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Service is the key to surviving as a small distributor in Silicon Valley.

Located in the center of both the high-tech electronics industry of Silicon Valley and California's more traditional industry, South San Francisco, Calif.-based The AdamHill Co., provides service to all sorts of customers.

Founded as a hose distributor in 1919 by Mr. Adam and Mr. Hill, the company added power transmission products to offer more to its customers.

One of the company's strengths is the enduring relationships it forms. It became the first Weatherhead distributor in 1926 and is still a distributor for the Boston Weatherhead, Div. of Dana Corp.

It has owned the building it currently inhabits for the past 41 years. As larger competitors have moved in, literally across the street, Adam-Hill has managed to remain independent.

Co-owners Rob Aveson and Mike Kohl have been with the company for 26 and 30 years, respectively. Both say their mothers, also employees of the distributorship, influenced the decision to join the company.

Aveson started in the warehouse and Kohl began his career at Adam-Hill as a truck driver. Each rose through the ranks and when the opportunity came to purchase the business in 1999, they rose to the occasion.

"Due to long-term relationships, we get calls from companies as far away as Canada," says Aveson. "Now, they could get the same products locally, but we give them a reason not to change."

Boston Weatherhead district sales manager Mike Courts agrees. He says "mom and pop" style businesses are Weatherhead's lifeblood.

"Everyone has hose, so it's the service that counts," says Courts. "If it establishes the right relationships, a small distributor can compete well against the large nationals."

Adam-Hill is a quiet giant, however. Courts says the small distributor's volume is much greater than many of the large competitors' individual branches. Some of the large conglomerates treat products as commodities and customer service suffers, but Adam-Hill has maintained a high level customer of service, he says.

"When you enter their office, you see filing cabinets rather than high-tech computer systems," says Courts. "They almost seem like a throwback -- like a drive-in movie, but looks can be deceiving."

Avoiding the ruts

Courts says Adam-Hill provides the best of modern service to the technology-savvy global companies it serves. That is one of the reasons Adam-Hill maintains its relationships when so many corporations are adopting national or integrated supply contracts, he adds.

Despite its rustic feel, the company upgraded to a modern Prophet 21 distribution system just before the turn of the century.

"We have to stay current, especially to continue serving our larger customers," says Kohl. "While other small distributors are becoming more tightly focused on their specialty, we maintain our expertise in both the power transmission and hydraulic fluid power fields."

It's important to stay with the times, says Kohl. Adam-Hill stays ahead of the curve in service without lagging behind in technology, he adds.

"As more engineers and buyers are turning to the Internet as a source of products and information, we are increasing our presence on the Web," says Aveson. "We keep up with our customers' needs so we won't be left behind like the horse and buggy."

Adam-Hill is outsourcing its Web and e-catalog development to New York-based Thomas Regional Directory Co., so its nine employees can concentrate on the distribution business.

"Though we focus on our specialties," says Aveson, "it is always important to be sure that our niche doesn't become a rut."

A full cart

"Another reason customers appreciate Adam-Hill is that it is willing to stock almost anything," says Courts.
This has led to opportunities to cooperate with the competition, says Aveson. A large competitor that specializes in integrated supply uses Adam-Hill to supply some of the items it doesn't inventory.

"We know the businesses around the Bay-area intimately," says Aveson. "We stock what our customers need."
A competitor came to Adam-Hill to see if it could find a source for an uncommon size and type of chain, says Aveson. Though it was a slow-moving item, it was in stock.

The larger company's rep asked why Adam-Hill would ever stock such an item. Despite pundits' emphasis on optimizing stock turns, Aveson justifies the inventory by the fact that it was purchased.

"While my mother was comptroller, she always told the owner, Bruce Duncan, there was too much inventory," says Aveson. "He would say that you can't sell from an empty cart."

The important thing is to know the difference between well-stocked shelves and dead inventory, says Aveson.

Therefore Adam-Hill keeps careful track of what is not moving.

Kohl says he didn't realize quite how unusual Adam-Hill was until he started to learn about the industry. Even when he rose from working in the warehouse or inside sales to being responsible for inventory control, he maintained the company's unusual inventory requirements.

