everyone’s facing and you know, that the customer service approach, no matter which way you look at it, is what sets the independents apart from the big box store. So I, I really can imagine setting yourself up for success in a better way.
The focus on quality employees for business success
Kelly (07:32):
We’ve communicated with all of our employees. And this year was an interesting year coming into 2022. Finishing 2021 – you know the great resignation, all of that stuff – we haven’t seen the employee turnover outside of the retirements that we knew were coming, but we elected to take care of our people first. Our employees were always front and center, and the decisions we made were about employees. And so this year, you know, we’ve raised wages far beyond any spectrum, any scale that I’ve ever seen in my working career, but it was to make sure that we were retaining the best people, and the good people that we’ve got. I just didn’t wanna see them walk because they were burned out. Well, we’re all facing the burnout and that’s not going away, but we can still take care of them for the work that they do.
Kelly (08:19):
And so we’ve done that and I feel really, really good about where we’re going into 2022 and beyond just because we have invested so much in our people. One of the things, you know, the industry shift, I talked about retirements in 2021, we made a huge investment into technology for our office here, or the office that I sit in, to put in a full on training center, complete with the video conference. The total digital workspace, where our employees, no matter what lumber yard they’re at, can remote in and be part of a training that we conduct, or we have facilitated right here. And if we have employees that are comfortable or ready to come into the office, we can have one on ones in the office here and share it all on a big screen and walk them through any business process we have. And so with those retirements, we’re building a pipeline behind them. And the only way that’s happening is through training.
Francesca (09:11):
Yeah, absolutely. That’s so well said, and obviously the great resignation is a, but b, I have a lot of businesses that are facing a lot of employees that are retiring and all of that institutional knowledge that sits with those people is sometimes irreplaceable, but investing in training absolutely is step one. To get that information out of just one or two people, and then spread it to the masses, to, you know, the rest of the team that sits there. So that’s, that’s super, super smart.
Kelly (09:43):
I was just gonna say one of the other things we did is we surveyed all of our employees to ask what was important, and for our employees that were getting close to retirement, flexibility was a big thing. And so these employees that are retired and what we found out is they don’t wanna just go cold turkey. They don’t wanna just be done today and off into the sunset. They would really like to transition into retirement. And so we figured out a way. Our HR manager, Laura, is absolutely fantastic, and helped us craft a schedule along with our managers to say, “Oh, you only wanna work 30 hours a week. Wanna work two days at this yard and two days at that yard? Great, we’re gonna make that happen for you.” And however we needed to transition the schedules, we’re allowing these people that wanna retire – our employees that wanna retire – to work a very flexible schedule. That gets us two more years, potentially with some of these employees and helps transition that knowledge out in a way that’s pretty low stress for the employee that’s retiring and pretty low stress for the employee learning behind them. It is an investment in the payroll, but it is so fun to see that connection in the business.
Francesca (10:47):
That’s really cool. You guys, clearly, without you even saying the word culture, have an amazing culture there, it sounds like. What are some words you would use to describe its culture and, you know, it’s not often I talk to a lumber yard that is so passionate about culture. So maybe along with that, you could talk a little bit about how that became so important.
Kelly (11:10):
Growing up in this industry, the first people I worked for, culture was the biggest part of it. And then you just my own upbringing you know, my mom managed businesses that always dealt in culture, you know, I mean, she ran a fast food franchise, and through the fast food franchise, she had zero turnover at a fast food restaurant for two years. And talking with her about it, somewhere along the way, it was just take care of the people, take care of the people, take care of the people, and the rest of it’ll take care of itself. At one point she had the highest performing Kentucky Fried Chicken franchise on the west coast. You know, I mean, it’s through no turnover. I mean, it’s those kind of crazy things like whatever, I don’t pay much mind to it as a kid, but as you kind of grow up, you start to just realize that that was important.
Kelly (12:01):
Well, whether it be in my past life or other companies I’ve worked at, or to now at Frontier, putting our people front and center is so critical to success in everything we do, you know. You asked about the culture at Frontier. I don’t know what it is other than we just take care of each other. You know, it’s every, you know, man, woman, other that works here, that’s really not afraid to step up and help those that are around them. We aren’t afraid of hard conversations. We’re not afraid of easy conversations, but we just communicate a lot. You said transparency earlier. I mean, that is through and through who we are. You wanna know where we stand, the cards are always on the table. There’s not a question an employee could ask about our business that we wouldn’t answer for them. We feel like if we make them business partners and teach them about the dollars and cents of our business, they begin to understand our business, the deeper level, and now start to make decisions to become more and more profitable. And so it’s a win for both of us.
