B E S T P R A C T I C E S

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1 RICK DALTON PHOTOGRAPHY AT A GLANCE Year founded: 1983 Principals: Walt Reynolds, president and CEO; Donald Reynolds Jr., COO Headquarters: Fort Worth, Texas Locations: 17 in Texas and Louisiana Employees: Approximately 375 Gross annual sales: $470 million Markets served: Medium and large commercial electrical contractors, industrials, oil and gas, pulp and paper, food and beverage, and automotive 60 the ELECTRICAL DISTRIBUTOR Oct. 08

2 BY MIKE DeFILIPPO Walt Reynolds, president and CEO (left), and Donald Reynolds Jr., COO, are owners of Fort Worth, Texas-headquartered The Reynolds Company. In its 25-year history, The Reynolds Company has expanded from a $30 million company with a handful of locations to a 17-location, $470 million powerhouse. This growth, according to President and CEO Walt Reynolds, has been sustained by a successful formula developed over the years: operational excellence and disciplined financial management combined with a flexible, fun culture. These three components, working together, are also the inspiration for the company s new tag line: It s On. Our new tag line is simple but direct, said Walt Reynolds. It positions us as a challenging competitor willing to take a chance and play the game full out. IT S ON AT THE REYNOLDS COMPANY Oct. 08 the ELECTRICAL DISTRIBUTOR 61

3 Headquartered deep in the heart of the oil and gas boom, The Reynolds Com - pany services commercial contractors and large industrial customers throughout Texas and the Louisiana Gulf Coast. However, location is only responsible for a fraction of the company s growth: It has absorbed parts of Cummins Sup - ply and Warren Electric and all of Wat - son Electric; international commerce also accounts for a significant portion of the business. Truly a family operation, Walt Reynolds and his brother, Donald Reynolds Jr., COO, own and operate the company founded by their father, Donald Reynolds Sr., in 1983 the year The Reynolds Company split from Cummins Supply, which was founded by their grandfather. The brothers joined the business within a few years of each other. Walt Reynolds became president in 1998 after a solid tenure running the commercial contractor division. The brothers complementary skill sets Walt has always been more sales oriented and Donald Jr. has always been more operationally oriented along with the need for constant, positive change have transformed the company. OPERATIONAL EXCELLENCE Technology fuels the operations at The Reynolds Company. Some technological initiatives are generated internally; others emerge by adopting best practices of electrical distributors from different re - gions. Customers also play a role in determining the company s technological progress. For example, the company embraced web order entry in 1996 in response to a commercial contractor s request this was many years before the Internet buzz gripped the industry. We were trying to automate ways that certain contractors ordered supplies, recalled Walt Reynolds. We put together an electronic catalog and processed their orders. None of our competition had this at the time. In doing so, we secured exclusive sourcing contracts with contractors. The distributor adopted barcoding in The Reynolds Company optimized the space in its new CDC by incorporating 18-footdeep shelving, narrow pick aisles, high vertical storage, and a mezzanine. The facility is lit with energy-efficient T-5 fluorescent lights on occupancy sensors. its warehouses in That, too, was ahead of the curve. This process has opened a floodgate of information, allowing Reynolds to deliver products more accurately and efficiently. Our goal is to drive value to the customer and instill confidence, said Dan Barlow, vice president of operations. Routing automation software and GPS-equipped delivery vehicles have been in place at the company s largest shipping locations since This has allowed Reynolds to optimize its fleet, expand its service radius, reduce the number of daily trips, and pinpoint delivery times for customers. We strive to be proactive and let customers know what is going on before they ask, said Barlow. The latest technological initiative at Reynolds involves portal enablement of reporting to customers. The goal is to provide the sales staff with predictive analysis of where growth originates so they can provide proactive solutions to their customers. We want to give everyone involved in the transactional process from the counter staff up to the sales team and management complete and accurate data regarding their sales, fulfillments, and fill rates, said Barlow. This is not just information for information s sake the purpose is to better serve the customer through proactive solutions and efficient operations. Technology also plays a role in the company s marketing efforts. The traditional marketing methods distributors have used in the past tend to be boring, said Steven Guidry, director of supplier relations and marketing. We wanted an innovative way to improve the sales of our General Electric component products through stock among electrical contractors. Guidry and Tracy Miesch, the e-commerce and marketing director, produced a five-minute informational video on the time- and cost-saving benefits of these products. They downloaded the GE Prostock Panelboard 62 the ELECTRICAL DISTRIBUTOR Oct. 08

