Dixie Plywood Doubles Down on Leadership, Marketing

Danny Bachman and Mark Gentry together form a sort of tag team at Dixie Plywood, where the co-COOs manage different duties but work toward a common objective. The former, with 20 years at the Savannah, Ga.-based distribution firm, covers sales and marketing, branch activities, and other operational duties; while the latter, with 30 years of tenure, is the go-to guy for financing, human resources, and like functions.

The family-owned business has been around for decades, having been established by the late Waldo Bradley, who previously founded Bradley Plywood Corp. to market the hardwood plywood products coming out of its Savannah mill. The first distribution center opened for business in Atlanta in 1944; and when a second sprouted up the next year, Dixie Plywood was born. Its uncommon operating structure, however, came much later. After being disrupted by a couple of departures at the top, Dixie turned to the co-COO model in 1999 to prevent a leadership gap in the event of an executive loss. The move gave the company principals some peace of mind that there would always be someone in charge, according to Gentry, who says the format took some time to settle in but ultimately has proved effective.

Gentry points out that the executive level isn't the only place in the organization where Dixie “doubles down.” The company also practices a dual-marketing approach. “We're a little bit different in that we service retail dealers — lumber yards — but we also have a very strong industrial presence,” he explains with a slight Southern drawl. “We have specific salesmen that are industrial, and then we have salesmen that are retail-oriented.” That, Bachman adds with a similar twang, gives Dixie diversity among its customers as well as among its products -- which in turn provides a certain level of stability. “We've aligned ourselves with some pretty important vendors in both sides of those customer segments, and that's been a key,” he continues. “What's made us unique is the alignment with some of those vendors that service both or service one or the other of those markets.”

Also to its advantage, Gentry notes, is that Dixie is one of the top two players for certain key products in many of its markets: its 11 full-line distribution centers dot the U.S. South and Southeast as well as the Caribbean basin. “We try, where we can, to have an exclusive relationship with the supplier. That's hard to get, but you can be one of the two in a market,” he explains. “And we do have that.” At the same time, Bachman stresses, “We always try to get the number one product in a category. So if it's siding, we want the number one product. If it's engineered wood, we want the number one product. If it's hardwood, plywood...if it's melamine, we want the number one supplier in that category, whatever it is. And if we can't, we want number two. And we want to make number two number one.”

The co-COOs agree that membership in NBMDA has been good for massaging Dixie's relationships with vendors, both on a small scale and a broader one. “One vendor, in particular, is very important for us and this [involvement in NBMDA] allows us to be able to communicate to them as a group of customers instead of being just one customer,” Bachman says. “So it provides that vehicle and as well as that touch point for other vendors.” Gentry also finds it interesting to be part of an organization where other members are customers of some of Dixie's own vendors. “You get some insight into what may be happening in other parts of the country and that just helps to keep you aware of what could potentially be coming our way in our market.”

As far as what's already happening, both executives quickly cite increasing consolidation — mostly on the dealer, or reseller, side -— and the shift by many large retailers since recession to “just-in-time” mode. Just as they divide duties at Dixie Plywood, however, they offer a split view of these trends. On one hand, for example, “just-in-time” provides an opportunity for Dixie to step in and service inventory needs for customers who experience a supply-chain spike, Gentry notes. On the other, Bachman counters, it is sometimes a challenge to maintain the proper supply level to support a retailer or cabinet shop when demand for a specific item surges. Consolidation, which he says is more prominent on the dealer or reseller side, also has its benefits and drawbacks.

Other opportunities and challenges are more clear-cut. Dixie's financial stability and access to capital has positioned it favorably, for instance, to compete on the credit side. “The working-capital issues that some of the larger firms had gave us an opportunity to go in and extend more credit terms and be able to garner more business from the bigger, national dealers,” says Gentry. Transportation, meanwhile, is a problem that Bachman sees continuing to grow as the market does. The restricted availability of and higher pay scale for truck drivers, many of whom defected to the oil industry when the fracking boom took off, is especially troubling for Dixie and the distribution community.

Dixie is addressing the driver-turnover issue with truck routing technology to help get drivers to their destinations, with an eye on maintaining a high level of service to the client base. “This technology allowed us to put an experienced driver that was unfamiliar with the territory or our customers and locations, actually put them in the truck and the route was generated automatically. …That's been an asset for us,” according to Bachman. Other solutions, too, have benefited the firm. Gentry ticks down the list: the document management system that eliminated paper files; the transition to barcoding; and Dixie's 10-year-old enterprise system, which is constantly being upgraded.

However, the main weapon in its arsenal of responses to these various challenges, Gentry and Bachman concur, is Dixie Plywood's investment in good managers who make solid decisions. While they share the COO duties between them, they do not micro-manage. Managers have local autonomy to run their branches and place the products in them that they deem appropriate, which has been critical in recent years as the company has moved away from price-driven commodity products that Bachman says “only work if you are the low-cost provider” in favor of specialty items that add value. “We've seen some expanded margin opportunities by just looking at our products that we can get more margin for, and we try to concentrate on those products and support those products with current, respective customers,” Gentry remarks. Local leadership, he and Bachman emphasize, plays a large role in that re-focused environment. “We try very hard to differentiate our products, and it's done in large part at the local level by our management teams,” Bachman affirms. “We have a lot of faith in the people out in the field to determine what best works in the marketplace. That's been key for us.”

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