It was standing room only when Orgill announced the location of its new distribution center on July 16. The citizens of Sikeston, Mo., turned out for a Wednesday afternoon press conference at city hall, along with the mayor, the chamber of commerce and other civic boosters. The audience broke out in applause, Sikeston was officially announced as the DC’s home, and the governor’s office issued a press release about economic incentives for companies that create good-paying jobs with health benefits. Orgill chose Sikeston, a town of 17,000 people in the southeastern corner of the state, over five other locations (two in Illinois, three in Missouri) for its sixth distribution center. The logistics were perfect: an industrial park just north of town, with easy access to both rail road lines and two interstate highways. But the Memphis distributor also likes small towns “where there’s a good quality of labor, and we can be an important employer in the area,” said Byrne Whitehead, senior vp and general manager of operations, finance and administration.
Orgill expects to break ground on the 795,000-square-foot warehouse in August 2008. Construction should take about one year. The facility will sit on 70 acres and can expand to one million square feet. Called the Mid-America Super Center, the site is almost halfway between St. Louis and Memphis, Tenn. It will play an important role in Orgill’s distribution net work, replacing the Memphis and Vandalia, Ill., warehouses—both of them will close—and serving dealers in the Midwest and mid-South.
“The plan all along has been to consolidate the two facilities into one,” said Whitehead, noting that Memphis and Vandalia are older, smaller facilities with low ceilings and small cube capacities. The Sikeston DC will be able to ship as far north as Michigan and across the border into Canada, where Orgill now serves several accounts.
The new facility will be a combination of a broken-case pick module on two levels and a three-level full case conveyable pick module. Orgill has also designated this facility as a flow through center for its import containers coming through the Port of Long Beach, Calif. Under the current system, entire containers go to individual distribution centers, and mixed containers are sorted at Vandalia, which is “absolutely overflowing with merchandise,” according to Whitehead.
Orgill’s real but enviable problem is that its customer base keeps growing, so the distribution net work has to keep pace. This is especially true in the Pacific Northwest, where the wholesaler is now supplying two major ProBuild divisions, Lumbermens and Spenard Builders Supply, from its Hurricane, Utah, distribution center. Many Lumbermens locations are clustered in Washington and Oregon. All of Spenards’ units are in Alaska, although Orgill only has to ship as far north as Seattle, where the Anchorage-based pro dealer has its own redistribution center and barge transportation system.
“We’ve got a lot of customers in the Pacific Northwest that we’re servicing from Hurricane,” Whitehead explained. “Fuel is expensive, and getting more expensive every day. We really need a facility up there.”
The company is now evaluating six potential sites in Washington and Oregon, with May 2009 as the targeted ground-breaking. Construction should take approximately one year. When finished, the Pacific Northwest facility will serve Orgill’s Pacific Rim customers as well as its domestic ones.
While it ramps up its construction schedule, Orgill is trying to consolidate routes and reduce idle time by equipping all trucks with GPS. Empty trucks are swinging by factories on their way back to the warehouse to pick up loads, reducing freight on incoming orders. Orgill is also looking at using third-party back haulers, according to Whitehead. “Our back hauling has increased significantly in the last 18 months,” he said.
It was only six months ago that Orgill opened a brand new DC in Kilgore, Texas. Located 120 miles east of Dallas, the 530,000-square-foot warehouse serves Texas and parts of Arkansas, Louisiana, Mississippi and Oklahoma.
Like proud parents, Orgill documented every phase of the project’s construction, from pouring the concrete slab to installing the rebar and perimeter footings. The photos were posted regularly on Orgill’s Web site so employees and customers could follow the progress of the building. Although it was the company’s sixth warehouse, company executives are clearly pleased with how it turned out. The facility in Sikeston will be “almost a carbon copy” of the Kilgore DC, Whitehead said.
PRO Group makes key promotions
Denver-based PRO Group has promoted Brendan Sullivan to director of merchandising, a new position, according to the company.
Sullivan is a 21-year industry veteran who has served in various merchandising and business development positions for Servistar/Coast To Coast and True Value prior to joining PRO Group in 2005.
“Brendan Sullivan’s experience and work style makes him ideally suited to a merchandising director role,” said Steve Synnott, president and CEO of PRO Group, in a statement. “Brendan has worked as a buyer and merchandise manager, and since he joined our company three years ago he has taken a leading role in providing progressive ideas and programs on the merchandising side.”
In addition, PRO Group managing director for the PRO Hardware and GardenMaster divisions, Shari Kalbach, has been named managing director for the company’s Farm Mart division, which supplies independent farm supply retailers.
Kalbach joined PRO Group in 1997 and is responsible for all of the Group’s distributor relationships.
“Shari Kalbach has a proven track record as a highly effective executive working with PRO Group distributor members,” Synnott said. “Adding Farm Mart to Shari Kalbach’s scope of work is a natural progression of her role. She excels working closely with our distributor members.”
Design Within Reach narrows losses
Design Within Reach, the San Francisco-based specialty home decor retailer with around 70 locations nationwide, saw net losses of $159 million, narrower than the $575 million in losses recorded in the same period last year.
Net sales for the second quarter decreased 3.7 percent to $47.3 million, compared with $49.1 million recorded in the year-ago period.
Still, the retailer saw an improvement in gross margin, a measurement of earnings that takes production and service costs into consideration — gross margin improved to 46.4 percent in the second quarter, compared with 44.3 percent in the same period last year.
In-store sales were $32.6 million, up 2.2 percent from last year. Sales from phone and the dwr.com Web site decreased 17.5 percent to $10.4 million.
DWR also said it predicted that “in light of the challenging economic environment, the company believes revenue will be flat year over year.”