4 Promotion infomercial to an ipod touch. We bought about 40 ipod touch devices and gave them to our salespeople so they could show the video to their customers, said Miesch. After customers view the video, they are directed to our website where they can register to win the ipod. She added that since launching the campaign, GE component sales are up significantly. Not every operational initiative at The Reynolds Company is rooted in technology. Some endeavors are lowtech, common sense-based solutions to problems. For example, the company s new headquarters has 30% less floor space than its old facility. Space was picked up in the warehouse by implementing a system of sliding shelves for small products where they previously used bin boxes. Warehouse space was also gained by installing 18-foot-deep shelves in narrow pick aisles, which eliminates dead space in the rear of the shelf, increasing the amount of usable shelf space. In addition, partnering with Omni Cable, the company recently redesigned its wire management center. Waste was reduced by switching to 10,000 lb. wire reels and productivity was improved by switching to new wire cutters. Wire cuts have increased from 60 per day to 170 per day. Recently, The Reynolds Company hosted a Wire Pull Challenge event. Ten teams of commercial contractors were invited to demonstrate their skills using new labor-saving products and the increased service capabilities of the new wire center. The three-person teams competed for a $3,000 cash prize. We packaged the whole event as a solution, said Guidry. We are trying to show contractors new and better ways to do their jobs. The event worked. Product sales were made on the spot. Within a week of the event the company sold an entire wire solution package to one of the participating contractors. MANAGEMENT TEAM We have incredible sales and operational teams that s what makes this company go, said Walt Reynolds. The Reynolds Company operates under a very lean management strucure, from Tearel Turner, warehouse manager, picks orders in a mezzanine drawer. Each sliding drawer has 40 put-away locations, allowing the company to optimize storage space. the branch level up to the main office. A typical branch has an inside and outside sales staff. Very few branch managers reside at one particular branch; most are charged with the management of multiple branches. All branch managers are responsible for both sales and operations performance. This is what separates us from much of our competition, said David Dozier, senior vice president of sales. We do not separate sales from operations. Branch-level sales managers are more like independent business owners, because they are charged with collecting money, turning inventory, maintaining vendor relations, and servicing customers. Their compensation is a reflection of their performance in all of these tasks. Our managers are compensated very well, but we also ask them to do a lot for the company, said Dozier. At the same time, there is an opportunity to meet your financial goals without having a management title. We have great growth in this company because people are treated fairly and enjoy working together. The mantra at The Reynolds Com - pany is profitable growth. Numbers are irrelevant unless there is a healthy margin supporting them. We have had more than $100 million in growth and added fewer than five people, said Dozier. You have to know your business and know where your growth is coming from. The first thing the Reynolds management team analyzes when presented with a growth opportunity through acquisition is the existing management team of the target company. We are close to being tapped out with our management team, said Walt Reynolds. We won t chase an opportunity unless we have a person who is ready to manage it properly. When an opportunity to expand into the Gulf Coast Region presented itself, the right person for that job was George Mehaffey, who joined The Reynolds Company in December of 2002 as vice president of the Gulf Coast Region. Within 90 days, the company had 64 the ELECTRICAL DISTRIBUTOR Oct. 08

5 Standing, from left: Dan Barlow, vice president of operations, and Steven Guidry, director of supplier relations and marketing. Seated, from left: Tracy Miesch, e-commerce and marketing director; David Dozier, senior vice president of sales; and George Mehaffey, vice president of the Gulf Coast Region opened six branches and hired almost 100 employees. According to Mehaffey, a typical start-up operation in a new region would require 18 months of planning. It was fast and furious, he recalled. Coming into this situation, I had to throw out everything I learned during 20 years in the business because the opportunity had to be addressed in a different way. We had the technology and confidence to execute it. At 47, Mehaffey is the oldest member of The Reynolds Company s management team. His tenure in the Gulf Coast area gave him an intimate knowledge of key distribution professionals serving the oil and gas industry. I was able to identify a lot of the experts serving the oil and gas business, he said. The people we hired for the expansion are some of the best leaders in their areas of specialization. We have pushed a lot of accountability to those individuals. FLEXIBLE, FUN CULTURE About 90% of the original workforce hired for that expansion is still with the company. Many of them recognized the opportunity to grow with The Reynolds Company as the Rockwell distributor for the Gulf Coast Region, but most of them stayed because of the company s corporate culture. Our company understands technology how to invest in it and get a return, said Walt Reynolds. We understand the business practices for running this business. What is challenging but also a strength is finding the right person for the right position who will be productive to both him- or herself and the company and, thus, stay for a long time. That must be driven by the culture. Employee satisfaction and retention is good business. The hiring, training, and termination of em ployees are expenses that can be avoided by finding, cultivating, and retaining good people. We ask ourselves, Why would some body want to stay at any job for the long term? Happiness? Money? By adding value to positions and fairly com pensating our em ployees, we be - lieve that they won t want to leave, said Dozier. DeFilippo is a St. Louisbased freelance writer and photographer. Find him at michaeldefilippo.com. Wearing the T-shirts emblazoned with the company s new logo, members of the Fort Worth warehouse team watch the wire pull competition at The Reynolds Com - pany s recent Wire Pull Challenge. 66 the ELECTRICAL DISTRIBUTOR Oct. 08