2014 Supply House of the Year: Ferguson Enterprises
National distributor’s sustained success centers on people and innovation.
There is an office at Ferguson Enterprises’ headquarters in Newport News, Va., that bears resemblance to a high-school art classroom.
Drawing tables and swatches of fabric are among the office’s contents. It is here where blueprints of the national distribution giant’s 1,350-plus locations are hatched, right down to the type of carpet being installed in each building.
While nothing more than a nondescript office to a visitor walking down the hallway, the space means everything to a company that ranks No. 1 in the 2014 Supply House Times Premier 150 listing of distributors based on sales from the previous fiscal year (In its most recent annual report, Ferguson reported revenues of more than $11 billion).
Because at Ferguson, those local branches and the people that work inside them are the be-all and end-all. A commitment to superior customer service at the local level supported by an innovative and responsive corporate infrastructure has allowed Ferguson to continue to thrive in an ultra-competitive distribution marketplace.
The 61-year-old company, which has been named the 2014 Supply House Times Supply House of the Year, continues to enjoy impressive growth with revenue increasing 8% in the first half of 2014, including a 10% for fiscal 2014, including an 8.0% climb over last year on a same-store basis. (For more on Ferguson’s just-released year-end fiscal results, read here.)
But CEO Frank Roach, a 39-year veteran who joined the company in the nascent days of its employee training program and worked his way up through the organizational ranks (starting in the warehouse), cautions none of Ferguson’s success would be possible without two key ingredients.
“People and innovation make us unique,” Roach says in his office at company headquarters. “We live by a theme around here of fear the status quo more than you fear change.”
Ferguson, owned by Wolseley plc, the world’s largest trade distributor of plumbing and heating products and a leading supplier of building materials, employs about 20,000 individuals throughout North America. And as Roach tells it, that 20,000 number to the company is akin to hitting a 21 in blackjack.
“Our associates have and will always be our competitive advantage,” he says. “We feel we have the best and the brightest here. I’m just the messenger. We have a wonderful team of people that has helped us achieve this success.”
Roach and Senior Vice President of Human Resources Steve Roznowski are proud of the company’s unwavering commitment to training, not just when an associate is hired, but throughout his or her career at Ferguson.
“Our focus is to train, retain and develop the very best people here,” says Roznowski, in his 30th year with the company. “We’re always looking for great talent and are committed to developing that talent. We only are as good as our people. We invest a lot in our associates.”
That investment starts with new hires being brought to Newport News to take part in the company’s progressive Cultures and Values program.
“Usually when someone has been with the company for about five to eight months they go through the program here,” Roznowski explains. “They’ve already been through some of the training steps and they are at a time when they are beginning to wonder what types of opportunities are available at Ferguson. They come in here and see our headquarters and meet with a lot of company leaders. They walk away with a great appreciation of Ferguson. The program connects them with the rest of the organization and helps them understand this company and the opportunities they have here.”
Ferguson also conducts senior leadership development training for the top 150 associates it identifies throughout the company. Roach adds at least two people a year are dispatched to Harvard University to study in its prestigious Advanced Management Program.
“Training is an expectation for everyone at Ferguson,” says Ferguson COO Kevin Murphy, who joined the company in 1999 through the acquisition of his family’s business. “Learning is a forever thing that never goes away.”
Ferguson’s expansive training programs haven’t gone unnoticed by its vendor partners. “One of Ferguson’s biggest differentiators is its management trainee program,” Rheem’s Randy Roberts says. “Ferguson has a dedicated training program to build high-quality employees. Their training program sets them apart. They are building their own leaders.”
Jim Golini, Ferguson’s general manager for its 38 branch locations in the expanding metro New York and New Jersey area, joined the company 26 years ago and says his passion for the job is as strong as it has ever been thanks to not only the support he receives from corporate headquarters, but the employees he oversees.
“Ferguson allows me to do a job I love and they challenge me to get better every day,” he says. “I have 800-plus associates with that same passion to be the best they can be and that is what makes Ferguson great. They make Ferguson stellar in the marketplace.”
Rich Butler, the general manager of Northern California-based Cal Steam (a Ferguson company), was hired by Roznowski to go into a Ferguson college trainee program 27 years ago.
