Jeff Druzak admits that he’s having fun at real estate development.
It’s not his core business, but Druzak, co-founder of Druzak Medical Inc., an Ambridge-based medical supplies distributor that he and two partners launched in 1990, is excited about CenterPlace, a moribund Center Township shopping center that he is revamping with the help of a $950,000 Pennsylvania Industrial Development Authority loan. The facility, which Druzak hopes to occupy this year, will house his 47-employee company headquarters and a 44,000 distribution center, double the size of its current warehouse.
The complex will also include an outpatient surgery center, a medical supplies and equipment store operated by Druzak Medical and several other health care related businesses.
But while CenterPlace is an important step for Druzak Medical, its long-term success can be attributed in greater measure to the company’s emphasis on technology. Druzak launched an e-commerce site in 1995, early in the online sales revolution. Today, Druzak Medical, after an investment of more than $1 million, has The Treetop Shopper, one of the most advanced Web sites in its industry. Online sales account for 20 percent of the company’s $27 million annual revenue.
A little luck came into play as well. Druzak Medical started out selling a limited line of incontinence products. It was able to partner with First Quality Enterprises Inc., a manufacturer of such products founded in 1988 that was looking for distribution outlets. That symbiotic relationship has continued to the present, and Druzak Medical is one of First Quality’s top customers.
Druzak’s success hasn’t gone unnoticed. He was the recipient of the Small Business Administration’s Entrepreneurial Success Award in 2002, the Benjamin Franklin Award for Entrepreneurial Achievement from the Beaver County Foundation in 2002, and this year garnered Ernst & Young Entrepreneur Of The Year honors.
While he might be enjoying the CenterPlace project, Druzak knows he can’t afford to take his eye off of the ball.
Says Druzak: “I think … you need to stay focused on what you do best, and normally what you do best is what you have the most fun at.”
Druzak spoke with Smart Business about e-commerce, real estate development and the value of investing in technology.
What factors were critical to your early success?
When you’re small, you have to be focused on a few product lines because not all of the manufacturers would even sell to us. So you had a very limited product selection, so we went after incontinence products. The key component was with First Quality, who had just started.
So you had two companies that had just started, both needing each other. They needed distribution and we needed manufacturing, so it worked out perfectly for both of us. I think that was part of the reason that we were successful.
Why do you think you’ll be successful with the CenterPlace development?
Well, first of all, as an owner, I’ll be occupying half of that property’s site anyway. I’m not relying on the local economy to make it successful.
If you’re looking at the demographics and how they affect our industry, it’s going to grow despite how successful we are as a company. You’re going to have a certain amount of growth, or you should.
Are you considering other areas for expansion?
Buffalo, I think, will be our next expansion, although we do have a rep down in the Washington, D.C., area. What we’re trying to do is develop Maryland. There are a lot of states that are very aggressive. Virginia is, North Carolina is another that’s aggressive in trying to have us locate there.
Their first step is trying to have us locate a distribution facility there. Geographically, I’m looking at where the elderly population is and where I think the growth is going to be. There are certain states that hold the largest populations of elderly. Pennsylvania is definitely one of the top states; so are Ohio, Michigan, New York, California, Florida.
What role has your e-commerce site, Treetop Shopper, played in your success?
It’s something we feel that is much further advanced than the competition has, even with national distribution. When we consider who our competitors are — Gulf South Medical Supply Inc., Medline Industries Inc. and Redline Healthcare Corp. — their sales are exceeding $1 billion, and here we are, doing approximately $2.3 million a month. We’re small potatoes to them, and technologically, we’re more advanced than they are with our Treetop Shopper program.
And we’re going to continue to do that. We have a programmer on staff … and we also have our own HTML guy. Companies our size typically don’t go to that degree.
Do you share any of the data you collect with your vendors?
We’ve put together another site for our vendors that allows them to see where we have sold product. Now we don’t give it to everyone, only to those where we feel the relationships are tight. If we align ourselves with a company and we’re working very hard to obtain business for them, they can make sure that a facility ordered a product, and if they stopped ordering a product, they can help our rep in finding out why.
It’s a two-edged sword. The one concern is the manufacturer has access to information about where we are shipping product. If that manufacturer’s rep leaves that particular manufacturer and goes to a competing manufacturer, then you have a situation where he knows where all of your business is.
It appears that you have an appreciation for technology and how it can improve your business. How did you come to that view?
Trying to do more with less. I knew that competition is based on how efficient you are, and the more efficient companies are going to be the most competitive, so at the very beginning, I knew that that was one way to have more knowledge transferred between everyone in the department or in the company.
It’s important for everyone to have a clear understanding of what our objectives are and then have incentive structures that are aligned with those corporate objectives. I think that’s probably the main reason that companies are successful, making sure … that knowledge and information is transferred quickly, and that your incentive structures are aligned with those objectives.
I think when it’s your money, you become a lot smarter real quick. Technology is something I forced myself to learn. It’s not something I enjoyed that much, especially the new IBM system, learning how that runs and the software products that were out there, making sure we made the right choice early on, spending the kind of money that we spent.
Most companies wouldn’t do that because they would rather pocket the money than invest it. I think it was really important to make that investment to continually improve and make ourselves extremely efficient. HOW TO REACH: Druzak Medical Inc., www.Druzak.com; CenterPlace, www.centerplace.biz
