Allied for Growth
For Orton Industries of Atlanta, forming strategic alliances -- both internally and externally -- is the best way to meet the demands of a changing industry
By Victoria Fraza -- Industrial Distribution, 2/1/2000
Brian Gilboy is glad to have Orton Industries as an ally in today's industrial marketplace. Gilboy is marketing manager for the hose products division of Parker Hannifin's fluid connector group and has been working with the Atlanta-based fluid power distributorship for 12 years. Gilboy counts product knowledge, technical proficiency and customer service among Orton's top qualities, but says the firm's ability to build relationships within the supply channel is what really sets it apart from other distributors."That's a very strong suit that Orton has," notes Gilboy. "Not only with their vendors, but with their customers."
While many would agree that forming strong relationships just makes good business sense, Orton tries to take that philosophy to the next level. The $16 million firm is a founding member of iPower of Georgia (an alliance of six regional distributors providing integrated supply services), is also part of an inventory sharing program with 14 other distributors nationwide, and is always in search of ways to work with other local companies -- whether by outsourcing to them, selling to them, or working with them as tier-two distributors.
Forming such strategic alliances is essential to Orton's goal to become their customers' key contact for fluid power and automation products, says Hal Kemp, vice president of Orton. "It's all about singleness of source," notes Kemp, pointing to Orton's broad product mix, which includes fluid connectors, hydraulic components and systems, and automation products. "We've got to be a full fluid power/automation solution provider to our customers."
The drive toward single-sourcing is causing many local and regional distributors to face a difficult choice: either expand and become sole-source providers themselves or further specialize as niche players. Orton has a unique approach to the problem: large enough to provide a wide range of products, yet small enough to offer technical expertise and value-added services, the firm is attempting to fill both roles for their customers. By aligning with manufacturers and other distributors in the supply chain, Orton can offer the increasing array of products and services customers demand. At the same time, the firm is developing a focused, division approach to business aimed at maximizing the company's product and applications knowledge.
On solid ground
Orton was founded in 1969 as The Orton Co. by Ray Orton, a 65-year old retiree looking to launch a second career. Ray Orton relocated to Atlanta from Cleveland to start the company -- headquartered in the suburb of Doraville, Ga. -- in large part because Parker Hannifin needed a distributor in the area. Orton remains closely linked with Parker to this day. Company president Jim Alexander, who sold his interest in a Chicago distributorship to purchase Orton in 1984, has ties to Parker that stretch back 30 years. Likewise, Kemp worked for Parker for 11 years before joining Orton in 1991.
While successful from the start, Orton experienced the bulk of its growth in the last five years -- more than doubling sales from $7 million in 1994 to last year's $16 million. Alexander and Kemp attribute much of that growth to good customer service, product knowledge and the value-added services Orton provides. The company offers a range of fabrication services, an inventory management program, has added a full line of automation products to meet customers' needs, and can provide integrated supply services through iPower or as a second-tier distributor. The Orton Web site provides product information and links to manufacturers' sites, and Alexander says the company is preparing to offer e-commerce, though no launch date has been set. While customers aren't demanding online ordering now, Alexander says the company needs to be prepared for the day they do. He explains: "It would be a disadvantage in the future if we didn't take action on it now."
But the real driving force behind Orton is its ability to partner with others in the supply chain. The firm's relationship with Parker Hannifin forms a strong base, from which good customer relationships have grown. Alexander and Kemp point to their close connection to bus manufacturer Blue Bird Body Co. of Fort Valley, Ga. Last year, Blue Bird and Orton worked together on a project to install compressed natural gas fittings and hoses in the company's buses. Dave Tyler, corporate purchasing agent at Blue Bird, says the experience was a good one.
"Customer service is what sold us on Orton," says Tyler. "We had a lot of questions about the material and they brought in factory reps and answered all of them ... They're willing to commit the resources to find out what we need and help identify the correct part and the correct supplier."
