Achieving Industry Leadership Through Employee Empowerment

Becoming Essential to the Industrial Supply Industry Through Employee Ownership

 

Locke Supply Co. has been a powerhouse in the supply distribution industry since 1955. The company exemplifies unparalleled operational effectiveness and a unique pathway to profitability with its employee-ownership model.

Locke’s ESOP (Employee Stock Option Plan) structure fundamentally aligns the focus of every action within the operation towards long-term growth and gratification of its share value.

In this dynamic, any one individual’s growth contributes to the collective benefit of everyone in the company. It is a slow and steady approach that demonstrably increases the payout at the end of the day for all employee-owners.

Furthermore, this approach also fosters a deep sense of commitment and an emphasis on minimizing wasteful actions within the company’s operations.

Internally, Locke Supply Co.’s profitability is secured by meticulous management using a sophisticated ERP system that leverages very effective forecasting capabilities combined with savvy Economic Order Quantity (EOQ) inventory management.

This ensures that Locke has sufficient inventory while finding the most cost-effective and efficient way to deliver it to its destination, directly impacting customer satisfaction.

The company’s commitment to ethical and transparent partnerships also serves as a natural safeguard for the stability and reliability of the entire supply chain.

Companies that partner with Locke Supply Co. understand and agree that loyalty is a two-way street and that when all parties remain transparent and accountable, everyone in the chain benefits financially.

With the imminent opening of the company’s new large distribution center, acute operations and partner loyalty will be paramount. This critical infrastructure project directly addresses Locke’s past capacity limitations, signaling a significant surge in its ability to expand and capture a greater market share.

Overall, Locke Supply Co.’s success is demonstrated by its remarkable blend of employee-centricity, operational acumen, and strategic relationships.

Now, it’s time to discover the details of how these factors consistently translate into such robust financial health and enduring market leadership.

A Transition of Foundational Values and Enduring Impact

The Locke Supply Company, founded in 1955 by Don and Wanda Locke in Bartlesville, Oklahoma, began as a plumbing-only enterprise.

Mr. Locke, who served in the military and gained experience at Norman Supply Company, a plumbing distributor, began his entrepreneurial journey with a clear vision.

Within a couple of years, the company expanded to Oklahoma City. This laid the groundwork for what would become a deeply rooted business that prioritized not just transactions but also the well-being of its people and the communities it served.

That groundwork was the foundation for a pivotal moment in Locke Supply Company’s history, namely its transition to an Employee Stock Ownership Plan (ESOP) structure.

“Mr. Locke always wanted to pass the business on to his associates, and he had a lot of conversations prior to his passing about doing so,” says current President and CEO John Orman III.

This shift wasn’t driven by external financial pressures but rather by the founder’s long-held desire to pass the business on to the people who helped him build it.

While discussions were initiated prior to his passing in 2000, it was the executive team—including Carter Marsh, Tammi Bryant, Jack Anderson, Chuck Cross, and Louie Sevier—who, after Mr. Locke’s death, formalized the ESOP and purchased the company from his widow, Wanda.

This transition honored Don Locke’s legacy and cemented an ownership model that profoundly shaped the company’s culture and long-term strategy.

Today, Locke Supply Co.’s leadership views communicating the full value of the ESOP structure to its employee-owners, clients, and other stakeholders as a continuous endeavor.

“We’re pretty transparent with our associates about the plan structure and everything we do… There’s not really any secret other than just to communicate as much as you can so associates can grasp and understand the value of an ESOP and the longevity it can provide. We talk about it as much as humanly possible,” Orman III explains.

According to Orman III, on average, it takes about seven to ten years for an associate to fully understand the profound, long-term financial value that an ESOP provides.

Therefore, the company’s ethos of transparency and extensive education about the plan’s structure and benefits is a critical vehicle to help them achieve this understanding.

To bridge this understanding gap, Locke Supply utilizes powerful tools, such as 10-year statements, and management actively encourages employees to speak with seasoned associates, recognizing that real numbers and peer-to-peer advocacy become the most credible and powerful testaments to the ESOP’s benefits.

“Once people have been employed for five to nine years, that’s when they go ‘oh okay’ and it becomes very real for them. Then those people usually become the biggest advocates and start communicating the value to others in the company,” Orman III explains.

This commitment to continuous, open communication, often reinforced by internal videos featuring employee testimonials, has led to a deep understanding and appreciation for Locke Supply Co.’s unique ownership model, resulting in a more dedicated and invested workforce.

Approaching the Market with Convenience and Customer Service

Locke Supply Company distinguishes itself in the industry through an operational model that diverges from traditional supply houses.

