Orgill, a focus on the details
Asmall example of the attention to detail and reliability that Orgill executives describe as a competitive differentiator took place on a recent Tuesday afternoon at 3:00 p.m. That’s when Ron Beal had an interview scheduled, and that’s precisceley when the phone rang—not a minute too soon, or too late.
It’s easy to read too much into little anecdotes, but Beal’s company has shown itself proficient at the big things, too. In 2008, Orgill showed sales growth of 4%. In addition to expanding its customer base—it has more than 5,000 retail accounts—it also boosted its infrastructure through the opening of a distribution center in Sikeston, Mo., that is so advanced, it goes by the name: “Mid-America Super Center.”
Here are some of the highlights of the 3:00 p.m. interview:
HCN: What do you think Orgill is doing that other distributors are not doing?
Beal: I can’t really speak for other companies as to what they may or may not be doing. My sense is they’re doing in one degree or another the things we’re trying to do. But I can speak to what we do at Orgill.
HCN: What are you doing at Orgill?
Beal: I think as you mentioned earlier it has to do with attention to detail and managing a lot of details. One of the things we try to do is try to be very focused in areas that are important. We really try to focus on the customer, and what that means is we try to precisely define who our customers are.
Our customer base breaks down into a pro dealer, a home center, a hardware store and a farm store. And, yes, there is some overlap, and the lines of separation are not clean cut, but generally, the people that we sell we try to support and service, and they will certainly fall into one of those categories.
HCN: And you speak differently to these groups.
Beal: I think the general way we speak and our approach is the same, but there are differences. When we define who our customers are, we have to face the dynamics of their businesses. Who are their competitors and what are the challenges facing them? If we are going to be important to them, we gotta make sure we have the prices, the services and the support. And they are all a little bit different, and they are certainly different in their products.
HCN: What are you doing differently today than in the good old days?
Beal: We devote tremendous time and effort to controlling costs in good times or bad. We run a tight ship. The things we are doing now in our current environment aren’t tremendously different from 2006. We ran a tight ship then, we run a tight ship now. Having said that, we try to constantly invest in new technology and invest in systems and infrastructure to be more efficient.
HCN: You’re talking about your supercenter DC. Is this the right environment to bring a new distribution center onboard?
Beal: Our supercenter is a little different. This is basically our fifth distribution center that we have opened, and to some degree the others have opened to support growth. But this one is strictly designed from an efficiency standpoint. It replaces two old facilities. This would not be a great time to open a facility and depend on new business to sustain that, but in our case this is strictly to improve efficiency. So for us, the timing couldn’t be better.
HCN: And internally, what is the mindset?
Beal: Another area of focus for us is on people. And we believe that we’re truly a team. In our company we depend on each other. And I’m absolutely confident that every member of the Orgill team knows that job one is taking care of our customers.
EXTREME MAKEOVER: HOME CENTER EDITIONKelseyville Lumber in Kelseyville, Calif., has been serving its rural community since 1956. In February 2009, the business made a big jump—from a lumberyard and hardware store to a lumberyard and home center.
The company moved farther down Main Street, but into a new realm of retailing. What was a 5,000-sq.-ft. store has been remade as an 84,000-sq.-ft. home center on a 7.5-acre yard, replete with a lawn and garden business that the retailer describes as a big draw for customers.
“The biggest change is that we went from a hardware store to a home center,” said Lisa Ridgeway, an executive assistant. “The ability to provide anything a home center can provide, we can do that now.”
Kelseyville Lumber has traditionally been a lumber-dominated operation. But with the downturn in home building, the DIY or walk-in business has risen to about a 50-50 split with the pro sales. The company is owned and managed by Mark Borghesani. The family-run operation includes the active involvement of Mark’s parents, Robert and Anni.
The product mix includes housewares and some sporting goods—“We do hunting and fishing licenses,” Ridgeway said. The expansion of the store has benefited the community by offering conveniences to the rural community, she said.
Orgill has played a large role in the merchandising and layout of the home center. “Orgill has really helped us through the process,” she said. “They have had a lot of people on site.”
The full-blown home center also serves to give the retailer a well-rounded approach to home improvement, building and remodeling.
“Home building almost came to a halt, but we see that it’s starting to come around,” said Ridgeway. “We’re picking up, but we’re still gearing up for a tough winter.”
HCN: Can you say anything in general about the overall health of your customers in this tough hardware market?
Beal: It’s kind of hard to generalize. The hardware industry is so diverse, and there are so many different formats. Probably our experience would reflect basically what you would expect, and I’ve seen this reported by Home Channel News. Even the No. 1 companies at all levels of the industry are impacted by the economy to some extent. And it’s just common sense. The more dependent a company is at supplying the contractor or the regional contractors, the more the business seems to be impacted.
HCN: So have you seen a shift in that direction?
Beal: In the last seven or eight years, some of the larger building material companies that we’re doing business with—the larger regional and national contractors—had the tendency to focus strictly on the contractor and downplay the front end. Some of them probably went a little too far in that direction, and we’ve seen a fair number of those folks get more focused on the front end.
HCN: As a distributor, where is the next big area of improvement going to come?
Beal: Optimizing is not the same as maximizing. We try to focus on constant and consistent incremental improvement in everything we do. It seems like there are always things we find we can do better. And incremental improvements over time can be very significant.
I can remember when all of the orders were handwritten. They were telephoned in. I was recently talking to someone who remembers putting orders on a bus to get to a DC. Technology has changed things tremendously—pick a date, and it’s changed tremendously since that date.
HCN: What will 2010 be known as?
Beal: Certainly there is a lot of hope out there that 2010 will be the year the economy starts to turn around. I don’t think any of us can afford to bet the ranch on that. But, it has to get a little better before it gets a lot better.