Turnaround plan: How one company did it | BDC.ca
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Superior Cabinets: A strong comeback


Scott Hodson, Superior Cabinets

Putting a new kitchen into your house is one of the most expensive and stressful experiences in the life of a homeowner. But what if you could work with a professional designer, load your design into a computer and see what your new kitchen would look like on a two-metre-high screen? What if you could virtually change the counters, cabinets and other features until you were completely satisfied?

That’s the kind of Wow! customer experience Superior Cabinets was looking for when it spent $400,000 to outfit its stores in Saskatchewan and Alberta with virtual showrooms. The virtual showrooms were just one of the bold moves the Saskatoon manufacturer of kitchen cabinets made as it struggled to survive a near‑death experience during the last recession.

Cuts waste

Superior transformed its manufacturing processes to speed production, cut waste and boost profits. For example, the company introduced software that allows its sales staff to design a kitchen with customers and send the order directly to the factory.

“Now, no one touches an order,” says Scott Hodson, Superior’s President and CEO. “We eliminated all of the non‑value‑added costs that customers weren’t prepared to pay for.”

Tough decisions and more than $2 million in timely investments have paid off. The company is now solidly profitable and posted sales of more than $41 million in 2013, up from $28 million in 2009. It has also doubled its store count in Saskatchewan and Alberta to six and is on track to reach $45 million in sales in 2014.

Superior’s transformation is an example of how Canadian manufacturers are changing to become more productive and customer focused in the face of intensifying competition at home and abroad.

Radical change needed

When Hodson joined Superior in 2008, he and the new leadership team knew the company needed radical change to survive.

Amid falling sales, the company posted a large loss in 2009, leading its primary lender to pull its line of credit. That’s when BDC’s Business Restructuring Unit stepped in to help the company devise a turnaround plan.

Superior started the turnaround by spending more than $1 million to map every process from initial customer contact to kitchen design and installation.

That initiative helped the company reduce the number of software systems it was using to two from a whopping 17, and slash its administrative staff by more than two‑thirds. Those cuts were just part of a painful restructuring that saw the employee head count almost halved to 200 employees.

A turnaround plan

BDC’s Business Restructuring Unit allowed the company to postpone its principal payments on BDC loans. It also made concessions on Superior’s sale of non‑core assets and provided an operating‑line‑of‑credit guarantee that allowed the company to better manage its cash flow, execute the restructuring plan and secure a new line of credit.

Five years later, the company has returned to sustainable profitability and is fully on side with lenders. The employee count has risen to 250.

The company spent months speaking to its home builder and home owner customers about their needs and expectations.

Tracks customer service

In response, the firm began tracking a series of service performance measures—including quality control, on‑time delivery and other key performance indicators. It built an online portal where staff could monitor how their customers’ orders were progressing and see real‑time service statistics.

A dedicated project team worked with an external software provider to develop the virtual showroom feature.

Hodson says that technology helps his sales staff remove much of the anxiety home owners feel when making what may be a once‑in‑a‑lifetime decision on a kitchen upgrade. Most importantly, it was technology that none of his competitors were using at the time.

A scalable business

Hodson’s plan is to grow Superior’s market share in Alberta, which currently stands at less than 10%, while continuing to increase its 35% share of the kitchen cabinet market in Saskatchewan. Doing so means constantly looking at the bottom line and automating processes.

“If you’re dependent on manual, traditional ways of doing things, you can’t scale your business,” Hodson says. “That’s why we needed to focus on automation and logistics.”

Lessons learned

  1. Consider the impact of major organizational change on your employees. “The reason we got through it was because our people embraced the change,” says Scott Hodson, president and CEO of Superior Cabinets.
  2. Give employees a stake in your company’s success. “I share financial information with our employees twice annually and we’ve just implemented a profit‑sharing plan for 2014,” Hodson says.
  3. Listen to your customers. Superior Cabinets spent months consulting with customers about key elements of its client experience and growth strategy.
  4. Be prepared to invest in change. Superior Cabinets spent upward of $2 million streamlining processes and introducing customer‑friendly technology to its kitchen showrooms and manufacturing facilities.