"When I started, I assumed this was normal, but what I discovered is that we have just what we need to serve our customer," says Kohl. "Whether that means technical knowledge or having the right product, in the end, all we have is service."

Service road

"Adam-Kill calls on us regularly, is interested in our needs and is in tune with our demands," says President Robert C. Harper of San Bruno, Calif.-based Harper Metal Products, Inc. "They invariably stock everything we need and I don't know of any more prepared supplier."

It is rare for a small supplier to be so willing to keep products in inventory, he says. Harper is a producer of metal forming equipment for the HVAC industry and purchases hydraulic hose and fittings as well as power transmission products from Adam-Hill.

"We can rely on Adam-Hill for personal service and reliable response," says Harper. "Even if the salesman doesn't have the solution at hand, they never drop the ball."

Some customers rely on Adam-Hill to provide complex technical assistance as well as exacting standards. Contracts administrator Barbara Garcia says Varian Medical Systems, Inc. of Palo Alto, Calif. relies on the distributor for many of its plumbing supplies for water cooling processes.

The company also uses prefabricated hose assemblies in the clinical linear accelerators it manufactures. As an international business, quality standards are high, says Garcia.

The distributor works closely with the engineering department, she says. Salesmen often provide samples and technical assistance for the engineering department's prototypes and new product development.

"Adam-Hill responds well to our unrealistically-high requirements," she says. "We appreciate their quality but we also look for the best price."

Other distributors Varian has tried haven't met its quality standards and provided unreliable delivery, says Garcia. Adam-Hill always has a competitive price when the company re-bids its supply contacts, she adds.

"Adam-Hill also has a floor stock program so that essential parts are replenished regularly or on call," says Garcia. "We have an open purchase order and don't have to monitor our stock."

Adam-Hill also operates a program in which it provides racks stocked with certain assemblies. When stock runs low, a new rack is brought rather than taking the time on the shop floor to replace individual items.

"Even if there is a product Adam-Hill doesn't stock, they will get it," says Garcia. "Some other distributors wouldn't even try to stock it for us."

She says these factors have all contributed to Adam-Hill repeatedly receiving Varian's supplier of the year award.

Driving in circles

Though Adam-Hill is experiencing increased competition as certain product lines have added distributors where the company once had exclusive territory, it is a master distributor of certain lines. This helps the small distributor to continue competing with the large national distributors, says Aveson.

Another factor in competing successfully is keeping costs low by reducing overhead. The high-tech boom caused property costs to skyrocket in the Bay area, so rent is at a premium.

Adam-Hill met this challenge of containing costs by closing the two branches it once had in the Bay area. Instead, the company runs a truck in a large circle route around the Bay. Aveson says the company kept the former branch phone numbers and service has been maintained so well that, years later, some customers are still unaware that the branch is closed.

There is a growing number of large national and international firms doing business in the Bay area. Many of these companies have national contracts instituted at the corporate level.

"Often smaller purchases fall below the national program minimum or an integrated supply program cannot meet certain needs, and the stocker will still come to us," says Aveson. "The bottom line is that we still do what we can to help the customer."

Competing in this economic climate can be difficult for smaller distributors. He says Adam-Hill often assists engineers in designing new products and then some purchasing departments will try to shop for price on the items specified on designs.

"More than ever, it requires a relationship with purchasing departments and a higher level of selling," says Aveson. "Of course, we have been with some of our customers since their beginning. One has grown from 16 to 4,500 employees."

In the Bay area, global high tech firms share Silicon Valley with a wide variety of more traditional manufacturers. Adam-Hill has been able to weather the region's economic downturn by providing service on both sides of the street.

COMPANY SNAPSHOT

The Adam-Hill Co.

Co-owners: Rob Aveson and Mike Kohl
Headquarters: South San Francisco, Calif.
Founded: 1919
2001 sales: $2.3 million
Employees: 9
Primary Products: Hydraulic and power transmission products
Territory: California
Web Site: www.adam-hill.com

COPYRIGHT 2002 Reed Business Information in association with The Gale Group and LookSmart.