Francesca (12:59):
Absolutely. I grew up and my parents own a small pizzeria restaurant and you don’t understand the value of working in a restaurant and, and how much value there is in that like real time customer service until you sort of have an opportunity to look back and reflect on that. I certainly agree, you know, putting, putting people first is so important. I’ve always kind of had the philosophy, like most people in this world do have to work and so let’s make it a place people want to come instead of have to come. There’s fun that can go along with that, but it’s also a little bit of a mix of good times, bad times, but, you know, if you’re all in it together and invested in one journey, it always pays off.
Kelly (13:44):
Absolutely. Right.
Francesca (13:46):
<Laugh> We touched on some of these things. Obviously supply is probably gonna be one of the first things that you would say, but what are some of the biggest threats that you see to independent lumber yards at this point?
Threats to independent lumber yards
Kelly (14:00):
I think consolidation is one of those things that is a little scary, but I don’t know that it’s a big threat. I think there’s still a place for independence. You know, you look at, you know, the BFS mergers, Kodiaks, and constant acquisition status, you know, USLBM, you name it. Another thing that they have over the independents is the independents are fiercely incredibly flexible. They can adapt to a market sometimes a lot faster than the big companies can. And so the threat is the big companies gobble up market share, but at the same time when a new entrant happens or a new way of doing business, a new product, those independents have that ability to respond in a way or adapt that they aren’t going through seven layers of corporation to get there. That local decision making is really tough to replace, and so I look at that as a strength, probably more than anything else is that flexibility, but the threat comes from you know, the potential loss of market share due to the bigger competitors, better pricing, whatever it is that they bring to the table.
Francesca (15:11):
Got it. That makes total sense. You had touched on technology before when talking about training, but, technology, I would say, is with the conversations I’ve had with other lumber yards, and you can agree or disagree, technology has definitely played probably the biggest role in the way things were maybe done even as early as 20 years ago to today. I know you had mentioned introducing some new technology as it relates to training. Are there other technologies that you guys are really relying on at this point? And is there anything you would add there that you would like to elaborate on? Okay.
Be unafraid to try new technologies
Kelly (15:46):
Yeah. Technology is another huge part of our business. And, you know, we talked about the retirements, but let’s talk about the next generation coming in. They’re bringing technology with them, whether we, as lumberyard people, are comfortable with it or not. They’re bringing technology with them. And so we look now in our computer system, biz track, which I’m sure, you know, half the audience that’s solid lumber is probably on biz track. It seems to be everyone is, but there’s tools in it that have allowed us to be better. Well, those are tools that are brought to us by some of the younger generation. Why can’t the system do this? You know, they’re asking questions that maybe we never thought to ask and finding out that, oh, yeah, that really does exist if we’re willing. Then the other thing too, is we’re constantly looking at outside technology.
Kelly (16:32):
There’s guys from within the industry, gals from the industry, that step out and say, “You know what, this could be done better. Here’s a process.” And so they go invent an app or invent a technology. Sometimes they’re home runs, sometimes they’re, “Yeah, it’s a novel idea, but it didn’t quite make the mark.” And so we’re unafraid of looking at that technology to say, “Can that make us better?” We’re in one right now that we’re looking at, that fundamentally changes the way we buy lumber by looking at demand planning. And so future forecasting, as opposed to, “Oh, I need to buy seven units because I bought seven units last time and that’s how many fit in the rack.” Well, based on what we’re actually selling based, you know, the purchase history, the cadence of the whole thing, by looking at demand, planning and the inventory management around it, all of a sudden we realized that, you know what, I’m spending a lot of money on inventory that sits there because I can fit seven in the rack when realistically I should get three and replenish it faster because that’s the margin opportunity, you know, or that’s the better opportunity.
Kelly (17:29):
And so technology is bringing us into patterns, into purchasing like that. They’re different thoughts about the way we look at working capital or inventory altogether. So it’s a pretty exciting time in the industry. I think it’s a little scary, but it’s very exciting.
Francesca (17:44):
Yeah, absolutely. Do you feel like you’re getting more of those questions, or like proactive types of questions from your customer base or from more of your employee base?
Kelly (17:54):
It’s a combination of both. The employees are looking for ways to do the job easier. You know, I remember a boss years ago told me if you want the best way to do something, find the laziest person and ask them how, just because they’re gonna find the easiest way to do the job, you know? And there is some wisdom in that and, you know, maybe we don’t always want lazy people, but really they, they can bring out a lot. But then we have customers that are asking for us to improve the way we do deliveries, improve communication tools, whether it be text messaging to the job site, you know, or to the leads when they’re coming out through the system or them texting in orders, e-Business you name it. You know, it’s all a constant evolution right now for lumber yards to get better. And it happens on both sides. One is business process. One is customer facing. And I think as an industry, we just have to be willing to adapt to that customer demand or what that customer is asking us.
