2014 MDM Market Leader Profile

Industrial distributor DGI Supply, Wheeling, IL, has focused much of its investment in recent years on building out its internal infrastructure and on providing a better training program for new employees – all with a focus on strengthening its core. Lindsay Konzak spoke with Bill Henricks, COO; David Crawford, senior vice president; Mickey Davis, vice president of sales & marketing; and Todd Mills, director of marketing services, to learn more.

MDM: How’s business going so far this year?

Bill Henricks: So far so good. We’re up a little over 5 percent. It’s a combination of organic and acquisitions. We’ve slowed down a little on the acquisition side. We’re still getting and enjoying good growth from acquisitions, but it’s a little bit of everything.

MDM: Are you optimistic?

Henricks: It’s guarded optimism. We’re still working on a lot of infrastructure projects and making our core stronger. We think that insulates us to a certain extent from some competitive pressures to the extent we can make our company a better company.

MDM: What is driving your acquisition strategy? What do you look for?

Henricks: What we’ve looked for traditionally is additional scale in certain geographies and in certain end-user verticals and products. And so acquisitions have been good for us, and we’ve made several over the past several years. We’ve made one to three acquisitions every year for about 10 consecutive years.

I think we’re at the point where we’ve got a solid base, and now we’re focused more on infrastructure projects related to our distribution center network, our e-commerce platform, our inside sales platform, our training and development, and we’re having some success there.

Acquisitions have been great, but perhaps on some level a healthier sign is that the organic business is strong and if you can accelerate that, that’s healthier.

David Crawford: Our customers are still looking for value from distributors. Our team has done a really nice job of documenting the value we bring our clients. We had over $50 million in documented productivity improvements in 2013. That is a requirement that our customers have from us. If you’re going to differentiate yourselves … the demands are changing as far as their expectations in the supply chain. The expectations on bringing value hasn’t changed.

… It’s still about bringing value to our customers. That’s how we’re getting the organic growth.

MDM: Tell me about the new website you are about to launch in 2014.

Todd Mills: Obviously with a new website, you want to have a good e-commerce solution. We’re trying to differentiate ourselves by making it more user-friendly, to make it a place where our customers can not only come to buy product but also come to find more information on our products and our premier partners. … We are really focusing on application videos and product recommendations, and trying to do additional things for our premier partners to highlight them. They’re excited about this.

… In addition, for the customers, we want to make sure we have a website that says what makes DGI Supply unique – what differentiates us, so we’re featuring all of our services. All the stuff DGI Supply does with productivity, we have a home place for our customers to see what we do beyond just selling online.

We’re also going to feature tools for our customers – machining calculators, industry links – making our website a resource for customers.

MDM: With that, you also have your sales force carrying iPads in the field.

Mickey Davis: There are a couple of different things going on with the iPads. One is we use the iPads to track our CRM data back to our sales portal – and it’s easy for them to access the information and provide the information on the go instead of waiting until the end of the day.

…They can also check pricing, orders, back orders, shipping dates – any kind of information associated with an account can be pulled up in front of a customer immediately and that eliminates getting back to them in a few days. It’s immediate. The accounts like the immediate response. And we feel it adds a lot of value at this particular point in time.

MDM: In 2013, you launched a new focus on national accounts business.

Crawford: The national accounts was launched based on what we have seen from our customers looking to leverage their purchases with fewer suppliers. We looked at that as a strength of our organization; when you have 34 locations in the U.S., eight in Canada and seven in Mexico – it’s a differentiator. … We had a number of customers that have moved their manufacturing from the United States to Mexico, with that there has been a nice handoff. Leverage is a big aspect of it.

All of these customers, even though they have manufacturing facilities throughout North America, they are still looking for that local presence.

Davis: One of the things that helped escalate the national account program was our ability to use automated procurement solutions for different accounts that have actually referred us up to the corporate headquarters to expand the program throughout all their locations.

MDM: Tell me about the infrastructure investments you’re making. What’s driving that?

Henricks: It’s a similar notion as the national accounts plan – around the corner, around the world. Traditionally local presence in a lot of markets with a sales office and a decent complement of inventory.

Increasingly the e-commerce world is wanting fewer shipments. So we’ve added this layer of logistics infrastructure to support the local sales offices, and now they carry just a smattering of customer-specific inventory, supported by DCs. We went live with Carol Stream (IL) in March, and we’re going to be replicating this model to three other regions in the United States and adding infrastructure in Canada and Mexico, as well.

These are the break bulk opportunities to support the local supply centers, but are also important to support the e-commerce customers and our traditional full-line customers. The notion is fewer shipments and faster delivery. We’re able to get to scale with our logistics partners to the point where we can ship next day from these DCs in the contiguous United States and Canada.

MDM: Are you seeing growing demand for faster shipments and shorter lead times?

Henricks: I’d say so. It’s an on-demand world. I think that’s a general statement that inventories are in general down. They’re looking to push more value-add on their supply chain partners. That is a trend that works to our benefit particularly as it relates to the P in MROP – the production consumables. They want to keep their machines fed.

MDM: You have recently developed an online training program. What is your focus with that?

Davis: We have a program in place where we’re bringing on new hires at what we consider to be an aggressive pace. It’s an aging industry, and it’s becoming increasingly hard to find people with industry knowledge to come into the business.

That leads us to the training program. It is an online program and works off Symbaloo. We have a specific type of training we would like new hires to go through, but also our account managers. The first week of training is an introduction to DGI Supply. The second week is an introduction of DGI administrative policies to get you acclimated to the company.

I won’t go through all the 40 training modules. … A critical part of the training we use is the Industrial Supply Association learning center.

The training goes on for the initial first 12 months new hires are on board. They are training every week. … While they are training, they work under the mentorship of a senior account manager in the field. … We feel like we can escalate, elevate and increase their overall introduction into the industry and therefore into DGI Supply and the marketplace.

MDM: It sounds like you are focused on the organic part of your business and building on what you have in place to position yourselves growing forward.

Crawford: It’s about the customer experience. If you make it more enjoyable and make it easier for clients to buy products from you, and source from you, deliver quicker, more accurately and more efficiently, and you help them manage inventory through supply chain solutions and work with them from a national accounts perspective. … We feel like we have a focused solution that will help our customers save money and keep jobs in this country.