Virginia distributor emphasizes systems integration.
In the mid-1980s, Ron Rechenbach and Bob Giberson worked together at a material handling company but were dissatisfied with the direction that company was taking. They believed they could create a better place to work, so the two business partners set up New Dominion Equipment Company in Richmond, Virginia, on December 7, 1989.
At the beginning, Giberson and Rechenbach chased all the sales, but they soon realized that the long drives to areas across the state weren’t the most efficient way to get things done. They decided to hire Ron’s brother Doug to handle accounts in the Shenandoah Valley and the western part of the state. More expansion followed as the company developed accounts in the Tidewater region, Roanoke and central Virginia, northern Virginia and North Carolina.
The two new business owners attacked all their markets with vigor, but they lacked strategic discipline. “With the exception of forklifts, we tried to sell everything and anything to anybody who had anything to do with material handling,” Rechenbach recalls. “Over the years, we’ve learned some lessons the hard way and in retrospect, we probably would have been better off to refer some jobs to somebody else.”
Rechenbach and Giberson are quick learners. In just over 15 years, their company has gone from those ragged beginnings to a highly efficient, vision-driven organization. With the help of an outside marketing group, the company changed its name to PeakLogix in February 2002. “New Dominion Equipment was one of a multitude of Virginia companies with the word Dominion in its name, and there was no uniqueness at all,” Giberson explains. PeakLogix was chosen to reflect the company’s new emphasis on branding and systems integration.
Rechenbach also reveals a second reason for the switch. “We had a philosophical change in the way we wanted to go after the market. We wanted to pursue systems jobs primarily and not concentrate so much on small, commodity projects. We felt that the future survival of our company would more likely be in the systems arena than in the commodity arena.” These words illustrate exactly the type of foresight and vision that have allowed PeakLogix to thrive in today’s material handling marketplace.
Strategy Dictates Operations
The shift to systems was the result of careful research and planning. “We found from analyzing the business through the years that larger projects were more profitable,” Giberson states. Twenty percent of the projects were creating 80 percent of the revenue, so the thought was to concentrate on those bigger projects. Plus, complicated systems projects carry a higher gross margin percentage. “In the commodity business, it’s the other way around. The bigger a job is, the smaller the margin. With systems, the more sophisticated a job is, the higher the gross margin is because of the perceived risk involved.” However, for Giberson and Rechenbach, experience showed that the risk was no greater on big projects as long as the company did its homework. Efficiency played a role, too. “If our support staff was generating 20 big orders versus 100 small orders, we could retool our in-house staff, cut down our overhead and be more efficient doing the bigger jobs.”
With such a strategic plan now firmly in place, Rechenbach and Giberson can focus more on day-to-day operations. Each man still has the primary responsibility of revenue production, but each also has taken on additional roles. Rechenbach oversees sales and marketing, including sales staff, marketing direction and advertising strategies. Giberson handles operations, including accounting, project management, systems installation and information technology.
They combine to oversee a staff of 30 employees divided among four company divisions. The design engineering team does conceptual development of material flow, facility planning and layout. The equipment division provides and sells all the equipment. The project management division performs turnkey projects, including those where the company may not have provided the equipment. A technology integration division concentrates on hardware and software consulting and interfacing with different product types throughout the facility to make sure they communicate smoothly with the customer’s in-house computer system.
Employees in all divisions attempt to live up to the company’s informal mission statement that PeakLogix is the best resource to meet all of a customer’s material handling needs. “We know what our strike zone is, and we try to concentrate with solutions to our customers within our strike zone,” Rechenbach says. “We don’t try to do something we’re not strong in. We try to help people if things are away from our core strengths, but we no longer try to be everything to everybody.” Consistency is a staple of the two owners’ leadership, and as if to illustrate the point, Giberson adds, “The only way to do business today is to be on the same side of the table as the client and help them make the best purchasing decision. If that decision is not to do business with PeakLogix, then we’d rather have that and maintain a good relationship than to stretch out of our strike zone, fail, and ruin a relationship.”
A Fun Place to Work
Relationships with employees are equally important, and Rechenbach and Giberson do their best to make PeakLogix a fun and relaxed place to work. Corporate headquarters remain centrally located in Richmond, and this office houses about 14 people. The remainder of the work force, primarily salespeople and installation crews, works out of offices in their homes throughout the region. “We have a very flexible, informal culture,” Giberson says. “If people need to work 12 hours today and 5 hours tomorrow, that’s fine.”
A comfortable work environment, however, does not imply that the company culture is lackadaisical. Every Monday morning at 7:30, Rechenbach and Giberson call each salesperson to review the previous week’s work and find out if there are any projects with which the salesperson needs help developing a strategy or tactics. “We’ll do whatever it takes to get the job done. We’re serious and we work hard, but it’s not overbearing,” Giberson explains. As another example, he points to the company trips that occur if the company reaches its revenue goals. Past destinations have included Miami, Jamaica, Cancun and the Bahamas.
Benefits to Employees
Employees also are kept in the financial loop. In monthly staff meetings, Giberson and Rechenbach share the financial results. “We want the staff to see the success and know that we’re heading in the right direction or if we need to step it up,” says Giberson. “I don’t ever want it to be a surprise to anybody. Employees appreciate being part of a participatory company where everybody’s voice carries some weight and it’s not just the owners calling them from on high.”
Printed on each of the company’s business cards is the phrase, “I Can Make It Happen,” which plays into the participatory theme where each employee feels responsible for the success of the company. Another way to build that sentiment is by allowing current workers to help interview potential employees. “We want to make sure that any new person we bring in meets the culture requirements of the established employees,” Giberson says. “We try to ensure that everyone is involved in the major employment decisions.”