“I was listening to Steve speak about the company and how they wanted to put together a group of individuals that had experience with things such as playing sports and being in a team environment,” he says. “They were looking for that competitive individual that gets up every morning, works hard, enjoys it and reaps the benefits of working as a team. That team concept has been active for the 27 years I’ve been with the company and it’s what still is attractive to me.”
Butler explains that team-first attitude was never more evident than a year after Ferguson acquired Cal Steam when about 100 people with the company walked out on the job.
“That happened on a Friday,” he recalls. “Without hesitation, Ferguson had people showing up from all over the country sitting at those empty desks Monday morning. That shows you the type of individuals we have here. These people packed up and told their wives, girlfriends, husbands, boyfriends and kids that they might be gone for a few weeks or a month. They didn’t even know what Cal Steam was. It didn’t matter. They were needed here and they came here. They stopped what they were doing and came out here to help. We support each other.”
Golini loves the fact he is able to be in regular contact with the top decision-makers in the massive organization, including Roach and Murphy.
“I don’t know if something like that exists in other big companies,” he says. “I feel like I can call the CEO or I can call Kevin Murphy and get a high level of support. They are busy running an organization the size of ours and they still make time to stay in contact with field leaders. If I reached out to Frank Roach right now, he would take my phone call.”
Dominick Porcelli, the Ferguson general manager for the states of Ohio, Indiana and Kentucky (34 locations), says people will play an even greater role in the company’s success going forward.
“The challenge for us is to never get complacent,” he says. “We have to continue to create value where talented people will want to come into the industry and continue to provide value to our customers so some new technology or competing industry doesn’t jump in and make us eat our lunch because we never saw it coming. We must be relevant to the customer and make sure they view us as their best option. And we continue to challenge our people to do that.”
Changing for the better
Innovation also is at the forefront of what continues to drive Ferguson forward. Roach laughs about the fact people from time to time will tell him 39 years is a long time to be with one company.
“My answer to that is I’ve been with Ferguson for almost 39 years, but I’ve been with a different company almost every year I’ve been here,” he says. “Change goes on within our company and is in our culture. It speaks to how we are able to perform well regardless of what the economy or the current business environment has given us. I would not want to be with a company that did not change. You can grow, but if you don’t grow and improve, there’s not a lot of excitement to it. What appeals to me here is our ability and willingness to grow, change and improve.”
But change, Murphy cautions, must have a defined purpose. “One, will change enhance our customers’ experience with us?” he asks. “And second, does it expand additional opportunities for our associates? If it meets those criteria, it’s a good thing. We have the desire to not only grow, but to look at improvement and change.”
Ferguson’s recent innovations have spanned the spectrum from the rollout of a successful mobile website to a more formalized approach to customer feedback to the popular Ferguson PRO Plus loyalty program (where NFL Hall of Famer Terry Bradshaw is the company spokesman).
Roach adds the company’s national sales center continues to expand, while a beta showroom site is being constructed on property directly across the parking lot from where Roach’s office is. The new showroom will allow Ferguson to test new programs and technologies and get customer and vendor feedback prior to any type of company-wide rollout. The new site is slated to be completed sometime in 2015.
“We want to make sure we are meeting our customers’ needs in a timely manner,” Roach says. “We continue to look into adjacent business and service opportunities that complement what we are currently doing.”
Larry Topping, the branch manager at the Ferguson store across the pathway from company headquarters (the site of the former company headquarters now called the David Peebles Building in honor of Peebles, one of the company’s previous CEOs), is appreciative of the company’s unrelenting focus on fill rates and fulfillment times.
“Our distribution centers (Ferguson has 12 throughout the country and recently announced plans to open a new one in 2015) have been one of our biggest competitive advantages,” says Topping, who started with the company 33 years ago. “They allow us to get material the next day. We can get just about anything we need the next day. Most weeks we’re getting three or four trucks a week. It’s pretty tough to beat that when you have no freight or UPS charges involved.”
