Editor's Note: This story was updated on Oct. 17 at L&W's request to clarify one of Deely's comments.
L&W Supply, the specialty dealer that’s No. 6 on the ProSales 100, already is showing payoffs less than two years into its five-year effort to reorganize and improve its operations, the company’s chief says.
“We really think we can double our revenue over the planning horizon with what we’ve got,” Brendan Deely, president and CEO of the $1.06 billion company, told ProSales in an interview Oct. 4. (On Oct. 17, Deely clarified those remarks by adding: "What I mean by this is that our existing branch network can handle substantially more volume. When demand eventually increases to be more in line with historical averages, we’ll be able to meet that demand without having to make big changes to our existing branch network.")
Signs of the change are most noticeable in the signs on the buildings, as Chicago-based L&W—the distribution unit of drywall products giant USG—slowly connects its 24 branded companies with the L&W logo. But the bigger change is behind the scenes, as L&W implements best practices that bubbled up as a result of management’s bringing together of key employees from around the country. The moves included improvements in invoicing accuracy and a shift in management that stresses performance across regions rather than at its more than 140 individual stores in 38 states from coast to coast.
L&W’s slogan remains “National Strength, Local Commitment.” While the switch to a single brand name might suggest a trend toward centralization, Deely stressed that all the dealer’s actions have been focused on using L&W’s national strength to benefit local customers. Equally important, he said, is the fact that L&W launched this several years into a housing recession that, according to the Freedonia Group, slashed North American demand for drywall nearly in half between 2006 and 2011.
“The whole notion for us was that we had to create our own recovery,” Deely said. “This was built from within.”
One key to the five-year initiative, launched in April 2011, came when L&W brought together 100 of its best workers to discuss how they operate. The goal was to find and disseminate best practices across the company. As the so-called impact teams worked and other employees began buying into what their coworkers, Deely said he began to see a change in the staff.
"It was remarkable as to the amount of dedication [employees showed], not just in committing to a plan but also making it happen,” he said. “We've gone from 2,500 people getting a check from L&W to 2,500 people who work for L&W Supply."
The management shifts also are getting people to look beyond their local facility. Raising profit-and-loss responsibility up from the branch bosses and onto the shoulders of regional managers responsible for eight to 10 branches apiece produces a leader who “thinks of that business a little more strategically” than was the case before, Deely said. Meanwhile, on the sales side the outside reps no longer report to their local branch manager but rather to a regional sales manager who spends much of his time on coaching. L&W also has beefed up its product training.
Key metrics include such measures as number of new customers, recency/frequency, and lost customers. These add to such standbys as same-store growth, national volumes, and safety stats. "We are a much more data-driven company than we were in the past," Deely said.
L&W focuses on sales of wallboard, ceilings, interior finish products, fasteners, eaves, insulation, and steel. USG products account for just under 50% of all the goods it sells. L&W claims an inventory of more than 40,000 items from vendors such as Owens Corning, Knauf, Dow, DeWalt, Johns Manville, Donn, and ClarkDietrich.