Francesca (18:56):
Yeah, absolutely. Do you feel like communication expectations, because things are happening so fast, online, have changed as well? Like is there an expectation that things are happening more in real time, whereas maybe previously it was expected that you would have like a few day turnaround or a week turnaround?
Adapt with customers demands
Kelly (19:15):
Yeah. So technology, communication, Google – you know, the Google reviews, the Google comments that come in – I personally manage all the Google comments for us, you know? So if somebody sends information or a request for information pricing, whatever, through Google, I handle all that. Well, it used to be that if I got to it within the same day, it was okay, but now if I’m not in it within 15 minutes, I’ve lost that connection, you know, lost that opportunity. And so it’s a night and day thing. And fortunately, most of our customers run in our same time zone and tend to sleep at the same time I sleep. So I don’t need to respond in the middle of the night, but I still have to respond right away. And that has totally changed, you know, when we get web. So through our website you know, we get web inquiries on decking on general lumber and lots of different things. I have to forward those off or get those off to the managers or to people that can make those responses, but the expectation is that we respond within the hour. It’s gotta be instant communication. That’s the expectation in them.
Francesca (20:21):
Yeah. Yeah. That’s been a really interesting shift and I would say one, that’s pretty universal to all of the industries that we work in. I don’t know, you know, necessarily like where it started. I know a few years ago, Facebook started like applying the badge to the pages that were responding to messages really quickly, and that was a mark of customer service success. I mean, certainly that could have played a role in it. I do think social media certainly allowing for more real time interaction has definitely applied some pressure as well, but that is certainly a demand on small businesses and independent retailers to keep up with that. And if you are responding to the Google reviews, you know, it’s almost a full time job in and of itself.
Kelly (21:03):
Yeah. It’s not just reviews. I mean, you have to be on reviews. You have to be on the comments. You have to be on the questions, you know, any which way they’re responding or reaching out to you, I feel like, and we have to be on that right away. The cadence has to be immediate. You know, we’re fortunate to have a team that manages most of the social media for us, with our corporate parent and Kodiak. And so with that, they handle a lot of that stuff, but even then it’s just a couple people and they manage a lot of it. And so I still own the Google stuff, because to me it’s so important that we respond, and yeah, social needs the same response too.
Francesca (21:39):
Yeah, it definitely does. It definitely does. And all of those things, you know, they’re demanding, but obviously, so, so, so valuable to get to or respond back to customers in real time. What kinds of things are you most looking forward to this year, and what, like, role, I guess, does COVID still play in that? Are there things that are holding you back that you’d like to try out for this year that COVID maybe is not allowing you to do right now?
COVID helped the business to grow and learn
Kelly (22:05):
You know, COVID is what it is at this point. You know, we’ve all learned to adapt and just respond however we need to, and as mandates change, as, you know, at least in the state of Washington, whether it be masks or whatever we’re just gonna roll with those punches anymore. It’s so beyond the control of anything we can deal in, all we have to do is keep a good workplace and a safe and healthy workplace for our employees and follow guidelines. And so that’s what we’re gonna do. But outside of that, I think we’re just gonna continue to evolve and continue to look for the opportunity to improve, whether it be incrementally or big improvements, if those opportunities present themselves. I think we wanna take everything that we – you know, one of my fears is that we learned so many valuable less in 2020 and 2021 about our business that, you know, we had a very successful year and through that success – that all of a sudden we quit learning or, or we don’t apply the things that we learned into the future.
Kelly (23:01):
And so now it’s a matter of just taking that stuff and don’t leave it in a book on a shelf, but actually apply it to the business and continue those things going forward. And so for me, into 2022, I’m really looking forward to the time with our managers, our leadership team here locally, about taking all of those lessons and the things that we did that worked well for us and applying those things to the future and saying, “Hey, you know, we don’t have to go back to the way we did it. Right. We learned that we can do it this way too.:
Francesca (23:27):
Are you comfortable sharing maybe one or two of the lessons that you feel you learned over the past year or two?
Kelly (23:33):
Yeah. I think some of the biggest lessons are through the hard times we’ve always had a people first strategy, but there were times where we made decisions that weren’t necessarily people first, you know, that things dictated to us or the way they came to us. Like, “Oh boy, I, I could have done something different there.: And so where we learned, especially early on in the COVID stuff, you know, we had to do some furloughs because the government in our region shut down building. In hindsight, we probably could have done that a little differently. We could’ve been better there, and so having our employees that were willing to stand up and say, you know, “That’s not an employee first choice.” Our leadership team, anyway, was not afraid of saying those things. And now going forward our leadership team, if we make a decision, I make a decision,
Kelly (24:21):
I say, you know, “I think we need to rethink that because that’s not employee driven. That’s not the values that we have.” It’s helping me go back and adjust and not being afraid to pivot on a decision. You know, I can make a decision today, but if I find out it was the wrong one, I’m not afraid to go back and change that decision. One big thing we learned in the 2021 is that we didn’t need to have trucks at every delivery yard. What we needed to do is be really efficient about getting to the job site. So now out of our eight locations, only four have trucks, the other four just work as satellite sales offices and their deliveries funnel out of other yards. Well as they funnel out of that yard based on geography, based on whatever the dispatch determines is the right location to deliver that, all of a sudden our delivery capacity increased by an awful lot, because we didn’t have so much dead time going back and forth between facilities, or we didn’t have trucks driving by each other on the highway.
