Clips/ Feature Article

Roadrunner-fast delivery is just one of the ways that a small business can add value

IN PENNSYLVANIA and across the Mid-Atlantic region, when machines break down and bearings and power transmission components are needed in a hurry, many businesses look for a bird to give them a hand. No, the parts aren't arriving by carrier pigeon.

The birds are the mascots of the delivery service offered by Lancaster, Pa.-based Brown Transmission & Bearing Co. Early Bird Service delivers orders received by 9 a.m. the same day, Night Owl Service gets orders taken before 6 p.m. there before 8 a.m. the next day, and Roadrunner 24-hr Express Service delivers the order anywhere in the service area within four hours, day or night.

"Anyone can provide next-day delivery," says president Thomas R. Kealey. "We wanted more."

The key to Brown's TNT Delivery System [TM] is its motto, "Today, not tomorrow," he says.

When Kealey founded Brown in 1982, next-day delivery was unavailable to distributors. Kealey decided that the power transmission distributor could match, but not necessarily beat, its competitors on price, inventory and great customer service. To differentiate itself, Brown determined it could provide the fastest delivery service, which meant providing next-day delivery in its area. Eventually, Brown was running a fleet of 10 trucks.

Of course, next-day delivery service became a common offering among parcel carriers and Brown began struggling to maintain a fleet and its costs. When Kealey analyzed the costs and compared what they were spending to the cost of using a parcel service, Brown decided to get out of the transportation business. There was another reason for the change.

"The greatest cost was the satisfaction liability," says customer service manager Joe Kealey. "We were proud of our service, but costs began to escalate every year as branch mangers would request just one more truck and driver so that they could do the job better."

That's when Brown created TNT and found a regional carrier to implement the system. It was a natural fit and customer satisfaction went up, says Joe Kealey.

"We had 10 trucks available -- now we have 180 and they share our service philosophy," he says. "We found someone as good at transportation logistics as we are at distribution."

Light as a feather

Birds are streamlined and very efficient -- and that is the strength of the Brown business model, says sales and marketing manager, Thomas R. Clawser. It was necessary to innovate and redesign everything with a very definite purpose.

Unlike many small distributors who pursue a small specialty niche, Brown chose to level the field with the larger competitors by broadening its offering, he says. This involved restructuring the organization.

"We chose to adopt a regional distribution center model," says Tom Kealey. "We have people and inventory at our branches but avoid duplication."

These branches also serve as retail locations where customers from engineers to hobbyists can come in and pick up components. Though there is a perception that distributors should only go after larger accounts, no one is too small for Brown.

"Every customer is important' says Clawser. "The key is to find the right venue for each one to do business with us."

Inventory wasn't the only thing centralized in the restructuring, he says. Brown consolidated customer service and purchasing functions previously spread over four locations.

In 1997, Brown acquired a location in Reading, Pa., by combining with an electric repair shop with a 50-year reputation. Tom Kealey says he gained better repair capability and the repair shop gained inventory.

Brown consolidated multiple machine shops to one location, operates a certified build center for Emerson Gearing, and is in the midst of installing a fabrication center for lightweight belting and hose assemblies.

Another feature that contributed to streamlining the company was the adoption of Systems Design, Inc.'s Prism distribution software. Finding the right system was a challenge that involved a team assembled from across all the business units, says Clawser.

Now associates are linked to the latest CRM and sales force automation tools so they can be easily informed of all the information affecting their customers without having to access multiple systems.

"Some people call us tech junkies, but several years ago we saw a storm coming and knew we needed to react," says Tom Kealey. "The IT system is the cornerstone of the organization."

Brown faced a major challenge because when it chose Prism, it also updated to a new computer system, says SDI executive vice president, Mike Klemp.

"They also challenged us because they were not in the [industry] which most of our customers shared," says Klemp. "They had clear requirements and worked closely with us."

He says Brown is a progressive firm. The distributor adopted nearly all of the available Prism modules, including the CRM module when it was developed.

"Early adopters were mostly large firms," says Klemp. "Most small companies shy away from risk, but conservative is not a part of their language."

Brown volunteered to be the first beta test for the latest version of the Prism software. Klemp says that's a big step but is typical of how closely Brown works with its partners.

"Small companies like Brown that are doing everything possible to increase efficiency give customers an alternative over the big guys," says Klemp. "These companies can compete in the same space with the large competitors."

In the end, everything was more efficient, says Clawser. It was also much leaner. After transitioning to the distribution center model, Brown was able to handle the same volume of sales while reducing employees from 44 to 26.

