Distributor on the move

When Orgill moves across town into its new world headquarters later this year, the operational impact will be minimal, but the symbolic impact will be huge.

The Memphis, Tennessee-based company simply grew out of its building. Once known as a regional distributor, Orgill hit the billion-dollar sales mark in 2006. It expects to exceed $2 billion in its current fiscal year. Another obvious and impressive sign of growth is its distribution footprint. In the last 16 months, Orgill shot up from five distribution centers to seven.

The company’s success is the direct result of its ability to move products — an activity that sounds deceptively simple, but according to Orgill CEO Ron Beal, is not. Trust him. You don’t see many startups clamoring to jump into the distribution business.

Beal shared some of his thoughts on the current state of hardware distribution with HBSDealer.

Here’s an edited recap:

HBSDealer: How would you describe the difference between a company with five distribution centers and seven distribution centers?

Ron Beal: There is nothing inherently better or worse with having more or fewer DCs. The goal is to have the right number of facilities to provide consistent, high-quality service to customers, while maintaining critical mass as far as volume is concerned in order to operate and replenish efficiently. Our new DCs in London, Ontario and Post Falls, Idaho, meet these criteria for us.

HBSDealer: Your Idaho facility is interesting for serving two countries. How do you manage the special demands placed on that kind of border-crossing operation?

Beal: The major complicating factor is that, to a large extent, due to labeling requirements as well as customer preferences, it’s necessary to stock complete assortments for both our U.S. and Canada customers. We actually did this for several years very effectively from our Inwood, W.Va., DC. Most of the systems and processes needed for Post Falls are already part of our overall operating infrastructure.

HBSDealer: Is it accurate to say that more and more distribution is small-order fulfillment?

Beal: The answer would be “Yes, but.” While the volume of small-order fulfillment orders has increased exponentially, and will in all probability continue to do so, it still represents a relatively small part of the overall volume in any of our facilities, which continues to be predominately regular replenishment to our customers. The small-order fulfillment we do is in support of our dealers.

HBSDealer: Are the trends in technology and retail favorable or unfavorable for hardware retailers?

Beal: Again, the answer is yes to both sides of the question. Many of the trends — probably the most visible of which is related in one way or another to e-comm — that present challenges, also offer opportunities. We’re firmly convinced that the independent hardware retailers who use these advances to meet the needs of their customers in their local markets will do well. Those who don’t, they won’t. We’re committed to supporting our dealers in every way we can to ensure they don’t get left behind.

HBSDealer: Describe how the Canadian arm of Orgill works with the U.S. arm. How would you describe the company’s teamwork?

Beal: We view ourselves as a North American company, which simplifies the U.S.-Canadian working relationship. We have a long history of focusing on the local dealer in his or her local market to provide the unique goods and services needed to service that market. There are many similarities and differences between markets, regardless of whether you’re talking California compared to New York or Florida; or [British Columbia] compared to Nova Scotia. A homogenous Canadian market doesn’t exist any more than does a homogeneous U.S. market. That said, we have been able to deal with the unique provincial and national regulations for Canada same as we do for the U.S., as well as being able to deal with both national currencies. Bottom line is that we’re all part of the same team.

HBSDealer: Which is the bigger growth opportunity for Orgill: U.S. or the world beyond the U.S. borders?

Beal: We have growth opportunities domestically and internationally, and fortunately they are not mutually exclusive. We focus our efforts on meeting the needs, challenges and opportunities of all of our customer groups. Our strategic plans are to grow in all areas we serve.

HBSDealer: What’s the “Next Big Thing” you’re working on?

Beal: We’ve worked hard over the years to make sure we’re not dependent on “the next big thing” to sustain our growth and viability. We focus on changes in technology in all parts of our business to ensure we’re able to take advantage of advances as they occur — same in merchandising, marketing and all other areas.