Kelly (25:23):
I mean, that just absolutely floors me to see one truck going out full and another truck coming back empty past the same space. So it’s those kind of things where we’ve applied learning, we’ve gotten better at it, and continue to look to improve that.
Francesca (25:38):
Absolutely. Two things. One about your first, the other about your second thing that you commented on. One, I do think it’s super admirable how much of a people first mentality you have. It definitely sounds like you guys have a great organization and one that your employees and other managers are super lucky to be a part of, so I definitely wanna say that I don’t want that to go <laugh>. But a second too, I do agree with you saying that, you know, I think COVID because it did allow for some downtime in every industry, although the times may have shifted, I do think it gave everybody an opportunity to say, “If I was to start over completely fresh today, how would I do something?” And that is such a valuable position to be in, and a question that I think historically has made a lot of people uncomfortable. But I do think that if you’re looking for a benefit with COVID, it is that it forced you to have those really uncomfortable, hard conversations, but to come out with such efficient processes, and that is awesome.
Kelly (26:43):
Yeah, we learned so much in COVID for whatever it is. I mean, it was a huge learning opportunity and you’re right, we hit the great reset button. We’re coming out of this with essentially when things shut down with zero sales or sales that were tiny, but all of a sudden it boomed, and okay, if it boomed like that, great, what did we learn and how are we gonna do this coming back through the process? I mean, it certainly turned on, but as it turned on in our business instages, as we opened up, it really allowed us to look at it with a whole new lens to say, “Huh? No, let’s route that here, let’s do this a little different.” And all of a sudden in the end, it was those lessons learned that you just apply that through the rest of the business now that we’re back and fully operational, and let’s see if we can’t save expense and well, lo and behold, we certainly did.
Francesca (27:34):
Yep. That’s awesome. I just have one more question for you, and that’s if someone was looking to just get started in the industry today, whether it be just stepping into a working for a lumber yard or potentially maybe starting their own lumber yard, what piece of advice would you have for someone looking to get involved in the industry in some capacity?
The lumber industry offers a lot of opportunity
Kelly (27:57):
I would say, just do it. Through this industry, I think a lot of people don’t realize that there is such a wide range of jobs, you know? I started in this industry pushing broom, and then worked in the yard, built loads, managed sales, all of that. But then you get onto the IT piece that now fits in. We have purchasing, we’ve got outside sales, we’ve got driving positions, you know, inventory management, you name it. If it’s in another big business, it’s likely in the lumber business too. And so you don’t have to have this path where, “Oh, you know, I’m just gonna have lumber over my shoulder,” or, you know, “I’m gonna be smelling sawdust or sell lumber forever.” No way. I know a lot of people that make very comfortable livings in the lumber industry in non-traditional jobs within the industry.
Kelly (28:42):
And so jump in. There is a place for everyone in the business. Every company is gonna face these needs no different than Frontier Builders, Kodiak, doesn’t matter, I mean BFS, how much do they just invest in a technology company up north? You know, so technology, all the parts are here. I think just get started. It’s a fun industry. And once it gets in your blood, you know, we joke about this sawdust getting in your blood and it never coming out. It’s one of those things that we love it. I couldn’t imagine doing anything else. If somebody wanted to start their own company, awesome. Awesome. Do it, you know, find a niche, find something that really matters that that touches a chord for you, whether it be, you know, environmental sustainability, whether it be, you know, a green message with building products or just that you have a different service proposition that you think means a lot to a customer. I remember talking with a millwork supplier years ago that started their business basically just packaging the materials in ways that have made it really super easy on the job site, and it turned into a pretty significant business. So there is all kinds of opportunity in this industry, and when you find that and just exploit it. <Affirmative>
Francesca (30:01):
Awesome. Awesome. Super well said, and I think this conversation is one a lot of businesses will definitely benefit from. I thank you so much for your time today, and thank you so much for sharing your perspective about people, about culture, about technology. I’m super grateful. All right.
Kelly (30:18):
Thank you, Francesca.
Francesca (30:19):
Thank you so much. Have a great afternoon. You too. Take care. Thanks. Bye.