Once employed, the company offers an attractive benefits package. “We’ve intentionally tried to make our health care package slightly better than what is typical in the marketplace,” Giberson notes. When the firm set up its 401(k) plan eight years ago, it was the smallest company to have done so with the Principal Group up to that point. “People have told us that we give too much, but we want it to be a nice place to work, both from a cultural standpoint and from a benefits standpoint. We’re not overly concerned with making a zillion dollars. We just want it to be comfortable.”
One of the underlying themes of the owners’ leadership strategy is adherence to what Rechenbach calls the please and thank you philosophy, which, quite simply, is asking people in a nice way to do something and acknowledging them when they do a good job. “Occasionally we’ll buy lunch, bring in pizzas or cook hot dogs just to do some different things,” Rechenbach adds. The strategy has worked for 15-plus years, even though both gentlemen admit that occasionally they don’t see eye-to-eye. “Being the two principal owners and equal partners, we have to agree to do something,” Rechenbach notes. “If we disagree, it’s up to each of us to articulate our feelings and try to convince the other. In the long run, it has worked out more often than it hasn’t.”
Separate from the Competition
As every material handling distributor knows, a customer problem may have multiple possible solutions. “With all applications, there are several ways to satisfy the customer. However, it is our duty to tell him or her which one is best based on our expertise and experience,” Rechenbach says. An interesting way the company puts that attitude to work is through its newly developed PeakLogix OneSource program. The company realized that customers often end up ordering a host of ancillary products to complement the main product. For example, a big conveyor job requires the client to buy guard rails, shelving, workbenches, garbage cans and safety mirrors in addition to the conveyor product. The concept of OneSource is to capture all that extra business up front. “When a client is opening a new facility, they want an expert to come in and survey what they’re going to need so that when they’re ready to open, they’re truly ready to open,” Giberson explains. “The worst thing that could happen is they get ready to open the facility and they don’t have dock plates, dock lights, garbage cans or something that sounds minor. What ends up happening is they have to send someone out to a retailer to pick up those items, and they’ll probably end up paying double what they would have spent if they had pre-bought it.”
With OneSource, clients can avoid such pitfalls. “In essence, it saves customers time and money because they can write a single purchase order rather than many to several different vendors to cover those ancillary items,” Rechenbach says. “Say they open up a new facility and forget to put guard rail around it. It won’t be long before somebody bumps or damages something, and if they had the guard rails from the start, that likely would not happen. Sometimes they don’t realize it until we point it out to them.”
The PeakLogix philosophy is to “help clients buy optimized solutions,” whether that entails meeting clients, getting engineers involved, doing data analysis, analyzing core drivers or anything else. Giberson believes that sort of attention is a separator. “In this business, there’s a portion of the industry that has an order-taking mentality and simply says, ‘What do you want to buy today?’ That idea over the years has never failed to get us into trouble. We’ve made a conscious effort to scrutinize everything on our clients’ behalf to make sure that we’re supplying the absolute best design and best solution for the client.”
More than Simply Performance
Providing client solutions is what drives PeakLogix, and the two owners know how to go above and beyond quality performance. Back in the company’s nascent days, it was easy because Rechnebach and Giberson knew all of their clients. Now that the company has grown, showing customer appreciation requires a little more effort. “We’re leveraged out there with the salespeople and we don’t know every customer, so we must do other things to build our relationship,” Giberson says. “Ron and I routinely take three or four people from a key client organization out to a nice dinner to show our appreciation for their business and fortify our relationship with them.” Both men see this as a crucial step toward maintaining healthy business relationships. “We have a small number of clients representing 80 percent of the business. We don’t want to neglect other clients, but we really want to build the business from that small group and grow horizontally within their organizations,” Giberson continues. “As everybody knows, it’s much easier to sell more to an existing client than it is to get a new client.”
These meetings serve a dual purpose. In this age of technology, it is easy to get caught in the rut of communicating only by fax, voicemail and e-mail. However, Rechenbach encourages face-to-face meetings with customers. “You can’t forget to have the personal relationships along with the technology. It is absolutely essential for us to constantly get out into the marketplace and to the customer’s place of business.”
Looking to the Future
Of course, that isn’t meant to imply that technology is not of daily importance. As the sophistication of products and the general office environment have become greater, so has the need for distributors to adapt accordingly. Rechenbach laughs as he relates, “When we first started, I don’t think we had a fax machine! We finally got one and then progressed into computers, cell phones and now more sophisticated computers.” Digital cameras are new additions that have proven helpful to business. Instantaneous, precise information is what customers today are clamoring for, and these new technologies allow salespeople to travel to work sites and pass along information about the size and progress of a project.
Vision and foresight have proven to be valuable allies of the ownership tandem at PeakLogix. So the next logical step is to focus on what’s ahead. “After two-and-a-half years of PeakLogix and the new direction, we’ve finally hit our stride, and our pipeline for projects is fuller than it’s ever been. We’ve established that the model works, so our future is to live out what’s happening and grow,” Giberson says. That growth likely will be with clients who have very high expectations, Rechenbach adds. “The clients of the future will do business with people who can do total solutions for them. Material handling companies will be adjuncts to their own departments, people who understand the business and can handle more things. They are going to expect PeakLogix and similar distributors to be more knowledgeable of what’s going on in the industry and technology, and bring new types of applications to see if they make the right fit. We’re going to need salespeople who are extremely knowledgeable and have the foresight to look at things with open eyes and not have tunnel vision.”
Leave it to the team at PeakLogix to already be prepping for the future, to see the big picture along with the details. That very formula has brought them success to this point, and they’re ready for more of the same in the years to come.