Feature Article

Change in direction helps growth

Chesterfield's PeakLogix reaps reward after retooling its model

By AARON KREMER

SPECIAL CORRESPONDENT

Three years.

That's how long management at PeakLogix says it took for a new business model and snazzy new name to take off.

Back in 2000, the Chesterfield County-based company went by the name New Dominion Equipment Co. and primarily sold racks and logistics equipment used to store goods inside warehouses. The company, for a time, also had installation crews on the payroll.

But then the Internet added more competition to the marketplace, and Dominion started to lose sales to lower-priced online vendors.

"We needed to change direction and change the culture of the business -- get away from commodities and provide more value," said Ron Rechenbach, who started the company in 1989 with Robert Giberson.

Thus began a period of contemplation and a rebranding effort. The company hired Richmond's RightMinds for $250,000 to assess the company's strengths and help find a new niche.

Chris Thurston, president and CEO of RightMinds, worked on the project. "When we came to work with them, they were really just an equipment reseller," he said. "The opportunity we saw was to position their expertise and think about how to make situations and warehouses more efficient."

Giberson said RightMinds' market study revealed that there were 1,400 firms in Virginia with the word "Dominion" as part of their names. That made it exceedingly difficult to carve out any branding space, Giberson said.

"The advertising folks, they came up with PeakLogix. Peak meaning at the top of our game and the ultimate in efficiency and Logix playing on logical," Giberson said.

PeakLogix launched in January 2002. The timing couldn't have been worse. After 9/11, business dropped by half. And there were some growing pains, like a few of the 30-odd employees who couldn't adjust to the new business model.

PeakLogix still sells storage and handling equipment, but the new consulting-based business dropped the installation crews, which were costing more than they were worth, the company said.

"Our margins are better now, and I think clients perceive us as a more professional service organization," Giberson said.

Company officials said they typically go after contracts worth $50,000 to $1 million and warehouses sized at 50,000 to 500,000 square feet.

"Businesses that are growing or need to grow, they come to us and we help them utilize their existing space first," Rechenbach said.

Sometimes PeakLogix discovers that new capital investments such as additional warehouses or equipment is unnecessary, and then PeakLogix saves their clients money.

Other times, warehouse employees can't efficiently move goods, and with a better system in place or better storage practices, fewer employees can handle the same workload.

Randy Murphy, a facilities maintenance manager at a Wella warehouse, said PeakLogix first helped install machinery that enables the company to ship partial pallets of goods. Previously, they could ship only entire pallets of the hair care products the company manufactures. Murphy said the modification helps decrease the time it takes to get hair-care products to market.

Currently, PeakLogix is assisting Wella reorganize its 350,000 square-foot Henrico County warehouse.

"They're helping with logistics like scheduling, making sure we still function while we reorganize and they're helping us make layout decisions, what should go where," Murphy said.

Giberson and Rechenbach say with projects such as Wella -- the company has also worked with grocery stores and other national manufactures -- the profit margins are higher in the consulting work than in sales. The company has around 27 employees and accepts work throughout the state.

"Now, with the replicable process and unique brand, we are looking to expand further," Giberson said, adding that the company recently established a presence in Raleigh, N.C.

"We may be smaller now but we're doing more business."  

-- This article was originally published in the Richmond Times-Dispatch on or about May 16, 2007. It is republished here with the permission of the Times-Dispatch.