Roach feels technology will continue to play a major role in how the company innovates going forward. “The way our customers do business is changing,” he says. “We took a look at how our customers order product and access information starting back during the most recent recessions. Ferguson always has been an extension of our customers’ businesses. This is still a relationship business and a partnership. Our investment in technology will continue to be significant because it’s so important and it’s what our customers want.”
Ferguson Senior Vice President and Chief Marketing Officer Byron Woodard is one of the senior management team’s newest additions, having been with the company for a little more than a year. It didn’t take Woodard very long to see innovation at work.
“I’ve noticed we’re very open to change,” he says. “Just because you’ve always done something a certain way doesn’t mean you can’t do it better going forward.”
Woodard also believes Ferguson is in a prime position to capture even more market share. “Our strength is our brand,” he says. “But there still are customers who don’t know all about Ferguson. That’s why we must make sure we are being informative about all our business units and putting out a value proposition on how we differentiate ourselves. There is a prime opportunity out there to extend our brand and gain even more of the marketplace.”
But don’t think for a minute Ferguson is ignoring its brick-and-mortar locations. “We take a very retail approach to our counters and showrooms in terms of how we merchandise and display products and service customers,” Roach says. “We have found retail has the highest standards around merchandising and best practices. How can we leverage that in our industry as well as insert more technology in that space? Counter and showroom channels are a significant part of what we do here.”
Sam Rose, Ferguson’s senior director of showrooms, points to the same core values of people and innovation when explaining the showroom division’s recent evolution.
“We have a very customer-centric approach to everything we do in the showroom,” he says. “We want to provide a unique, personalized, one-on-one experience from the time they walk in the door to the time product is delivered on the jobsite. One way we provide that is through our showroom product experts. Their product knowledge really is what sets us apart. They work as an extension of the builder, remodelers and designers and have a ‘our showroom is your showroom’ mentality.”
Rose adds Ferguson isn’t afraid to venture into new product categories in order to take that customer experience to the next level. Case in point is the company’s recent acquisitions of Karl’s Appliance and Factory Direct (two of six Ferguson acquisitions in the last year) to bolster the company’s appliance position.
“While we always have been known for plumbing, we have stepped up our appliance and lighting offering,” he notes. “Becoming a one-stop shop for customers and offering plumbing, lighting and appliances all under one roof helps us thrive. We have stayed true to our brand and value proposition — we offer the best people in the industry and the absolute best environment to see, touch and experience products. Clearly communicating the value of our showroom also has contributed to our success.”
Mark Mango, president of Wheatland Tube’s Standard Pipe and Sprinkler Division, says market diversity has aided Ferguson, particularly during the most recent economic downturn.
“Their diversification has served them well over the boom and bust of the construction markets,” he says. “If the plumbing market is down, fire protection carries the water. If fire protection hits a bump, industrial PVF picks up the slack. Best of all, they are very good at every segment they participate in.”
ROHL has been a Ferguson partner for more than 20 years and Mark Rohl, the company’s Eastern Division president, notes its long-standing relationship with Ferguson is bred out of like attributes.
“I have great respect for their corporate culture, key performance indicator requirements and disciplined approach to planning and execution,” he says. “We share the same standards of excellence and because of this it makes us both better. If they say they’ll do it, they’ll do it and do it best. That get-it-done attitude is witnessed from the front office to the warehouse to each showroom and sales associate.”
Local flavor rules
From the outside looking in Ferguson may seem like a giant corporate conglomerate. But inside the walls of the company’s various headquarters buildings in Newport News (including one that houses IT and a state-of-the-art production studio), the sole focus is on meeting the needs of all its North American locations.
“We never forget the importance of the individual markets,” Roach says. “It still begins and ends at the local level. The role of a big organization and this campus is to support our associates in the field and provide the best possible experience for our customers. As long as we remember those things we will be OK.”
And in those local Ferguson markets, associates are well aware of the high level of competition that exists.
“If you look at the competitive landscape, we have very good competitors,” Roach says. “The independent wholesaler is our biggest competitor. They have great relationships in the marketplace and do things very well and have a strong history of performance and success in the market. We have to be good at everything we do and that means having the right people that are trained well and giving these local markets the appropriate support they need to take care of our customers.