"Our clients are also trying to consolidate and cut back on expenses," says Joe Kealey. "As a result, they have come to rely on us for technical training."

The training is intensive and technical, which makes it difficult to do onsite. Brown has a training facility that includes hands-on labs.

"It was a tremendous investment for a small company," says Tom Kealey. "It has, however, brought us a phenomenal payback."

One of the flock

Brown looks for relationships that will help it further its efforts to become lean and efficient. Therefore, the company holds membership in several associations like Power Transmission Distributors Assn., Bearing Specialists Assn. and is involved in cooperatives.

In 1986, Kealey was a founding member of Independent Distributors Cooperative-USA. Today, DC has over 60 independent members nationwide, stocks more than $1.5 million in inventory, supports direct purchase programs and assists its members with marketing programs, which allow small distributors to compete on price with the large competitors, he says.

As a member of iPower Distribution Group, an integrated supply provider made up of independent distributors, Brown forms relationships with organizations that it could not have developed on its own, says Tom Kealey. For instance, when an old navy shipyard renewed production, Brown and six other independent distributors under the iPower name signed a contract to provide products and services to the new shipbuilder.

Customers appreciate how independents can pull together and provide them with better service than a large competitor, Kealey says. Many vendors also appreciate the efforts of their small distributors.

An independent distributor like Brown can tailor its business model to best serve the specific customer needs in its territory, says regional manager of industrial bearings Stephen P. Kerr of Canton, Ohio-based The Timken Co. As customer needs change, an independent distributor can quickly and efficiently alter its business model to service those constantly changing demands.

"In addition, independent distributors are very receptive to new product and service offerings," says Kerr. "For example, the sales and management team at Brown has aggressively marketed new cost-saving services like repair of spherical, cylindrical, ball, and tapered roller bearings."

Bundling products with value-added services reduces some of the market pressure on both Brown and its vendors, says Kerr. Its full line of inventory and delivery options add value by making it easy and efficient for end-customers to get what they need, and its on-site machine shop services make Brown a power transmission and bearing system solution provider, he adds.

"Regional distributors are important to Timken because of their continued heavy emphasis on the sale of bearings, related products, and services," says Kerr. "Often it is our strong regional distributors that help us introduce and grow the sale of new products like bearing repair, spherical bearings, and cylindrical bearings in the marketplace."

Quill and ink

Commercial printers have been a major part of the client base since Brown was founded 20 years ago. The company's expertise in the printing industry still plays an important role in the company's growth.

One such company is R.R. Donnelley & Sons Co., a global printer based in Chicago, that left Brown during a corporate-level decision to enter a national contract, says Don Becker, operations services supervisor for the Lancaster Manufacturing Division.

"Presses have precise tolerances and we relied on Brown for expertise," says Becker. "The relationship was successful and the costs were similar to larger companies."

He says when the corporate change occurred, he missed the level of service to which he was accustomed with Brown. The Lancaster plant went solo and is again doing business through the nearby Brown headquarters.

"Changing back was worth it. Brown deals with many printing companies and knows our business," says Becker. "They stock products that we didn't even know we used until we needed them."

Becker says R.R. Donnelley has also benefited from manufacturer-sponsored training. Brown often arranges classes for new employees, he adds.

"During the night shift, other distributors may be willing to go into their warehouse to check the stock," he says. "Brown has someone on call who can check the inventory immediately on the Web so we are not left waiting."

Not all large companies have instituted national contracts. Quebecor World, Inc. is an international printing company based in Montreal, Canada, with 160 locations in North America. Brown services several of the printer's locations within the Mid-Atlantic region.

"We have dealt with them over the years and have found that they have the 'big guy' capabilities while keeping a hometown feeling," says purchasing agent Karen Fogarty. "They simply know the printing industry. With their depth of knowledge, they are never at a loss."

She says Brown is service-driven and proactive. For example, when Quebecor ordered new presses, Brown was onsite during assembly and helped in the process.

"Like most printers in the area, we run 24/7," says Fogarty. "We always hope we don't have to use their Night Owl or Roadrunner services, but it is important that they are there if we need them."

No matter what, Brown will need to keep forming strong personal relationships and remain on the cutting edge of innovation, says Clawser. Anything else is for the birds.

COMPANY SNAPSHOT

Brown Transmission & Bearing Co.

President: Thomas R. Kealey
Headquarters: Lancaster, Pa.
Founded: 1982
2001 Sales: $10 million
Employees: 26
Branches: 5
Territory: Mid-Atlantic region
Web Site: www.browntransmission.com

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