What goes into making a warehouse successful? Why does one operation sweat and struggle while another builds on its success and grows in profitability and reputation?

Talking with professionals who work in warehouse-related industries will reveal a number of theories. But few tried and true approaches are brought up consistently, regardless of geographical location, company size or what products are being sold.

One of them is the seemingly obvious notion—but one not always followed—that a warehouse is a vital marketing tool. Bob Footlik is president of Evanston, Ill.-based Footlik & Associates, which provides consulting services in the materials handling and industrial engineering industries.

"Profitability in the warehouse, and making the warehouse a marketing tool, go hand in hand," Footlik says. "Everyone pays lip service to this, but not everyone does it."

Footlik recalls meeting with a particular distributor about his warehouses.

"He said to me 'There are two words that characterize my warehouse operation: necessary and evil,'" Footlik laughs.

Like many distributors, this man once was a salesman, Footlik explains, so he knew he couldn't function profitably without a good warehouse set-up. But, he adds, the actual running of a warehouse is not what many salesmen/distributors want to do.

Footlik says this "necessary evil" attitude towards warehousing can become problematic. He has worked with several successful warehouse operations—as well as some unsuccessful ones. He has seen most of the faults that make up many of the less successful warehouse operations. Are there any common mistakes?

"Oh, man. Dozens!" he laughs, but then turns serious when discussing some of the more common mistakes he has seen over the years. "Number one would be poor housekeeping," he says.

Envision two competing warehouses. One leaves a potential customer feeling it is a seat-of-the-pants organization, with shelves in semi-disarray and workers not sure of where materials are. By contrast, another seems to have an organized system, with its shelves in order and workers who are well-informed and alert. Naturally, the choice of with whom you want to do business is simple.

The first warehouse shows "an encouragement of sloppiness," Footlik says. "This leads directly to there never being enough time to do things properly. Too much time is lost fixing things that were done incorrectly. So eventually, it becomes easier for them just to apologize than it does to clean up their act."

This can become a habit that permeates an entire operation, he cautions.

"If that attitude is prevalent, from top management on down," he says, "you can be sure people on the bottom are picking up that attitude and will continue to make errors."

One distributor whose warehouse operation Footlik admires is the Brock White Co., a distributor that specializes in materials for the concrete and masonry construction markets. It has 13 locations in the upper Midwest and Canada, with headquarters in St. Paul, Minn.

Brock White deals primarily with commercial construction, but has some walk-in retail business as well, says Walt Brambilla, director of warehousing and distribution at the St. Paul location. Brock White warehouses also have showrooms they use for both the walk-ins as well as demonstrating products.

"We have showrooms associated with all of our warehouses," Brambilla says. "With some commercial distributors, you walk in, go up to a desk and order, but you don't have a chance to look and touch [products]. At our showrooms, we have an assortment of the products most likely to be picked up and purchased by a customer."

The St. Paul location uses "tool walls," and moveable kiosks where items are displayed and categorized based on customer need. So there are no actual "aisles" to walk—rather, the aisle can be "walked" to the customer.

While smaller in size, what Brock White does in St. Paul is similar to what the mammoth-sized Grainger, Inc., does at its branches.

"We don't display [product] by brand or supplier names," says Y.C. Chen, Grainger's senior vice president of supply chain management. "We organize things in such a way that it's easy for our customers to find a solution to the problem they are trying to solve."

This holds true at the 400 branches Grainger has across the United States, Chen explains, as well as in its catalogue and Web sites.

One common trait among most successful warehouse operations is the attention they pay to customer feedback—positive or negative. This is a category where a comparatively smaller company like Brock White can have an advantage.

Brambilla explains that at Brock White, "We have annual events where we get together offsite with customers and do a customer survey. The Brock White officers meet with key customers, listen to what they say and respond to that."

At one of these recent gatherings, Brambilla recalls, customers complained that when they came by a branch to pick up pre-ordered materials, they still had to wait for the supplies to be ready. The process was taking too long, thus negating the very reason for pre-ordering.