In the 1990s, the company evolved to offer a hybrid approach, combining self-service, traditional counter service, and other options across its numerous locations.

“We’re a combination of everything… We’re residential-focused for a large portion of our business, and we try to position ourselves for convenience. We want to be convenient to the contractor and be where they are,” says Orman III.

When it comes to the positioning of its facility locations, the Locke Supply Co. takes a page from Sam Walton’s philosophy of bringing the business to the customer and remaining easily accessible to contractors.

However, accessibility isn’t the only driving force behind the company’s growth, as its internal operational strategy also plays a significant role.

Locke Supply Co. expertly leverages technology to effectively forecast demand and inventory. As an Infor user, the company utilizes the Web UI platform, employing its forecasting capabilities since 2005.

Regarding its inventory management, Locke Supply Co. follows the inventory philosophies of Grant Howard and prioritizes the Economic Order Quantity (EOQ) approach.

“That was a philosophy change that happened about 15 years ago, where we were using Just in Time inventory for a long time, but that doesn’t yield the best level of customer service,” Orman III says.

According to Orman III, the EOQ approach ensures that the company always has the necessary inventory. However, it primarily focuses on identifying the most cost-effective method to deliver that inventory to its designated location.

“It’s served us well from a customer service standpoint, so we’re definitely big fans of economic order quantity,” Orman III confirms.

Lastly, separate from its management practices, Locke Supply Co.’s partnerships are also a key part of its success. The company places immense value on establishing reliable and ethical partnerships, rather than merely transactional relationships.

It maintains open and transparent communication with its vendors, prioritizing true partnerships built on mutual benefit. Locke Supply Co. has even demonstrated its commitment to ethical conduct by severing ties with past vendors engaged in practices it deemed unethical.

This philosophy underscores their long-standing relationships, with partnerships extending back 50-plus years for some, like Bradford White and Allied Air, and over a decade with Encore Wire and Siemens, the latter having stepped up significantly during a past transition.

“We have a lot of premier partners… but I would be remiss to not mention Bradford White or Allied Air or Encore Wire or Siemens. These are our largest partners, the largest that we deal with on a daily basis. They’re what we consider to be exclusive. I would say those are four of the top vendors that we have, the four top vendors that are aligned in each of our divisions, and most of our spend is with those particular partners,” Orman III says.

These enduring relationships are built on trust, honesty, and a shared understanding that loyalty is a two-way street.

A Well-Grown Culture Advancing Toward the Future

Locke Supply Co.’s ESOP structure profoundly influences not only its growth trajectory and bottom line but also its employee retention, recruitment, and overall culture.

Turnover is low and retention is high due to the understanding that the company’s share value grows directly in line with organizational growth. This inherently aligns all efforts towards efficiency and excellence, without an overbearing rush to accomplish it right away.

“I was always a tortoise and hare fan, and slow and steady certainly seems to be the approach we take. Slow, steady, and very consistent growth,” Orman III explains.

This patient approach, driven by the fundamental mechanism that is the ESOP itself, ensures that the company’s actions contribute to sustainable, enduring value rather than short-term gains.

Everyone involved understands that if the company grows, they grow as well, and that when the company grows, it pays out more to them as individuals. It’s an incredibly powerful positive feedback loop that creates loyal, long-standing employee-owners within the company.

Orman III is a prime example of this. Having started in the warehouse at 18, he expresses immense pride in Locke Supply, viewing it as an exceptional place to work due to its comprehensive benefits and its vital role in providing essential goods to communities.

“I can’t think of a better place, a better group of people, or a better industry to work in, it really is that simple,” Orman III expresses.

Looking to the future, Locke Supply Company is poised for significant infrastructural advancement. For the past four years, the company has been diligently working on a large distribution center.

This expansion aims to overcome previous infrastructure limitations, enabling Locke Supply to further achieve its long-term objectives.

This new facility, nearing completion with a planned move-in process for June and July, represents a substantial investment in the company’s capacity for growth.

With this increased capacity, Locke Supply Co. will be able to paint an even grander picture of how remaining with the company allows employees to fully realize lifestyles that were previously inaccessible to them.

The substantial benefits of the company’s ESOP stand in stark contrast to the misconception that corporate America is inherently negative.

Instead, it showcases the value of a company model that works as hard for employees as its employees work for it.

AT A GLANCE

Who: Locke Supply Company

What: A 100% employee-owned wholesale distributor serving contractors and customers across multiple trades.

Where: Headquartered in Oklahoma City, Oklahoma

Website: www.lockesupply.com