Same Thing In A New Way

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When you hear the word innovation, the first thing that probably pops into your head is the latest technology or the newest invention. However, for many distributors in the gases and welding industry, the recipe for success isn’t in the newest gadget or the latest technological advancement.

In January 2010, Apple sold its 250 millionth iPod, a product that was introduced just nine years earlier. Steve Jobs, the founder of Apple and considered by many to be this generation’s greatest innovator, thinks a lot about innovation. He says, “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. Innovation is not about money. It’s about the people you have, how you lead, and how much you get it.”

Twelve distributors who “get it” share some of their innovative ideas for growing their businesses as the economy struggles upward. They remind us that innovation is not about reinventing the wheel. Innovation is not a big leap from where you currently stand. Innovation does not come from technologies, systems, or research and development. It comes from finding ways to add value to your customers. It’s about finding new ways to do the same things you already are doing.

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Know What Customers Want Before They Do

“Take care of it, or lose it,” declares Scott Griskavich, president of Badger Welding Supplies (Madison, WI), as he points to a practice that has resulted in an on-time-order-fill rate of 95 percent. “When customers run out of product, they don’t hesitate to call. They want it today, not40c_griskavich when the next truck is coming by.” What does he do? “We go! Today! There are a lot of hungry competitors out there more than happy to go when a customer needs something.” Competition has been intense for Badger and profit margins have eroded, added delivery costs notwithstanding. However, meeting customer demands remains the norm for the Badger team. Both outside and inside salespeople stay in contact with their manufacturing and job shop customers to better anticipate and prepare for future projects. “We get to know the individual who really knows what that next move is going to be in the plant,” Badger says. This approach eliminates, or at least minimizes, surprises and keeps Badger on track with appropriate inventory on hand. In addition, since Griskavich introduced the Electronic Price File Standard that automatically updates his suppliers’ prices, he has gained back the time that used to be spent correcting inaccuracies and manually entering individual data—time now better spent on listening to and learning from customers.

The demands of providing “extreme service” may be driving John Hutchings, president of Tri-County Industrial Supply (Alvin, TX), and his employees to the brink, but he stands by his motto. “We didn’t reinvent the wheel. We just went back to an old principle and said: ‘Get the job 40d_hutchingsdone and get it done right.’” Thinking ahead of the curve, asking questions, communicating well and really knowing what customers need before they even realize they need it is a strategy Hutchings is focused on to make sure customers are more than satisfied. He acknowledges the demand for quick turnaround, a tough expectation to meet given the current slow flow of inventory from his suppliers. The company’s extreme service motto is taken literally, however, and the Tri-Country team is pulling out all the stops to anticipate customers’ needs and be prepared to meet them quickly.

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Flaunt Your Technical Expertise

Product innovations often come with many customer questions on how to use them. Pete Matarese, president of Liberty Supply (Leominster, MA), takes advantage of his technical team’s ability to provide answers right on the spot. 40e_matarese“There are people who have problems with welding equipment or some sort of service issue,” he says. “An in-house technical staff enables us to provide technical support immediately. We don’t have to put the customer on hold; we don’t have to call back. We address questions and respond immediately.” Matarese points out that this practice goes a long way toward developing strong relationships with customers.

A well-trained staff is an investment that keeps Dale Oxygen (Johnstown, PA) one step ahead of the competition. With many customers downsizing, President Harry Bennear happily acknowledges that his employees have become the go-to guys. “With no one in-house to take care of equipment, answer questions or solve problems, customers are now relying on suppliers for this help.” Bennear encourages extra training for his employees and uses vendors’ training programs to keep current.

Money is tight, and everyone can relate to the fact that end-users are not spending much of it. But when they do make a purchase, they want quality and value.40f_houser And that’s exactly what the team at Houser Welding Supply Company (Somerville, NJ) gives them. “Service is the name of the game,” says President David Houser, who spends a lot of time troubleshooting customers’ technical problems. Often that means working with a product purchased elsewhere. “We are on the phone every day with people asking for help because the imported machines they bought from mail order companies or big box stores have broken down. We are always working hard for our customers,” says Houser. “And we are always working hard to get and keep new customers.” Houser knows that customers appreciate discounts, and is not reluctant to give them, knowing that the payback will be a repeat customer.

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Figure Out a Way for the Customer to Save Money

Most distributors wouldn’t think of trading secrets with other distributors, but Robert Iverson believes this practice has helped his company, Ivey Industries (Springfield, MA), grow and prosper for over 20 years.40g_iverson “I call a non-competitor working a different geographic area and ask, ‘What do you do better than I do? I want to visit with you and see it in action.’” Nine times out of ten, people are willing to talk with Iverson about what works and what doesn’t, and when he sees a good idea, he duplicates it—with permission. One idea Iverson built upon involves price increases—or the lack thereof. Since January 2009, there have been no price hikes for the company’s large customers. Iverson says such increases push customers to shop elsewhere (they have more time to shop around in a slow economy) and force salespeople to spend their time defending their pricing against competitive quotes, rather than making proactive sales calls to get new customers. When a customer asks for a price rollback, say five percent, Iverson determines how much that percentage amounts to, based on purchases of the preceding 12 months. For instance, if that amount equals $500, he asks the customer, “If we come in and show you how to save $500 or more, without lowering our pricing, would that be just as good?” Then Iverson’s team shows the customer ways to save that $500 by achieving better cylinder control, or using different products, or buying fewer products, or other ways. Says Iverson, “Usually the customer doesn’t care how the money is saved, as long as the money is saved.”

