Regular readers of Supply House Times are undoubtedly aware that many of its feature stories focus on larger wholesalers. The editors have received comments from smaller distributors that they sometimes feel excluded; the information we publish seems irrelevant to them.
We beg to differ. In most cases, the practices that bring success to the companies listed in the Premier 150 - the largest wholesalers in the North American PHCP market (May 1999, page 50) - can be adapted to the needs of smaller firms.
Case in point: Missouri-Kansas Supply of Kansas City, Mo. The company does only about one-quarter of the sales volume pro-duced by the smallest of the Premier 150 companies. However, it takes every possible advantage - from technology to marketing alliances - to compete with "the big guys."
For most of its 62-year history, Missouri-Kansas Supply was a one-location plumbing and HVAC distributor. In the mid-'70s, just a few years after a couple of young men named Pat Adams and Bruce McKeon joined the firm as pricing clerks, the company's management decided to get out of those highly competitive markets and focus instead on industrial pipe, valves and fittings. "One reason," Adams recalls with a grin, "was that there's less breakage in PVF products!"
So, as Adams and McKeon worked their way into outside sales, they found themselves dealing mostly in carbon-steel commodity products. And they apparently did it well. By the mid-'80s, both men were able to start buying shares in the company as the four previous owners retired. In 1996, the last of those owners sold his 51% of the company to Adams and McKeon.
Of course, the new owners were itching to make changes as soon as possible. "We've been on a tear to bring it up to where we thought it should be," Adams says.
And they were willing to put their money where their mouths were: They hired eight additional employees and replaced the ancient wooden bins in the warehouse with new shelving. They bought new forklifts and added a couple of trucks to the company's fleet. They converted what had been a parking lot next to the building into a pipe yard and acquired two nearby buildings for additional storage and a valve-actuation shop.
The partners also turned to technology, installing new telephone and computer systems and arming each of their sales people and truck drivers with combination cell phone/pager/walkie talkies.
"We are very much in a growth mode," Adams says. "It used to be tough to deliver an order that had to be at a job site at 7:30 the next morning. The same goes for a big job that would take more than one truck to deliver. But now we have the trucks and the right people in the right jobs. That has made a big difference."
Thinking bigThe "new" Missouri-Kansas Supply has expanded its product offerings as well. The company had been selling stainless-steel products for years, even though it didn't stock stainless. Any order for stainless products meant that Missouri-Kansas had to turn to other wholesalers, which of course put a crimp in its ability to provide delivery that met the company's own expectations, let alone the customer's.
So a couple of years ago, Adams and McKeon added stainless steel to their inventory. However, they both freely admit that this decision could have been better timed.
"We had just started carrying more stainless when the bottom fell out of the market," McKeon says. "But we're still able to provide those products to the customers who had been asking us to supply them for a long time."
The move into valve automation in early 1998 grew from similar requests from customers, Adams notes. The company now has two employees working full-time on electric and pneumatic actuation in the shop half a block from the corporate office.
"We continue to battle with some big supply houses. This is one way to differentiate ourselves," Adams adds.
All this emphasis on customer service is perhaps the defining feature of Missouri-Kansas Supply, and that's exactly how its owners want it. "Sure, money is always the bottom line," Adams explains. "But if it's a matter of getting material to a customer fast, we can work out the pricing later. If you don't take care of a customer because of a $20 problem, you won't have that problem the next time. He'll go somewhere else."
Adams' and McKeon's plans ex-tend beyond adding square footage, new product lines and specialized services, however. The company's territory is presently western Missouri, northern Arkansas and Kansas. The owners hope to extend their market into parts of Iowa and Nebraska as they continue to add sales people. They are also looking at opening a facility in Springfield, Mo.
Growth modeWhile Missouri-Kansas may be planning to put its eggs in more than one geographic basket, it has already attained considerable diversity in its customer base. McKeon estimates that 60% of the company's business is with mechanical contractors, with the remainder originating largely in the power, food- and pharmaceutical-process piping and railroad industries.
Another decision made shortly after Adams and McKeon took over at Missouri-Kansas was to join Affiliated Distributors, the King of Prussia, Pa., marketing group. The company became an A-D affiliate just a few months after they bought it. The partners believe that A-D provides them with the ability to compete for national contracts that would be out of their reach otherwise. The organization offers other benefits, as well, Adams notes.
"A-D is very important to us as a marketing tool," he says. "It helps companies like ours keep focused and stay on track."
As an A-D affiliate, Missouri-Kansas has become even more accustomed to electronic technology in the supply chain, although the company has had its thumb in that pie for a decade already.
"We're doing EDI [electronic data interchange] with a couple of our vendors and some customers," Adams says. "I don't think we've pursued it as hard as we can, though. We'd like to do more EDI, electronic commerce and national MRO contracts. A-D is helping with that."
Like most smaller companies, Missouri-Kansas can't justify the expense of a dedicated information-systems manager. Adams and McKeon are lucky, however, that their purchasing manager, Drew Jameson, is also very good with computers. In fact, they look forward to the day when other employees can take over all of the purchasing function, freeing up Jameson's time to concentrate on the computer system.
What other hopes do Adams and McKeon have for their company? They're not dreaming of someday growing larger than any other com-pany in PHCP distribution. In fact, they say, they prefer having the op-portunity to be as involved as possible in the day-to-day operations. Adams, for example, is looking forward to doing more outside sales. He enjoyed that phase of his career and wants to get back to working more closely with customers.
"My personal goal is to get this company to the point where it can run with the thoroughbreds," he says. "I don't want it to be the biggest. I just want it to be the best."
Sidebar: Corporate profileLocation: Kansas City, Mo. Corporate office and warehouse with adjacent pipe yard. Actuation shop in separate building across the street.
Management team: Pat Adams, president and treasurer; Bruce McKeon, vice president and secretary; Drew Jameson, purchasing manager; Beverly Boulware, accounting manager; Derek Woods, warehouse manager.
Territory: western Missouri, Kansas, northern Arkansas.
Markets served: mechanical contractors, utilities, food and pharmaceutical processing piping, railroad industry.