As a result, the warehouse management system was revised, barcoding was upgraded and the process improved. Brock White realized that their customers wanted the same thing they did: "The idea is to get them in, get the order and get them out as quickly as we can," Brambilla says.

While collected less informally than at Brock White, feedback from customers also is essential to the process at Grainger.

At any Grainger location, Chen says, "If a customer calls in and, for some reason, we don't have a specific item available, we'll 'capture' that information. We do that nationally, and massage that information and use it to do our future forecasting."

Some who have found themselves unable to get out of that "necessary evil" mentality have outsourced most of their warehousing needs and responsibilities. A beneficiary of this type of outsourcing has been ORS Nasco, a master distributor selling to the welding, safety, construction, electrical MRO, HVAC, janitorial and plumbing markets.

The company was formed in 1999 by the merger of Oklahoma Rig & Supply Co. (ORS) and Nasco. At the time, ORS was a wholesale distributor of industrial, safety and oilfield supplies. Nasco specialized in safety supplies and welding equipment.

"Let us be your everything," is how Mark Prox, vice-president of operations, describes the ORS Nasco approach to those considering the outsourcing route.

Reflecting Footlik's thoughts about the warehouse as a "marketing tool," Prox explains that one of the reasons that the merger was a good fit was that the "previous owner of Oklahoma Rig felt very strongly that his best salesman was his warehouse."

"One of our bigger initiatives is to educate distributors on our ability to serve their needs in a consolidated effort," Prox says. "This allows them to utilize us as a marketing tool to their customers."

The outsourcing of their warehouse operations can be a huge step to take, and one that is not necessarily for everybody. But it's one that, Prox explains, can be profitable once a step-by-step introduction is completed.

"Customers don't have to invest in the personnel to manage their inventory levels or to process their procurements," Prox says. Outsourcing at ORS Nasco, "also allows them to improve their return on investment and reduces their transactional costs. It gets them away from the mentality that they are ordering everyday to meet customer needs. We project what those customer needs will be for them and do their forecasting."

David Jones is a regional manager of the Matheson TriGas location in Beaumont, Texas, which uses ORS Nasco for almost all its warehousing needs.

Matheson is a single source provider of specialty and bulk gases, gas handling equipment, and high performance purification systems. The company also provides support services, engineering services and systems management services.

"At one time, we had more than 140 suppliers," he says. "But the majority of that now goes through ORS Nasco. They give us the ability to go after a market that other wholesalers did not."

Matheson recently completed the implementation of a new catalog program that was designed in conjunction with ORS Nasco.

Methods of inventory control and related skills are becoming more sophisticated each year. As a result, employee training at successful warehouses is as important as ever.

Those who spoke with INDUSTRIAL DISTRIBUTION, regardless of size or niche, have found that using a personal touch in their training methods can be effective. At ORS Nasco, Prox says their most successful training method has been to retain as many of their employees as possible.

"Some ORS Nasco employees have been doing business with customers for 15-to-30 years," he says. "That reinforces the relationship and builds some consistency in how they process the orders. Yet, we're always looking at innovative ways to drive consistency in our training."

A proven training method at ORS Nasco warehouses is what Prox refers to as a "lunch and learn."

"We bring in suppliers on a weekly basis to present their product lines to our customer service teams. So they spend their lunch hour learning new product lines or refocusing on certain new product lines," he says.

Even behemoth Grainger takes pains to use a "buddy system," Chen says, in which younger employees are mentored by experienced warehouse veterans in the Grainger approach to doing business. Chen also advises against overtraining people.

"Before we decide to roll out any new training, we do what we call a 'gap analysis' to determine if new training would actually be the solution to the problem," he explains. "That may mean we go and do the new training, but in many cases it can mean we will just need to move personnel to a different job site. That 'gap analysis' is critical before we roll out any training, otherwise it might be wasted."

So refer to them as "warehouses," "distribution centers," or "branches." For all the theories and analyses about what to do, don't leave out an element of common sense.

"We believe that we will have no problem making profits if we provide excellent service and high product availability," sums up Grainger's Chen. "That's the best way for us."