Vendor Case Study Testimonial

How Outdoor Living Today turned scrap lumber into a booming business

June 20, 2017
The C2FO Team

Company founder Greg Bailey cultivates success through better management of resources, relationships, and growth.

Just out of high school, Greg Bailey started work in the sawmills of Canada’s Fraiser River area. From day one Bailey had a different way of looking at things, starting with the wood in front of him.

“Right off the block,” Bailey says, “I was a little bit shocked at how the mills looked at wood and how much waste there was, and it was a little bit of a head-scratcher. I didn’t understand the pragmatic side of the business that ‘you can’t use this lumber because it would cost you too much.'”

Bailey refused to accept that 20 percent of “byproduct” is destined for chips and sawdust or pulp for paper. “I was always driven by the idea of ‘why can’t you commercially use more of that lumber?’ That’s how my path started. I was asking a lot of questions and probably annoying a lot of people. Eventually, I moved up through the chain and into management and probably asked too many questions and tried too many programs to try and use more of that wood. Eventually, I ended up starting my company with that thought in mind,” he says.

He also started with that 20 percent of scrap lumber.

A company built by using resources better and smarter

Bailey designed backyard kits using those scraps with the goal of making finished projects that are strong, easy to assemble, and beautiful. Thirteen years, and a lot of late nights later, Bailey has designed 50 DIY backyard kits. Projects include raised beds, gazebos, and outdoor sheds that look so nice you could live in them. Not surprisingly, Bailey is designing a new kit for a tiny house.

“It’s a little cottage that you can assemble at your site. You can get it out there; you can assemble it, you don’t need to bring in a backhoe or all the big heavy equipment. It will be portable and easy to ship it. But once you put it up, it’s there and structurally sound, and it looks great,” Bailey says.

Outdoor Living Today uses Western Red Cedar, one of the most sustainable building materials, in all their products. The company is PEFC Chain of Custody certified to ensure that all the wood used comes from certified and sustainably managed sources.

PEFC certification means that OLT will not source:

  • Illegally harvested wood
  • Wood harvested in violation of traditional or civil rights
  • Wood harvested in forests where high conservation values are threatened by management activities
  • Wood harvested in forest being converted to plantations or non-forest use
  • Wood from forests in which genetically modified trees are planted
  • Wood fiber from any international trade in endangered species of wild Fauna and Flora

Typically, an efficient lumber mill extracts approximately 50 percent of the log into saleable lumber, Bailey notes. Because OLT utilizes so many smaller pieces that would otherwise be chipped and turned into waste, he explains, they extract an additional 20 percent from each log.

“We have something like 5000 SKUs in our plant. All are different sizes of wood that we have to maintain to make our 50 backyard kits,” he says. “They range from little three-inch pieces all the way up to 14-foot pieces. But we have so many different little pieces that when we get a piece of wood, we can chop so many components out of it that there’s very little going into the chipper or out to the landfill.”

“One great example is our cedar joists and floor runners we use in our sheds. Since those parts are not visible under the floor, we use structurally sound but visibly not pretty pieces. They may have some marks or scratches on them and could be rough-cut, but are functional in all our sheds. Otherwise, those pieces would end up in the landfill, and newly harvested wood would have to be used,” he says.

“Reducing your environmental footprint by 20 percent is massive, and it’s something we believe our customers value,” says Bailey. “I believe it is our responsibility to conserve the precious resources we have and it is my way to make and impactful and meaningful contribution to this cause.”

Better use of resources for the environment, and a better environment for employees

Outdoor Living Today’s commitment to fair practices means more than responsible materials sourcing and reducing waste. To Bailey, reducing worker injuries is just as imperative.

“Our company has spent so much effort and dollars on making sure that our workers are safe and that’s probably our number one thing that we do better than anyone else in our industry and the forestry industry,” he says.

OLT voluntarily holds itself to safety standards that are two levels above Canada’s requirements. At the time of this article, OLT had 1200 days without an accident in their specialty plant and 1000 days without any accident in their shake and shingle manufacturing.

Their commitment to doing the right thing paid off.

“When Martin from Costco came out, I think he keyed onto our practices and liked that we were concentrating so much on those areas. He said ‘I want to do business with you in particular. I like you. I like what you do,'” says Bailey.

OLT succeeds by building better products — and better relationships

Bailey describes Costco’s team as “amazing people.” He notes, respectfully, that a company must have a great product to work with the retailer.

“Costco is probably the best vehicle to have your product in the United States bar none. But it’s not for everyone,” he says.

“Costco wants to have better prices, and their return policy is so liberal,” Bailey remarks. “You must have a really good product you believe in. You have to follow that up with pricing that makes sense. Or, there’s no point putting it in Costco,” he remarks.

He advises other suppliers to carefully analyze their cost and the return percentage they are likely to incur no matter which retail partner they have.

