For William Churchman, running an efficient operation begins with a philosophy.
True, the CEO of Imperial Pools Distribution in Latham, N.Y., has reorganized his warehouse space, restructured his workforce and reduced the turnaround time on orders. But the key, he insists, lies in a progressive state of mind.
“The most important thing is the culture you create by talking about these topics,” Churchman says. “If it doesn’t add value for the customer, then it’s waste. That line of lean thinking permeates the company now, and it’s reflected in a new attitude among our staff.”
Imperial Pools’ approach is not unusual for modern distribution firms. Regardless of their size, the clients they serve or the challenges each faces, distributors in the pool and spa industry have spent the past couple of years discovering how to stay competitive without sacrificing customer service or yielding market share.
Here, several of the leading distribution companies share the steps they’ve taken to remain competitive.
When Bill Kent re-examined his business two years ago, he considered “every line item.” In doing so, he quickly identified areas of his distribution business that could be streamlined or, in some cases, outright eliminated.
So the CEO of HornerXpress in Ft. Lauderdale, Fla., closed down locations in Lakeland, Melbourne and Ocala, Fla.
He then set about seeking better lease terms for a number of other branches.
“We went to those landlords and asked for reductions,” Kent says. “We explained to them about our marketplace and told them we needed their cooperation, we needed their help.”
Through phone calls and personal letters, Kent was able to secure 20- to 30-percent reductions for six of the eight Florida sites that were targeted. In the two years since, he adds, not a single one has tried to renegotiate back up.
“This is the new normal,” Kent says, “and this is the way it is. We need to just get used to it.”
At distribution giant PoolCorp, vice president Mark Joslin also managed to renegotiate leases — nearly 40, he says, on facilities throughout the country. Because they represent the company’s second-largest expenditure behind personnel, PoolCorp as a result has realized savings in the neighborhood of $40 million, he says.
But the reorganization hardly stopped there. Joslin notes improved efficiencies in the labor force, citing for example the relocation of some 30 West Coast-based support staff to more centralized locations, as well as standardizing various company-wide programs, everything from travel procurement to waste-disposal services.
“Even if it’s things like reducing unneeded cell phone lines,” Joslin says, “we really looked at every cost across the organization and asked if we could do it more efficiently, but also do it in a way that didn’t negatively impact our customers.”
When it came to establishing a lean culture at Imperial, Churchman rearranged the company structure, which included elimination of about a dozen positions in middle and upper management, he says.
But he also streamlined what he calls the company’s “silos of responsibility.” For example, the sales and operations divisions in the past worked largely independently of one another. Sales typically interfaced with the customer, while operations focused on fulfillment.
“Today they work much more in concert,” Churchman says. “The branch manager now has the same boss as the outside sales representative — together they establish the goals and strategies for the different branches and regions, as opposed to it all coming down from the top and both sides doing their own thing.”
About a year ago, Susan Stern had her own staffing dilemma. A reduction in business meant there simply wasn’t enough work to keep all of her eight employees busy for 40 hours a week.
Rather than send one to the unemployment line, however, the president of California Specialty Distributors in San Luis Obispo, Calif., found a better alternative. She contacted the state’s Employment Development Department and applied for its Work Sharing Unemployment Insurance program.
Operated by the government, the program is offered to employers that experience a decline in production and wish to avoid layoffs. It allows the affected employee(s) to work a reduced schedule while collecting benefits for the hours they aren’t on the payroll.
It’s straightforward, but not a quick process, Stern says, noting it took about six weeks from the time she applied to the time she was approved; she has since instituted the program for three-quarters of her staff, including sales, warehouse and clerical positions.
“I think it’s a good way for companies to retain their employees,” Stern says. “And when business comes back, I can give them their hours back. But that’s how I’ve leaned up — by reducing hours.”
According to Barry Knickerbocker, finding opportunities for greater efficiency is “the most fun part of the business for me.”
The president of Spa Parts Plus in Prescott Valley, Ariz., is constantly looking for new ways to trim expenses, often utilizing technology when appropriate. For example, some time ago he decided to drastically reduce the company’s reliance on paper.
In fact, beginning last year he stopped sending hard-copy invoices to customers in favor of electronic versions. Clients would either receive them via e-mail or have the option of downloading a pdf document from Spa Parts Plus’ Website.
“The cost of mailing it was phenomenal,” he says, “so we saved on labor, postage and paper.”
That philosophy has filtered through to the warehouse level as well, Knickerbocker says, where pickers are now directed through their routes by handheld wireless devices that are preprogrammed.
Email has also helped Appatek Industries in Concord, N.C., reduce its own postage-related expenses. In the past, the company mailed its customers three-ring binders with the brands it carried and their catalogs, as well as Appatek’s pricing. But today that information is sent electronically, says chief operating officer Jose Miranda.
Still, Appatek hasn’t abandoned the personal touch, as evidenced by its policies that now govern accounts receivables. Within a week of the due date, a dedicated staff member now contacts customers with, as Miranda describes it, “a friendly phone call, though it may be more of a prodding at times.”
The result has been a marked decrease in past-due accounts — about 5 percent in the 30- to 60-day range, and 2 percent for more than 60 days, Miranda says. Prior to the change, those numbers were doubled, he adds.
For distribution companies nationwide, evidence of this “new normal,” as Kent put it, are everywhere. Tightening belts, however, must never conflict with customer service, particularly in such a competitive environment.
At Baystate Pool Supplies in Cambridge, Mass., president Charles Arakelian rattles off a laundry list of new initiatives aimed at streamlining costs: bar-code scanning, more conveyor lines to save on labor, renegotiating with freight companies, a reduced work week, and more.
“There’s really only so much you can cut,” Arakelian says, “because we pride ourselves on always being able to meet our customers’ needs.”