Amid sales growth, Orgill tackles fill rate
Orgill’s CEO Boyden Moore didn’t duck anything in his stand-and-deliver presentation to Orgill nation during the distributor’s Online Buying Event. Moore touched on inflation, price changes, the difficulty of hiring at hardware stores, the challenges faced by ports around the world and even the discouraging return of pandemic-related headlines.
Of course, there were success stories to share, as well. Among them: Overall sales growth; the opening of the company’s Rome, N.Y., distribution center; the increased capacity coming online in Hurricane, Utah; and high service levels related to the company’s previous Spring Buying Event. “Overall, we delivered 96.9% of Warehouse Items and Warehouse Pallets Ordered and 94.0% of Door Busters Ordered so far,” Moore said.
Moore stressed, however, that work remains to lift the company’s overall fill rates to historical high standards. “Our number one priority is to restore the dependability of our supply chain as quickly as we can,” he said.
One reason for a slow recovery in service levels is the high demand for home improvement products. While the distributor planned for 7% gains, sales were up 21% in the first half of 2021, a pace running ahed of the industry, Moore said.
To support that growth, Orgill opened its 780,000 sq. ft. distribution center in Rome, the company's eighth D.C. PLus, out in Hurricane, Utah, a 430,000 sq. ft. addition is under way.
Additionally, the IT team has been bolstered with more than 40 new employees under the new Chief Information and Technology Officer Marc Hamer. "This team has identified and prioritized over 180 projects to improve access to information, our sales team’s efficiency and ability to serve you better, make our distribution centers more efficient, improve our replenishment systems and inventory management, improve our website and online buying event experience, and more," Moore said.
Managing pricing in an environment of accelerated change is one of the challenges facing all distributors. And during his presentation, Moore quantified that challenge by explaining that, in a typical year, Orgill sees some 18,000 to 19,000 price changes on items. This year, Orgill is seeing four times that number, and most of those are price increases.
"While we are careful to ensure any increases we accept are the same as we are seeing in the market and keep you competitive, it’s a lot more work this year to stay up to date on your pricing and gross margin management," Moore said.
As the company works to manage its challenges, it's also excited about its lineup of digital markets, including its current Online Buying Event, which runs through Aug. 27. The company is moving to four online buying events each year, doubling buyer's access to promotional and special buys.
Also on the calendar is a Feb. 24-26 dealer market in Orlando, Fla. The event will mark the company's 175th year.
"Throughout the past 16 months we’ve focused on four things: staying safe, building capacity, embracing agility, and strengthening relationships," Moore said.