“Our competition makes us better. We must do things well in order to grow. If there is any pressure we impose it on ourselves by constantly asking how can we be better at what we are doing and how can we be different tomorrow than we are today? If we don’t change and we don’t respond and create opportunities to enhance the experience for our customers, someone else will do that either inside or outside our industry.”
Golini feels Ferguson’s best days are still ahead of it as long as the company continues its innovation focus with the goal of taking the customer experience to even greater levels.
“I’ve used the phrase customer service makes payday possible,” he says. “Without our customers, we’re not here. Our objective is to have the best customer service. As big as we continue to get, we never lose sight of our customers.”
Giving back is part of Ferguson’s fabric
While Ferguson has more than 1,350 locations throughout North America and employs some 20,000 individuals, CEO Frank Roach says it hasn’t forgotten the importance of the word local — specifically having a genuine and active presence in each community it does business in.
“Giving back to the communities we are in is something we expect our employees to do,” he says. “Community involvement is part of our core values.”
Among the many community-oriented initiatives Ferguson organizes are a national summer food drive, Project Holiday Joy (collecting toys and other needed items for families) and a program where greeting cards are sent to U.S. military troops around the world that cannot make it home for the holidays. This year’s food drive was highlighted by the 38 locations in the New York metro area donating more than 3,000 pounds of human and animal food to several area nonprofits.
Ferguson also is heavily involved in philanthropic efforts in its local headquarters community. The company is in its second year of a partnership with Habitat for Humanity Peninsula and Greater Williamsburg. Ferguson will donate all the rough-end and finished plumbing products for each new-home build and rehab in the area. It also recently donated more than $1 million to a pair of Virginia youth educational programs.
“These programs are very important to us,” Roach says. “That’s what we are all about.”
The company also has been ultra-responsive within its communities that have endured disasters such as hurricanes and tornadoes.
“A few years ago a tornado destroyed our main location in Raleigh (N.C.),” Roach recalls. “We were back in business immediately because of e-commerce and the bricks and mortar (Ferguson set up shop in a new location and placed associates in surrounding locations. The main branch later re-opened).
“More importantly, we made sure all of our associates’ needs were taken care of and made sure we were helping our customers and the people in the community any way we could. We will go into affected communities and provide whatever we think is helpful. We want to be first responders. This all goes beyond products and services. We care about our customers and the communities we are in.” — Mike MiazgaSupply House Times
Supply House of the Year Previous Winners
1959 — Robertson Supply
1960 — Noland Co.
1961 — EMCO Ltd.
1962 — Raub Supply
1963 — Atlas Supply Co.
1964 — A. Y. McDonald
1965 — Horne-Wilson
1966 — Taylor Companies
1967 — Palmer Supply
1968 — J. Levitt
1969 — Kiefaber Co.
1970 — None
1971 — None
1972 — None
1973 — Hajoca
1974 — Ferguson Enterprises
1975 — Standard Plumbing Supply
1976 — CSC Inc.
1977 — Trumbull Supply
1978 — Harry Cooper Co.
1979 — F. W. Webb
1980 — Slakey Bros.
1981 — RAL Corp.
1982 — Familian NW
1983 — Moore Supply
1984 — Apex Supply
1985 — Noland Co.
1986 — Familian Corp.
1987 — Hughes Supply
1988 — Davis & Warshow
1989 — LaCrosse Plumbing Supply
1990 — A. Y. McDonald
1991 — RAL Corp.
1992 — Columbia Pipe & Supply
1993 — LCR Corp.
1994 — Ferguson Enterprises
1995 — Hughes Supply
1996 — Familian NW
1997 — F. W. Webb
1998 — Apex Supply
1999 — Torrington Supply
2000 — Wolff Bros.
2001 — Lehman Pipe & Supply
2002 — Todd Pipe & Supply
2003 — Davis & Warshow
2004 — WinWholesale
2005 — Castle Supply
2006 — Red Man Pipe & Supply
2007 — Standard Plumbing Supply
2008 — Wilson
2009 — Robertson Heating Supply
2010 — Rampart Supply
2011 — Modern Supply
2012 — Coburn Supply
2013 — Southern Pipe & Supply
2014 — Ferguson Enterprises