By standing the usual practice on its head, Nordeck gets a number of benefits. For starters, she can keep inventory extremely tight, essentially buying only what she needs to meet established demand. That lets her hold down capital requirements in a capital-intensive industry, a result her bankers applaud.
"You would expect a company that size to be sitting with a $2.5-million inventory," says Dave Zuercher, the Wells Fargo senior vice-president in Sacramento. "I think Enita is sitting with about a third of that, or less. She has figured out that the real expense in this industry is carrying a lot of inventory awaiting sales.
"Basically, she's introduced a more modern, just-in-time approach to an industry that has grown up on some older values," he says. "Her competitors want the comfort of having the inventory under their control at their locations, already remanufactured and in a finished condition. They think they need that to make sales. But when people get in trouble in this industry, it's usually because they have too much inventory."
The danger in Nordeck's method, of course, is that if supplies get tight, she might not get the wood she needs. (Wood supply has become a pressing industry concern as environmental activists work to shut down logging in many North American forests.) So far she has managed that risk adroitly. She has developed strong relationships with dozens of vendors. And when she buys lumber, she does so judiciously and then pushes her salespeople to make sure they move it swiftly.
She walks the yard every Monday morning with the sales crew, inspecting every stack of blanks yet to be milled. "If it's been there more than four days, that's bad inventory," she says. "They have to get rid of it. The saying in the industry is, 'Your first loss is your best loss.' So if you have to take a loss on it, take the loss. Once you start that policy, you put those dollars into something good that's turning rapidly and making margin. And pretty soon you don't have any bad stock."
As it is, the inventory turns over every week -- a stunning rate. The industry average, remember, is 58 days. From the outset, the mill was designed for versatility and speed. "That really comes from experience," Nordeck says. "When you've been around sawmills all your life, you know how to make that flow more efficient, and do multiple tasks on any one piece of equipment. Most remanufacturing people lack sawmill backgrounds -- they're not used to diverting lumber from one direction to another and combining uses. Mike Smith has that sawmill experience, as I do, so we designed our equipment to be able to shift quickly from one product to another. It wasn't that difficult."
It requires unusual teamwork and cooperation between sales and manufacturing to make this high-speed system work. Nordeck and her key people hold at least three meetings a day, she says, because the need for judgment calls often arises so rapidly. The mill sometimes has to "jump through hoops," she says, to get wood out on time. But the fast pace yields distinct benefits.
For one, it keeps the sales folks sharp. Foreman Smith gives them a trucking list on Monday mornings. "If we have promised a guy 2,000 board feet on Tuesday -- and trucks carry 30,000 feet -- then they will sell 28,000 feet on Monday to fill that load. They'll make 150 or 200 calls by noontime."
Second, the rapid inventory turnover is popular with customers. They always get fresh products. "We don't have problems with customers saying this stuff is gray or warped," Nordeck says, "and that's a big issue with a lot of other vendors."
What's more, by shipping its products so frequently (it leases three trucks and uses common carriers as well), Unity helps customers hold down their own inventories. Larry Silva manages Copeland Lumberyards, in Woodlake, Calif., a south Central Valley community. "Unity runs trucks in this area every day, so I can buy smaller quantities and get better turns that way," he says. "I can call them today, and if I really need it, they'll get it here tomorrow if it's available. If they don't have it in stock, I generally get it in two days. Our other suppliers aren't that reliable."
Adds salesman Til Johnson: "We're not the cheapest guys around, but price really becomes secondary. Reliable service is what customers are after more than ever. They want somebody who can keep their own inventory turns up without their having to buy a whole truckload. That has helped us tremendously."
Third, because it turns inventory over so quickly, Unity's prices are on the market. Lumber costs can fluctuate between the time the company buys the raw wood and the time it ships the finished product. If Unity has to take a hit, it's usually for only a day or two of volume. "We never weasel out of a commitment," Nordeck says. "Customers trust us to deliver at prices we quoted, and that's given us a certain integrity in the industry."
Finally, Unity's speed and versatility help shield it against a soft economy. "If you have just a few major products, you are tied into particular vendors," Nordeck says. "If you need to change, if housing slumps, you have to establish rapport with other sawmills. That's why we have so many species of wood in here and more than 150 product lines. No matter what happens to the economy, we're not locked into any one sector. When one product area slows down, we pick up on others."
All this requires teamwork, dedication, and long hours from people working in a stressful environment. "Everyone here understands the energy level required to make this go," Nordeck says. She compensates for the strain on her troops by treating them generously. "I may be cheap," she notes, "but I'm not greedy."
Mill hands earn about $2 an hour more than the prevailing wage rates and get bonuses of $300 to $500 a month whenever Nordeck can afford it. Salaried folks regularly receive $1,000 bonuses. Salespeople can easily make six figures.
Together, these moves have helped Unity weather the current downturn in home building -- no small feat for a young company. One wonders why Nordeck's competitors don't emulate her obviously successful methods. She wonders, too. "I don't understand why the whole industry doesn't turn inventory and receivables faster," she says. "It seems so simple to me."
