Planning the Retrofit
For Scott, who has been with Smitty’s from day one and used to marvel at the huge trucks and yards of the “big players,” the opportunity to craft a wish list of rolling stock, capital improvements, and new staff and services for the “Alexandria Retrofit,” as it came to be known, was a dream come true. With tacit board approval, he, CFO Gary Davis, and recently hired COO Don Belt (see “New Personnel, New Possibilities,” page 55) got to work right away on a game plan attacking inventory assortment, showroom floor plans, yard redesign, and new-associate recruitment and hiring. By mid-May, the team had developed an income statement and sales forecast, and a capital budget outlay, and were preparing for companywide meetings to lay out the retrofit blueprint.
Chief among all concerned was to lose the “second-class citizen” aura surrounding Alexandria and involve and empower as many associates (both old and new) as possible to effect the most efficient and profitable transition for the location. “When you are working on 80-plus initiatives, there are dependencies on all people,” Belt explains, “but also there is ultimately one owner to each initiative.”
To track changes of each initiative, Smitty’s relied on a simple master document created in Microsoft Excel. The spreadsheet reads like a time line, showing when an initiative was started, its expected completion date, its leader, and whether the initiative has been finished. All actionable items for the retrofit are further organized under 13 subcategories: budgeting and planning; inventory assortment; showroom floor plans; operations equipment; new hires; warehouse design and yard layout; interior re-merchandising and inventory purchase; yard and warehouse inventory ordering and stocking; staff training; add delivery capability; computers and technology; exterior refurbishing; and marketing.
Total expenditures on new capital equipment and inventory came to $1.1 million, which Scott says was the simplest piece of the retrofit equation. “There’s that old adage that ‘If you build it they will come.’ Well that doesn’t mean they are going to stay, especially if they never get that feeling that there is a reason why they need to be there,” he says. “It’s not just racking and warehousing—it’s getting the right product mix, getting the right personnel to utilize that—and that’s been our main focus. The paint and paving is the easy part.”
Custom millwork products and services, in particular, were an area that Smitty’s had conceded to local competitors like Smoot Lumber (operated by Stock Building Supply) when production building and the importance of the Manassas yard were at a fever pitch. With the retrofit, Smitty’s has added 150 new millwork SKUs in hardwoods including cherry, mahogany, oak, and maple. Additionally, Smitty’s has lured Smoot sales manager Rick Herbst to run the renovated Alexandria yard and will rely on his expertise in millwork and kitchen and bath sales (Herbst was a longtime K&B sales manager for Wolf Distributing) to fire up the new focus on Beltway remodelers, custom home builders, and infill contractors.
“The opportunity they have given me here is to bring all the experience from my past into one position and then give me the support to provide our customers the full line of products and services,” says Herbst, who started on Oct. 1, joining several other new hires, including two counter associates, two yard workers, two delivery drivers, a millwork sales associate, and a part-time cashier. “This yard is a shining new diamond, and it’s not just talk, it’s not just paint. They have brought in the people and made a substantial monetary commitment to do it—and we all want to do it. That’s another great thing about it: Enthusiasm throughout the company is really good.”
The uptick in morale suits Smitty’s management, who have come to realize through the year-long retrofit process that the redesign of just one yard meant revamping the entire company’s customer focus and market strategy. Company officials expect the Alexandria location to be cash-flow positive this year and for the total $1.5 million cost of the retrofit (which includes capital, inventory, and personnel expenditures) to be recouped as early as 2009 if the intended effect of bringing high-end contractor clientele back to Smitty’s Alexandria roots is realized.
Is yard redesign, then, not just about the physical—the warehouses and paving—but about larger concerns like personnel, what type of customer can be served best from a particular location, and rethinking where you are with a specific geographic footprint and where you can ultimately take it?
“Absolutely,” Rick says.