“What’s the easiest way to make sure the margins are there?” asks Al Kalmerton, owner of A. Kalmerton Welding Supplies (Oshkosh, WI). 40h_kalmertonIncrease prices. Kalmerton, however, doesn’t agree with this tactic. “It’s too easy. And customers are tired of it. We have to be smarter and find better ways to help customers save that dollar. Once they save it, the more likely it is they will spend it again with us.” Kal-merton has aligned his company with several robotics and cell manufacturers. “One way for a customer to save money is through the use of robotics.” Within the next five years, he expects to see welding automation being used more frequently to control costs, especially in the one or two person shops, where a small automated welding system could significantly cut costs for the end-user. Kalmerton explains, “I expect we will be putting many small systems in place. The robot is there 24 hours a day. It doesn’t go to lunch; it doesn’t call in sick; and it doesn’t require Workers’ Comp.”

Neil Mackay, vice president and general manager of West Penn Laco (Pittsburgh, PA), is tapping into the technology innovations that come with new information systems. To drive efficiencies, the company purchased an entirely new computer system, including software. As a result, Mackay expects to pinpoint good accounts from bad ones and to accurately track costs and expenses. “As our customers aim to be more efficient, we want to find areas where we can save them money.” The upgrade will be complete by mid-summer.

“We’re the David in David and Goliath,” says Dave Fischer, president of General Welding Supply Company (Denver, CO), referring to his small business’s practice of providing competitive price points against all odds. 40i_fischerWhile many businesses point to the economy as an excuse to streamline customer service, this is not an option for General Welding Supply. “Customers want competitive pricing, better service and inventory on hand. They don’t care about how the economy is impacting us. They care about how it is impacting them. They’re watching their costs very carefully, and they want us to watch their costs too.” Fischer is working hard to define the company differently from mass-merchandised big-box stores, looking closely at everything from the showroom to how the company defines itself. “A bottle of oxygen is a bottle of oxygen,” he says, “and everyone has the same regulators and machines. We sell service and technical expertise.” Fischer knows that innovation, particularly in the area of green technology, is helping the industry grow and is looking forward to working with the hydrogen fuel cell market, even building the hydrogen stations. Ironically, this innovation toward the future is leading General Welding Supply back to being what Fischer calls “a traditional, old-time welding supply distributor that helps customers with all their needs.”

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Be in the Right Place at the Right Time

Eagerly anticipating the opening of a Volkswagen plant in Chattanooga, Phil Chadwick, vice president of
C & C Oxygen Company (Chattanooga, TN), is taking advantage of potential new sales at the high-tech facility. With production slated to begin in early 2011, the plant will produce 150,000 vehicles a year. Chadwick points out that getting new accounts and servicing customers requires the same foundation of excellence, and he looks forward to bringing that old-fashioned customer service to this new high-tech facility and the satellite businesses that will locate around it.

40j_loganTommy Hagan
, president of Logan Hagan Welding Supply (Statesboro, GA), likes to be in the forefront of new technology so he takes time to read science magazines and journals. Fascinated by green technology, Hagan is eagerly anticipating the build out of Mitsubishi’s Turbine and Service Manufacturing Center in Savannah, Georgia. The new plant will manufacture and service windmill turbines and related components, a growing industry in alternative energy generation. Hagan keeps his ear to the ground and knows Mitsubishi is looking for knowledgeable suppliers. He is ready for all opportunities with his highly skilled and experienced team.

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Remember, Appearance Counts

40k_madisonIn the wake of insurance reimbursements being slashed, many of Prest-O-Sales & Service (Long Island City, NY) medical customers are calling for price concessions. To meet their demands, President Jim Madison has come up with some resourceful ways to help customers increase their productivity while at the same time decreasing their cost of doing business. “We remove some transactional costs by using monthly billings, consolidated billings and fewer deliveries with larger quantities,” explains Madison. The company continues to improve its information systems to make it easier for customers, who can now order and check their account status online. Salespeople are working hard to be fully knowledgeable about products in order to answer all questions from customers. Madison retired the older fleet of cylinders and invested in different, more updated packaging. “We’re giving customers, even those that don’t care about the look of a cylinder, one that looks good, rather than an old, beat-up cylinder. Keeping product looking fresh helps promote a quality image, and customers notice.”

Back to the Future
A recent survey asking what end-users of gases and welding equipment are demanding now, in the first half of 2010, indicated some standard responses:
• Personal contact/service
• No price increases
• Available inventory/quick turnaround
• Higher quality products
• More value for the dollar.

As to what our customers will demand from us three years from now, in 2013, the survey showed:
• Quality products
• More automation equipment
• Great customer service
• Be a full-service provider. “Sell product and show us how to be more efficient and save money.”

So innovation comes down to service. As the New Economy of the coming months and year surely shakes things up, distributors are steadfast, strong and ready.

Gases and Welding Distributors Association