COE Distributing Explains Why it is Laser-Focused on Running Efficiently
COE Distributing has doubled the footprint of its headquarters and distribution center in Uniontown, Pa.
“Efficiency is doing better what is already being done.”
The late Peter Drucker, hailed as the father of management thinking, said that. And it’s the type of thinking that J.D. Ewing, the president and CEO of COE Distributing, says he brings to his wholesale office furniture business every day. It’s also a mindset that has been adopted by COE Distributing’s 120 employees.
“It’s about operating efficiently throughout our three warehouse facilities as well as customer service, accounting, marketing … the whole bit,” Ewing says.
A third-generation, family-owned business that began as a typewriter repair and office supply store operated by Ewing’s grandmother in the late 1940s, COE Distributing offers furniture and accessories across the gamut — ranging from products for the high-end executive to the guy who just needs a corner office in his home. The Uniontown, Pa.-based company ships its products nationwide.
In addition to offering well-known brands such as 9to5 Seating and La-Z-Boy, COE Distributing also offers its own brand, OfficeSource.
Bettering the Chain
COE Distributing opened a new distribution center in Houston last October, but it has made several supply chain improvements over the past two years to operate more efficiently. For instance, the company doubled the footprint of its headquarters and distribution center in Uniontown.
“We went from 135,000 square feet to 270,000 square feet and eliminated three outside facilities that were being used for intake and overflow,” Ewing says. “So that gave us some significant efficiencies in the operation and gave us a single operation center in the East.”
COE Distributing also moved its Charlotte, N.C., distribution center to a more efficient building with higher ceilings that allowed for high storage racking. “It just gave us more room to operate,” Ewing says.
The 251,754-square-foot Houston facility will serve Texas, Oklahoma and other nearby states, taking pressure off the Charlotte facility to serve them. The Houston facility will also cover the West Coast.
“It became apparent that it was more efficient to have a facility in that market than to continue to truck product into that market,” Ewing explains. “The opening of the Houston facility created significant efficiencies.”
The Houston facility positions COE Distributing for continued growth in sales in those states. It has also improved the service level its clients experience in those areas, including a reduction in time from orders placed to orders delivered by 50 to 75 percent. Shipping costs from the Houston facility to their destinations are also 30 to 50 percent less than they were coming from Charlotte.
“[The Houston facility] has also allowed us to become a less-expensive option to our e-commerce customers because freight and time were drastically reduced,” Ewing adds.
The West Coast is a growing market for the company, but not an area that COE Distributing is directly focused on. Sales mainly come from customer references.
A Critical Component
COE Distributing’s business hinges on a smooth operation of the supply chain.
“We have our own brand [OfficeSource] that we created and continue to grow,” Ewing says. “It has evolved into an array of products in the commercial furniture setting. That brand has been curated over the last 20 years, and it wouldn’t exist without the supply chain and the efficiencies within it.”
One of the advantages that COE Distributing has created is long-term relationships with its manufacturing partners. “We don’t jump from partner to partner every 12 to 18 months so we can save 6 percent on a certain product,” Ewing says.
COE Distributing’s supply chain is global with a heavy concentration in Asia. But Ewing says the company has diversified significantly in Asia with less of an emphasis on China, which has been a huge benefit because of the tariff wars.
“As much as the furniture industry has been impacted by the tariffs on product coming out of China, we haven’t been impacted nearly as much as our competitors,” he added.
COE Distributing uses about 35 global factories for original equipment manufacturing (OEM) of its products, most of it comprising its OfficeSource brand. The product is shipped to its warehouses where it’s consolidated before being shipped to the company’s clients.
“It’s a little bit different than it was 20 years ago,” Ewing says of the process. “When we began, we were buying from branded North American-based manufacturers as a true wholesaler. And today we’re more of a manufacturer with distribution than a traditional wholesaler. We still wholesale branded product, but the majority of what we do is heavily reliant on an efficient supply chain.”
Efficiency equates to being valuable to its customers, Ewing adds.
“When we get it right, which we’ve been fortunate enough to do the majority of the time, we take market share, become more ingrained in our customers’ businesses and continue to grow,” Ewing says, noting that COE Distributing has averaged 25 percent year-over-year sales growth the last few years, well above the industry average.
Getting it right has to do with company’s continuous focus on engaging employees. Ewing is big on that and has introduced several methods across the company to engage employees, including weekly newsletters, quarterly surveys, continuous education, a company book club, a rising stars program and even an employee engagement program with the Pittsburgh Penguins, the city’s NHL franchise.
Throughout the coronavirus crisis, the company has focused on moving forward even though revenues have slid 60 percent. While nobody could predict the coronavirus and the economic decline it has caused, Ewing says he and his team started planning for the next recession about 18 months ago and became more diligent about making those plans last summer.
“When we moved into quarter three [last year], we really became intent on what would happen when the business slows down,” Ewing says.
COE Distributing was ready to weather the impact of the coronavirus.
“We were in the strongest position we’ve ever been in from a financial perspective,” Ewing says. “You always want your business to be in position to withstand the worst-case scenario.”
None of COE Distributing’s employees have been laid off or furloughed. In fact, Ewing provided them an additional 80 hours of personal time off during the crisis. But with business slowing, Ewing challenged all of the company’s employees to better themselves during the crisis by participating in webinars or taking online classes to improve in areas where they thought they needed to improve.
Ewing also asked employees in accounting, marketing, sales and customer service to reach out to customers — not to sell them anything but just to have conversations with them.
“We wanted to let them know that we’re here for them,” Ewing says. “And if they needed to talk about anything, they could talk to us and we would listen.”