Now, Orton supplies the compressed natural gas fittings and hoses on time at a competitive price, says Tyler, noting that reliability is one of a distributor's most important qualities. The quest to become more reliable and efficient actually drove Orton to form yet another strategic alliance two years ago -- with 14 other Parker Hannifin distributors across the country. The companies are linked in an inventory sharing program that allows inside salespeople to view the inventory at all of the companies' locations and purchase whatever products they are out of or don't normally stock. The idea is to help improve customer service, says Alexander, adding that it gives his company access to $30 million in inventory as opposed to the $2 million they stock themselves.
"We're stronger together than we are individually," comments Kemp.
That's a common theme at Orton -- and one that applies internally, as well. While teamwork has always been an important part of the Orton strategy, the company is taking a new approach to the concept for 2000. Building on the company's three business development teams -- fluid connectors, hydraulics, and automation (including pneumatic) products -- Orton has assigned team leaders responsible for managing and developing the company's business in each product category. One of the program's goals is to heighten Orton's technical knowledge by creating a network of internal experts.
Orton's focused business approach is also designed to promote team selling. Rather than have geographic territories, each outside salesperson is assigned to one of the three product categories and works under the direction of the team leader. The "experts" in each group can then work together to fill customers' total fluid power and automation needs -- creating an internal alliance, of sorts.
It is simply too much to ask salespeople to become experts in each of the product groups the company covers, Alexander and Kemp explain. It's too much, that is, if you want to provide customers with the kind of technical knowledge and applications expertise Orton prides itself on. "With the product mix that we cover and the technical issues we deal with, it was impossible to expect everyone to do all three," says Kemp. "It all boils down to making assignments more manageable -- and making employees product experts."
It's also a way to answer the single-source question, as Alexander is quick to point out. "Our customers are going to deal with all of these issues," he says. "So we want to be their resource."
The Business Development Team program was officially launched in January, although Orton has had an informal team selling approach for several years. Alexander and Kemp say the concept is being driven by manufacturers and is gaining popularity in the industry. Orton's program is part of an effort to increase business in the Georgia market -- both with new and existing customers.
Another way the firm is trying to do that is by reaching out to "the local guy," as Alexander and Kemp put it, through a network of branches called ParkerStores. Developed by Parker Hannifin, ParkerStores operate much like local hardware stores, focusing on walk-in sales and add-on business. The idea is to provide customers throughout the state with convenient Orton locations. The stores help meet the needs of highway crews, construction workers and other mobile customers, as well as industrial customers located a few hours away from Orton's Atlanta headquarters.
While convenience is the driving force behind Orton's ParkerStore strategy, traffic is also a factor. Traffic is so bad in the Atlanta area that many are calling the city the "new Los Angeles," says Alexander, referring to the notorious traffic jams on the West Coast. The situation is so bad, it keeps many customers from stopping by Orton's headquarters to pick up a last-minute item or two. "With the congestion of traffic in Atlanta," notes Alexander, "They're not going to drive across town for these parts."
To date, Orton has opened two ParkerStores -- one in Doraville, Ga., not far from company headquarters, and one in Columbus, Ga., about 90 miles southwest of Atlanta. Plans are to open two more locations this year -- one in Forest Park, Ga., just south of the Atlanta airport, and one in Macon, Ga., about an hour-and-a-half south of Atlanta.
Other future plans include expanding the company's hydraulic business. Kemp says he would like to open a regional repair facility, a service Orton now offers by outsourcing to another local distributor. "That's been part of our alliance strategy," Alexander says. "We outsource to other distributors who are focused on repair, manufacturing, etc." But part of the struggle for the future, the two point out, is deciding which of those value-added services they can provide themselves and which ones they either won't provide at all or for which they will seek other sources of supply.
"The change is so rapid now, it's hard to plan or conceive what our business will be like in three to five years," notes Alexander, pointing to technology and consolidation as major change agents.
But the leaders at Orton aren't afraid of change. With a solid foundation, a plan for managed growth, and a group of dedicated employees, Alexander and Kemp say they're ready to meet the future head-on.
COMPANY SNAPSHOT
Orton Industries
Headquarters: Doraville, Ga.
President: Jim Alexander
Vice President: Hal Kemp
Founded: 1969
1999 Sales: $16 million
Employees: 50
Locations: 3
Web Site: www.ortonindustries.com
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