The new Hughes

Hughes Supply’s megacenter concept combines multiple products into a unified facility.

by Rich Vurva

If you ask several Hughes Supply customers to describe the company to you, their answers might be drastically different. Some think of Hughes as a source for plumbing and HVAC supplies, others say it’s an electrical wholesaler or a distributor of tools and fasteners, or perhaps maintenance, repair and operations products. They’d all be correct. Unfortunately, some customers are unaware that Hughes Supply offers expertise in all of those categories (and more).

That’s why one of the company’s four goals is to promote the concept of Hughes One in order to position Hughes as the place customers can go for a wide variety of their product needs. The idea is being implemented at two new megacenter locations in Miami and Atlanta, with a third slated to open in 2006 in Orlando, Fla., and more to follow. The megacenters showcase products from multiple Hughes businesses, including MRO, Water & Sewer, Electrical Utilities, Plumbing/HVAC, Electrical and Tools & Fasteners.

“Historically, individual branches focused on specific product groups,” says chief operating officer Neal Keating. “The megacenter gives us an opportunity to showcase our vast product offering to our customers, increase efficiencies in the order fulfillment process and provide a foundation to build upon the Hughes One concept.”

Hughes opened its first megacenter at a 22-acre, two-building campus in Miami. It brought five Hughes branches together into one location, giving customers a one-stop shopping experience. For instance, when a landscaping contractor stops by to pick up an order of water well pumps and irrigation valves, he’ll see the array of tools and fasteners and other supplies Hughes offers. Customers who visit a megacenter for the first time typically add products to their original order.

“It’s a great opportunity to create a customer sales experience and promote our brand. Customers have the same experience in the same building,” says Mel Meineke, vice president of corporate marketing.

Improved processes
The state-of-the-art megacenters also offer Hughes greater operating efficiencies. Instead of maintaining five separate warehouses, each with their own operating procedures and staff, the 442,000 square foot megacenter in Atlanta helps Hughes consolidate that activity into a single location. The Tools & Fasteners group services all nationwide branches out of this location, while the other businesses focus on the 25 counties in the Atlanta metro area.

“Quite frankly, many times in the past if you put two branches together, they operated somewhat autonomously because they felt the customers were different and the needs of the customer were different,” says Jonathan House, vice president of supply chain. “But we believe, and we’re proving this now, that we have the ability to provide the kind of warehousing support that everyone needs with fewer resources.”

For customers who buy from multiple branches, the megacenter eliminates the need to send drivers from location to location to pick up orders, or to receive orders from separate Hughes delivery vehicles.

Placing global positioning system (GPS) tracking devices on delivery vehicles is one way to simultaneously improve customer service and operating efficiency. Every evening, megacenter employees load trucks with products for a variety of different customers. One vehicle might contain products from several business units. The next morning, an automated system routes the vehicle so that it makes deliveries in the most efficient manner.

“In the past, we had two or three different vehicles going to the same location during the course of the day. Now we have only one vehicle going to that location. Anytime a vehicle from Hughes Supply or anyone else shows up, they have to stop what they’re doing and offload the vehicle. Now they only have to do it once,” says House.

GPS capability helps keep tabs on the precise location of trucks while en route. If a customer calls asking for an estimated time of delivery, instead of being told, “Your order is on its way,” they can hear, “The truck is two miles from your dock and should arrive within minutes.”

The system also improves vehicle and driver scheduling, which frees up resources and equipment for emergency deliveries.

“The most valuable commodity anyone has is time,” says Jay Romans, senior vice president of human resources. “Our customers run their business on a time-based system. Every time they’re distracted, it takes away from what they’re trying to accomplish. Our focus on satisfying their needs is at the foundation of developing these types of systems. If I can minimize the impact that Hughes has in disruption on your business, that’s a value-added service.”

As Hughes opens additional megacenters, it won’t necessarily mean closing local branches. But because the megacenter can also serve as a regional distribution center, local branches may not require as much space or inventory.

“We’re able to ramp down the size of the other branches to make them smaller and more efficient. Customers can continue to go to those locations if it’s convenient for them, but we don’t have to stock as much because we have it stocked at the megacenter. We can maintain replenishment to those smaller branches on a daily basis,” says House.

Improved customer service
Putting a broader range of products in one location also makes it easier to kit products. For contractors working on jobs with tight time frames and thin profit margins, it’s important to have the material they need for each day’s jobs kitted and ready to go, says Keating.

“It can make the difference in whether or not they make money on that job. Having the material is one thing. Having it on time is another. Having it on time in one shipment at 6:45 in the morning makes all the difference,” Keating says.

The megacenter concept also improves communication between branches. Salespeople have easier access to product and application experts from other business groups. They no longer have to use the phone or fax to contact a product specialist from another group; they can literally walk with the customer to help him find the information he needs.

“Megacenters make us more efficient, and help us do a better job of promoting Hughes One to better serve our national accounts or accounts that buy from multiple lines of our business today,” says Keating.

State-of-the-art facilities
In addition to offering a more pleasant atmosphere for customers, the Atlanta facility houses a state-of-the-art training center with surround sound and other audiovisual equipment. In-house trainers and vendors use the classroom setting to teach salespeople the product knowledge and selling skills they need to serve customers. The company recently embarked on a comprehensive sales training program. Starting with the top-performing salespeople, the training will eventually reach all inside and outside salespeople.

“We’re trying to move past feature and benefit selling. Let’s understand the customer and the real value we provide to them,” says Keating. “We want all of our salespeople to be able to anticipate their customers’ needs. It really comes down to our differentiating ourselves in the market through superior customer service. In distribution today, that’s the name of the game.”

This article originally appeared in the November/December 2005 issue of Progressive Distributor. Copyright 2005.

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