Mitchell Lewis used to by COO of a $1.3 billion company with just a dozen people in the headquarters. During his year at the helm of BlueLinx, he hasn't matched such lows in HQ personnel, but he's heading toward building a company in which efficiency and local service both are on the rise.
Since taking over last January as president and chief executive officer, Lewis says he has pursued a strategy that builds on the Atlanta-based distributor's extensive network and knowledgeable staff to shape a company in which local managers have been given increased authority to do what works best for their territory. One recent example was when local managers decided whether to carry Fiberon decking; some opted out.
"The philosophy of the business has changed, and one of the things we’ve emphasized is a more local approach," Lewis told PROSALES in an exclusive interview recently. "We’re empowering local managers to make decisions and take advantage of economies of scale. We want to drive this company through a local view."
That style contrasts with a much more centralized BlueLinx of years past, Lewis says. Today, beyond setting strategic direction, concentrating its purchasing power, and "setting guard rails for the organization," BlueLinx wants its local team members "to be entrepreneurial and be responsible, run their own [profit and loss statements]." Local officers' authority, he says, "would really cut across any decision that you think a general local business person would make."
That autonomy extends even to selling Weyerhaeuser products at BlueLinx facilities near the Gulf of Mexico. That decision raised eyebrows because BlueLinx was created in 2004 out of Georgia-Pacific's old distribution arm, and for much of the next decade it remained closely linked with GP. While GP remains a relatively large supplier for BlueLinx, that relationship ended several years ago
The BlueLinx footprint also has changed, as the company has closed five distribution centers since 2013 and has left most markets west of the Rockies and north of Southern California. But all the still-extensive territory that's left can be serviced by BlueLinx's 49 facilities within at least two days and often in less than 24 hours, Lewis points out.
The headquarters operation also is noticeably thinner, but it retains what Lewis regards as "the best product knowledge among our industry associates." That comes on top of all the people at dealers that Lewis has discovered BlueLinx had a role in training over the years. Combine staff knowledge with BlueLinx's long-term customer relationships and you get the ability to create high-value solutions for customers, he says.
"We have, for example, tremendous expertise in the supply chain, so we’re going to customers and saying 'How can we help you?' "What internal resources can we use [to assist you]?'" Lewis says. "We’ve spent money to bring in talented people in logistics and operations. Some are having talks with customers on things like what’s the best way to lay out a facility. It’s not about selling a product at a low price, it’s about helping our customers get a higher return on capital. ... We are clearly rightsized for where we want to go."
Those activities are helping BlueLinx turn around, but it's still operating in the red. On Nov. 6, the company posted a net loss of $860,000 for the three-month period ended Oct. 4. That's about a quarter of the $3,2 million loss it recorded in the year-earlier third quarter even though sales shrank just 1.5% to $549.8 million. And through the first three quarters of 2014, the net loss was $6.2 million vs. $38.2 million a year before on a sales decline of 8.4% to $1.53 billion.
Lewis came to BlueLinx on Jan. 17 from Euramax Holdings, a producer of metal and vinyl products, where he was president and CEO from February 2008 thru 2013. He started out his working life as a mergers and acquisitions specialty attorney after having studied economics as an undergrad, so numbers definitely are part of his skill set.
He says BlueLinx has focused on logistics and operations in the past year, paying particular attention to such performance indicators on-time delivery, fill rates, and the number of steps and stops it takes to complete a task.
From the start, "I spent time to make sure we had analytics to manage the business," he says. "My effectiveness has been predicated on getting close to customers and suppliers. A high percentage of what I’m doing is spending time, understanding the markets better and what our suppliers need, and helping to drive a positive cultural improvement from our team members. This week, I was in our Frederick (Md.) facility. At 5 a.m. I was meeting with truck drivers, at 6 a.m. with logistics, at 7 with operations, and 8 with the sales team. A lot of my time is listening, learning, and getting ideas." Those ideas run the gamut from major changes to things as simple as whether it's vital that a product has to be tagged a certain way and what the harm would be if you stopped. "The next thing you know, you’ve saved hundreds of man hours," he says.
"I personally and the organization overall subscribe to the view that somehow, housing starts will revert back to the mean," he says. "Therefore, it necessitates a continued operational excellence and focus on efficiency. And when we talk about the pull and local economy, it’s a shift, and you have to get everybody’s mind straight on that. There’s an education and a training process to make sure that our team in the field understands that we want them to be nimble, to make decisions, to move quickly, and act like business owners. And at the same time, you need to get people who support them to actually support them."