In 2014, MDM is recognizing distributors that are innovative in their approach to their markets. Capitol Coffee, Raleigh, NC, was selected as an MDM Market Mover for its investment in e-commerce, product line expansion and a unique ordering/concierge service.

2014 MDM Market Mover

Company: Capitol Coffee
Headquarters: Raleigh, NC
Leadership: CEO Charles Brunson
Details: Capitol Coffee began as an office coffee distributor, but quickly expanded to provide more products and services to its customers with its concierge service.

The mantra “How can we do it faster, better, cheaper?” has driven office supply distributor Capitol Coffee’s push for continuous improvement since the company’s founding in 1979. Capitol, which started out as an office coffee distributor, now sells “everything from the bathroom to the break room, under the sink, in the fridge and around the coffee brewer,” CEO Charles Brunson says, and offers a unique concierge service to keep its customers stocked at all times.

The push for product line expansion started very early in Capitol’s history, when founders Buddy Brunson and John Scott were making sales rounds and noticed a lot of other office products at their customers’ locations.

“Being the entrepreneurs they were, they would ask, ‘If we had a good price on copy paper, would you buy it from us?’” Charles Brunson says.

The answer was a resounding yes, which led to Capitol expanding its SKU offerings. However, Capitol was using a “rolling warehouse” inventory method. Trucks would be loaded with products, sent out to customers and have products taken directly off the back as orders were placed. This limited the catalog that Capitol could carry and negatively affected service.

If a customer were to place an unexpectedly large order of coffee filters, for example, coffee filters would be out-of-stock for the rest of their customers that day. This inefficiency led Capitol to move from a “rolling warehouse” inventory model to what it refers to as “pre-write.”

The company would have someone run out and write the orders, bring them back to the office, then have another person deliver them, allowing Capitol to do twice as many orders, Brunson says.

This proactive inventory approach led to Capitol’s concierge program, a higher-service, vendor-managed style of inventory. With the concierge service, a member of Capitol would “walk into the [customer’s] break room, clean all the equipment, then… stock all the different dispensers and whatnot that we service for them,” Brunson says. “Then, they would take an order and a delivery specialist would follow two days later with the order, and deliver it and put it away, and if need be restock again at that time.”

While the concierge service was popular with Capitol’s customers, it created some new challenges for the business. The concierge had to go to the office, download that day’s route information from the company’s database, enter orders on a handheld device while on the route, and then return to the office to upload orders back into the database.

“That caused a hiccup in our program, because we could not order that product fast enough,” Brunson says. “Just-in-time ordering wasn’t a possibility for a lot of products, and we had to stock a lot more of those items.”

There were also issues with technology compatibility. Capitol used an industry-specific software to process orders, handheld devices to input them, a SQL program to manage all the data, different software to handle back-office functions and Quickbooks to manage payroll and financials.

Capitol decided to integrate all of its processes under a single NetSuite platform. This investment allowed the company to streamline its inventory, as well as update its e-commerce capabilities.

Prior to upgrading its platform, 3 to 4 percent of customers placed orders through Capitol’s Web interface. Now nearly half of the company’s orders come via the Web or email, Brunson says.

Brunson sees technology investments as critical to remaining viable in an increasingly competitive marketplace. “Staples has embraced online ordering – and all the office supply guys have – so they’ve definitely got that piece down,” Brunson says. “If you don’t have it, you lose the business.

“Nobody thought it was important for a coffee service to have online ordering available,” he adds. “Let me tell you, they’re struggling now and trying to play catch-up.”