|
|
|
|
|
|
By Richard Trombly | Industrial Distribution: September 2003 Entrepreneurial spirit, computing power and talent pays off in big sales for this 3 yr old distributor Thomas Arbeiter, Richard Surges and Peter Kiscunas worked
together at one of the top 100 industrial distribution companies and learned
how to efficiently run a distributorship. Each had also had experience
successfully opening and managing branches. Their sales expertise and success within the established
firm only led them to harbor dreams of running their own business one
day. With entrepreneurs, they don't wait for one day to come. They seek
out and seize the opportunity. In 1999, these three entrepreneurs decided the time was
ripe and founded The Industrial Depot. It began operations in Peter Kiscunas'
Atlanta-suburb basement, but soon outgrew the location when sales volume
increased to the point that inventory arrived by the tractor trailer-load.
A 1,200 sq. ft. location held the business for a year
before it outgrew that as well. It then moved to its current location,
a 12,000 sq. ft. warehouse in Lawrenceville, Ga. The Industrial Depot
continues to grow rapidly, with the recent opening of its first branch
location. The company plans to open at least a branch each year, says
president Thomas Arbeiter. The company had annual sales of $2.2 million
in 2001 and showed more than 60 percent growth to $3.6 million in 2002.
The goal is to more than double sales this year. The
distributorship is on track to break that goal, according to Arbeiter. Featured in INDUSTRIAL DISTRIBUTION's April 2003 article,
"New kids on the block", the company has already seen several
changes. There are now 16 employees — up from 12, including two new
sales reps. Cofounder Peter Kiscunas has stepped down as president but
still remains active within the firm. Making the best of change In such a dynamic and rapidly
growing organization, change is constant, says Arbeiter. The company was
founded at the end of 1999, rounding out a decade of unparalleled prosperity.
Soon the economy hit the rocks, but the sales force hit the ground running,
Arbeiter says. Stock options and the opportunity to join in the start
of a new distributorship enticed some well-trained talent to come on board. "It was challenging, but we had an experienced sales
staff with a minimum of five years experience," says Arbeiter. "We
had confidence in ourselves and our employees." There are actually certain advantages to starting in
a slowdown, Arbeiter says. Many companies were taking the time to look
at their cost structures and find new ways to save money. "We specialize in large OEMs," says Arbeiter.
"We go in and look at their processes and develop programs to increase
efficiency, reduce inventory and streamline ordering processes." The company cannot always meet the price of the large
national competitors, but it offers higher service levels than many larger
companies and helps end-customers reduce overall costs, according to Arbeiter.
A full line of products and systems to cross-reference part numbers helps
make transition simple for new customers, he says. "Catalog sales or integrated supply agreements have
their place in the market," says Arbeiter. "But many companies
need and can benefit from our representation and service in their facilities." The Industrial Depot has capitalized on its information
assets by using its inside sales staff to perform outward marketing campaigns
and generate leads for the outside sales. Arbeiter credits the marketing
system software with tripling the leads and sales opportunities and getting
much more information into the field. The company strives to close 8-12 new accounts per month.
Though it declined to offer any customer contacts, the sales growth indicates
that the company not only closes new accounts, but also retains a significant
percentage of its existing customers. While some manufacturing businesses have closed operations
in Georgia and moved them to Mexico, The Industrial Depot has found some
customers that are thriving and growing in the region. Arbeiter credits
the diverse economy for the strength of the region. Buying large One of the secrets to success in distribution is to
intimately understand the flow of inventory. The Industrial Depot maintains
its own fleet of trucks to get inventory in, cross-docked and shipped
out to its customers. The inventory held at its facility maintains a high "turn
and earn" ratio, says Arbeiter. Other items are special ordered.
