Message from the top: Improvement

Orgill chairman, president and CEO Ron Beal says the concept of constant improvement is fundamental to the way the company runs its business. The proof is in the growth. The Memphis, Tenn.-based distributor has grown by more than 50% in the past five years, and has more than doubled in size in the last decade. Here’s the HCN Q&A with the CEO:

HCN: What’s the latest area of improvement for Orgill?

Beal: This year we have made a concerted effort to improve our replenishment fill rates, which were already consistently good at 96% plus. For the second half of the year, we’ve achieved 97.5% company-wide, and two of our DCs have averaged over 98%. It will be hard to improve much over these numbers going forward, but we will certainly try.

HCN: With housing starts up 18% in 2013, have we definitely hit a full-fledged recovery mode?

Beal: We’re all wanting this to be the case. We have seen steady growth in the pro dealer sector of our business, both in terms of same customer sales as well as overall segment improvement.

HCN: You have said distribution seems simple, but it’s very difficult to execute. What are some of the complications that have arisen in recent months?

Beal: Most of the complications to normal operations recently have been weather related. Twice during recent weeks, transportation staffs in all of our distribution centers were battling snow and ice at the same time. I can’t remember this ever happening in the past.

HCN: What do you think distinguishes Orgill from other distributors?

Beal: Conceptually, almost all hardware distribution companies are doing pretty much the same things; providing wholesale product delivery to the retail store, and offering varying levels of retail support. It really boils down to execution.

We’re unique in that we’re the only national non-co-op distributor. We don’t spend much time trying to simply be different from distributor competitors. We think it is much more productive to instead devote our energies toward providing the best possible mix of goods and services to our retail customers.

HCN: In terms of categories of merchandise, what’s on your list of high-growth areas?

Beal: We think that core departments will be especially strong this year. Any pickup in housing activity ripples throughout the industry. Coupled with the severe weather we’re seeing so far this winter, this should generate a lot of fix-up and repair projects. Plumbing, lawn & garden, paint and tools should all benefit as a result.

HCN: Are there any ways that your retail customers are changing?

Beal: Retailers are definitely getting more sophisticated in understanding the need for the whole area of electronic commerce. This is driven in large part by the changing habits of consumers in general. For us, this means programs like our new Boost system, which allows a local retailer to customize a local Internet commerce presence without the significant backend costs of supporting an individual system. We’ve also significantly enhanced our small order fulfillment capabilities to support shipments direct to consumers on behalf of our dealers.