One thing that differentiates Costco from other retailers is their customers, explains Bailey. When it comes to customer service, OLT and Costco share common values.

“We do interact a lot with Costco members because we’re the kind of company that believes in old-fashioned customer service on our products,” Bailey explains.

“The products range anywhere from $500 all the way up to $8,000 or $10,000. For a member to pay for some of the kits is very expensive. We talk to every single customer before we ship their product and have a product knowledge session,” he says.

“Last year we shipped 7,000 kits. That’s a lot of phone calls.”

The personal touch also saves time and cost. Each year, the OLT team prevents 50-to-100 kits from being shipped out and returned when customers don’t understand the assembly involved. There is a huge savings in time and energy on returns especially for larger kits like sheds and pergolas.

“We figure we can spend that energy on educating customers upfront and what they need to do and how to do it. We find it works out way better,” Bailey says.

OLT goes extra lengths in reducing customer calls, not just making them. This effort includes creating clear kit instructions and YouTube videos that show step-by-step assembly for each of their kits. However, should a customer have issues with assembly, an OLT team member will pick up the phone. Even on weekends.

“If they do call us, they are going to find someone who is happy to talk to them. We have weekend customer assistance for assembly because we know that most of our kits are put together on the weekend,” Bailey says. “It’s a challenge, but we feel that if someone has a question they need to be able to pick up the phone and talk to a human being,” he says.

“We want to build a rapport with them no matter if they buy a $500 kit or a $5000 kit. We want them to have a great experience. And it’s important for them; we feel that’s part of our business plan.”

OLT makes success sustainable by managing growth

OLT not only gets 20 percent more from each log, but their business plan also focuses on making the most of each existing retailer relationship, too.

“We’re really proud that with Costco our RMA, the return merchandise rate, is one of the lowest that they have right now for our category. We’re going to continue to do good business that doesn’t cause grief for everybody. That seems to be the direction that we’re going down now,” Bailey says.

“We know all the buyers, and they know us and like what we are doing. That’s probably the reason we’re growing the way we are,” he says.

OLT’s business plan also includes continual improvements to their existing product base and keeping an eye on the new direction for the market, such as the tiny house trend. For a business that relies on natural resources, this also means understanding a changing environment and protecting their supply chain relationships.

Solving seasonal challenges with marketing and market expansion

Managing 20 percent growth is a challenge for any business, let alone a seasonal one. Bailey says that OLT works to build enough components during their “shoulder” season when sales are lower, October through February. Of the 7000 kits OLT sells per year, 4000 of those ship in three months; April, May, and June.

“We have to finance all that wood and materials to run a plant like this, then store it in a climate-controlled warehouse, so it doesn’t get damaged by the environment. There’s plenty of planning and financing involved when you are making as many kits as we are,” Bailey says of their shoulder season.

In many ways, a shoulder season is both a blessing and a burden.

“The good — and bad problem — that we’re having is that our business has grown so much over the last five years that we are beginning not to have a shoulder season. I’d say that when we first started five years ago, we would have five or six decent months of selling products. But then there were a couple of months where we would have downtime, and didn’t have as many people working,” he says.

“But now we’re working twelve months out of the year, and sales are strong 10-11 months of the year. We do not have the time we used to have to get organized. To make sure we’re doing it better. To make sure we’re getting enough components on the ground. It gets to be a bit of a challenge,” Bailey says.

The challenge is one that Bailey and the OLT team created with their success. The company expanded their product set and leveraged targeted marketing by geographic region to increase sales in warmer climates during their slow months. They also expanded their market not just to southern regions, but the southern hemisphere. New Zealand and Australia conveniently have summer during our winter months.

The result? No more shoulder season, and twenty percent growth.

Despite growth and challenges, OLT stays committed to purpose, not just profit

Sometimes, with success and growth, businesses can be tempted to cut corners and maximize profits while there is an opportunity. OLT has resisted that pull and stayed true to its commitment to the environment and their employees.

“I think that if you’re going to get into this business, the first thing is, it’s more of a long-term process. It kind of goes against businesses that only have profit as a reason for existing. It’s more existential than that,” Bailey explains.

For those convictions to stay in place, he adds, a business must invest in doing things the right way, which is not always the easy way. These values must be shared by everyone — including customers.

“You must have a good message that you can get out there. A message that’s not fake, it’s not disingenuous. It’s true and authentic,” Bailey says.

“You have to have that culture, and it starts from the top. You have to make sure that everyone is on board and understands why we are doing this. It’s got to be good, and it’s got to be real, it’s not always just about how much profit you can make — there’s more to it although that’s super important — if you are not making money, you’re not going to be around,” Bailey says.

“I believe taking the sustainability road creates longevity and strength in your brand and ultimately will create the success you’re looking for however you must be in it for the long-term,” Bailey says.

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