"We carry anything that moves and as we come to know our customers'
businesses, we maintain the stock to meet their emergency needs,"
Arbeiter says. "Due to our unique location, we can buy everything
else nearly as efficiently as the big competitors." Atlanta is a hub for many modes of transportation and
has become a center for many manufacturers' regional inventory in local
distribution centers. Arbeiter says the distributor can also efficiently
import products. Arbeiter credits the IT infrastructure provided by Advanced
Business Software for the ability to maintain such exacting control of
inventory and forecast information. With the company's advanced IT systems,
customers can efficiently order over the Internet. This has led to a number
of new customers from across the country and internationally. "Our IT wasn't always quite so smooth and efficient,"
says Arbeiter. "We had 60 people in the IT department of our old
employer, yet we tried to start out with QuickBooks small business software." While that software offered some powerful tools for very
low cost when starting a business, the management soon realized that profits
were suffering from lack of a powerful distribution IT system, says Arbeiter.
The month the ABS system went live, sales doubled and inventory costs
dropped considerably. "We have salesmen in the field with wireless touch
pads that can make quotes directly, or check order status in real time,"
says Arbeiter. "The sales force is empowered through its close connection
to the IT systems and can access information at the point of discussion
rather than hours or days later." Arbeiter claims a recent new customer saved a projected
$35,000 due, in part, to the IT systems The Industrial Depot employs.
These savings were based upon cost of goods, reduced inventory and efficient
inventory control, onsite scanners for automated vendor managed inventory
as well as vendor consolidation and weekly billing for reduced purchase
orders. Lessons learned After realizing the cost of going with QuickBooks to
save money in the first year of business, The Industrial Depot made sure
to look at future additions more closely, says vice president of sales
Richard Surges. That included hiring new employees. "A major business purchase can often involve several
meetings of a management team, but most employees are hired by human resources
after a short interview," Surges says. "It costs a lot of money
to hire a salesman, train them, only to find out six months later that
they were a bad fit." The Industrial Depot has developed a screening process
to find salesmen, termed market managers, who will fit with the dynamic,
high-energy culture. Surges says the process is quite exclusive. In a
recent round of hiring, 300 applicants led to 60 interviews and none fit
the position. "Especially in an economy like this, each employee
must really show their worth," says Surges. "While we are anxious
to grow and expand our territory, we have to make sure we find partners
that share our goals." When the company does find a fit, it supports the market
managers in developing a territory, says Surges. The sales staff operates
largely independently although they are always closely tied in through
cutting edge technology to the company's IT resources. "Our industry is really a dinosaur," says Surges.
"I have stopped into some places in my travels and have seen them
operating on old inefficient legacy systems or card catalogs even. It's
frightening." Surges says The Industrial Depot's technology offers
benefits that only the largest distributors could have afforded just a
few years ago. This computing power also allows the distributor to do
more importing and maintain global ties. Surges expects that to be a continual
path of growth in the future. Kindred spirits It can be hard to break into the industrial
supply marketplace. Old name vendors and distributors have long-established
brand preferences and supply relationships with their end-customers. Drillco, Inc. of Baton Rouge, La., is familiar with that
challenge. An entrepreneur familiar with the drill and cutting tool industry
founded the cutting tool manufacturer in 1991. Since that time, the family-owned company has developed
a reputation for a wide range of high quality solid carbide tooling, says
Bill Woodard, manager of Drillco Baton Rouge. Drillco is committed to
providing value through the distribution supply chain, he adds. "The Industrial Depot has become a valued part of
our distribution network," says Woodard. "They share in our
entrepreneurial spirit and business philosophy." Drillco has been continually expanding its relationship
with The Industrial Depot, he says. Woodard says that business relations have improved as
the systems became more advanced at The Industrial Depot. "Orders
are accurate and have the part numbers referenced, which makes it easier
to do business with them," says Woodard. Woodard points out that cutting tool technical and application
knowledge has become increasingly complex. The sales staff at The Industrial
Depot has assimilated the results of Drillco's extensive research to provide
expert application assistance to Drillco's end-customers, he says. "The Industrial Depot has its sales reps out on
the road opening new accounts. They are growing and we are growing along
with them." It is a challenge to launch a new company in any economy,
but The Industrial Depot is proof that there is never a bad time to start
a business. COMPANY SNAPSHOT
COPYRIGHT 2003 Reed Business Information in association with The Gale Group and LookSmart.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
Home | Contact | |
|
© Copyright Richard Trombly 2003
|
||