Taking care of business
Jack Hester: To paraphrase the Oldsmobile commercial, "It's not your father's association." That's for sure. We've had some great leaders at ASA over the past years who've seen changes in the industry and have made corresponding strategic changes in the association's direction.
We're moving towards an industry association, representing not only distributors, but manufacturers and reps, too. This has allowed us to address some meaty channel issues, like supply chain cost-reduction and technology. We've also learned how to move faster to keep up with the rapidly changing needs of our members.
I think - at least, I hope - we're perceived as an organization that's out there doing things that are important not only for the individual members themselves, but for the industry at-large. If ASA doesn't do it, who will?
Q. Let's say I'm a new wholesaler. Sell me on joining ASA. Why should I spend the time and money, and what will I get back in return?
Hester: I'd first tell a new wholesaler to look into the great educational programs that ASA has to offer, especially when it comes to training his employees about the products they sell. ASA also has industry-specific management training programs he won't be able to get anywhere else. I'd also tell him how ASA represents companies like his in Washington, where no one else is going to fight his battles for him when it comes to issues like the 1.6-gpf repeal or inside sales compensation.
Then I'd spend about an hour telling him about what ASA is doing to help promote standards in the industry, like a centralized database, EDI transaction sets, the whole gamut. Any wholesaler that belongs to ASA and takes part in the things that are offered can make his dues back ten-fold every year just with the ideas and information that is shared at the annual convention. I'd be embarrassed not to be a part of an organization that's doing so much for the industry.
Q. What will be your main priorities as ASA president?
Hester: Obviously, there are a number of priorities already in place, and fortunately, ASA has never been an organization where new presidents come in with their own agenda, pushing others aside. We're pretty proud of the teamwork that exists among all of our volunteer leaders. I would say that my year will be spent making sure that the existing direction of ASA continues on course, and that means taking care of business when it comes to building new educational programs with the help of the endowment we now have in place. It also means making sure that the government affairs program is well supported so that it can be maximally effective. And, of course, we have a responsibility to be sure that the ISH North America venture is as successful as it can be when it's held in October 2002.
But if there's one thing that is nearest and dearest to my heart, it's definitely the Tech Center, and the things we're trying to do to create efficiencies in the industry. We've recently rededicated some energy to the centralized database project, and I suspect that will continue for some time.
Also, I want to work closer with the regional associations in three areas:
- Ask them to help explain to their members the many educational programs that ASA offers, especially the new CD-ROM "Product-Pro" training series;
- Help explain what the Center for Advancing Technology (CAT) is all about, especially Source ASA+; and
- Ask them to explain to their members the importance of the role that ASA is trying to perform in the area of governmental issues and hopefully gather some more support for the Capitol Club.
These three areas - education, technology, government - represent the three legs of the stool that support ASA as they are extremely important to our success.
Q. You speak with passion when discussing ASA's technology initiatives. Please elaborate about your thoughts in this area.
Hester: Action Plan 2003 was done a few years ago by Frank Lynn & Associates and funded by the Associate Member Division of ASA. They looked at the technology issue and challenged ASA to take the leadership role. ASA has been trying to do this for the past two years with limited success, although it did establish EDI Express, which helped those who decided to get into EDI. Now ASA is pushing the issue big time.
It's kind of mind-boggling trying to get manufacturers to participate in this whole area of technology. The associate membership just did a survey of what manufacturers are doing in this area and found that only 50% of our vendors use EDI, and the ones that do only do about one-third of their volume on EDI. We at F. W. Webb do business with more than 5,000 suppliers, but do EDI with only 24 of them. It's crazy!
ASA developed very simple standards for EDI with EDI Express. It should be a no-brainer. But for some reason most companies are burying their heads in the sand - with a few exceptions, like Nibco, which is light years ahead of everyone. We are working with them and don't even touch an order. We send them the sales information every night electronically, and they send us material every Thursday - 99.8% fill rates, no stock-outs and we have cut our inventory in half. Not bad.
We are trying to push the database as the computer systems today require that you have UPC codes for EDI transactions, list pricing and various product information. We have sent a letter to more than 400 manufacturers and have compiled a list of supporters, including some heavy hitters. Someone has to wake up the industry. The electrical industry has had all this stuff for years, and we have hardly gotten going.
Q. Why has Source ASA+ been so slow to catch on with manufacturers and distributors?
Hester: I'm glad you asked that question! I think it's been a challenge of communication. Many of the manufacturers we talk to don't understand that Source ASA+ is not simply a catalog program. By far the biggest value of it is that it's a centralized and standardized database. That's something we all need for a multitude of reasons (see "ASA's business solution," Supply House Times, May 2000, page 49).
Then, there's the issue of the investment they've made in their own Web sites. A big challenge we face is telling them that their own, individual Web sites can't possibly be utilized in the same way that a central repository of information that is standardized can be used.
Some say that they'll subscribe when more distributors are using it. Then the distributors say they'll subscribe when more manufacturers are on it. You get the picture. ASA doesn't have the resources to launch an all-out marketing campaign to try to break this chicken-and-egg cycle, but we are trying hard to harness some of our collective strength. We organized a coalition of distributors to lobby the manufacturing community to participate in building the content of the database.
Q. Not only ASA, but trade associations in all industries seem to be losing influence to affinity groups, buying groups and other organizations that target narrower interests. What does ASA offer that these other organizations don't?
Hester: That's a question we get asked a lot, and the best answer is a moving target. The buying groups have provided a good environment for sharing interests and intelligence among noncompetitors. They definitely bite into the time that is spent in meetings on an annual basis, which is an ongoing challenge. However, they can't do the kinds of things that ASA can do on a national basis in the areas of education, technology and advocacy in the federal government, which is why those areas are currently on ASA's top list of activities.
Q. How would you characterize ASA's relationship with its regional affiliates?
Hester: There's no question that at times we've been in a position of competing with our regional affiliates, particularly when it comes to our members' time and attention. But now that the whole White Paper reorganization is behind us, I believe we're in a better position than ever before. We've agreed to some written Partnering Guidelines, and so far, they're working out fine. The regionals are still independent organizations, and there will still be times when we won't always agree, but the commitment is still strong.
Q. Is there anything we haven't discussed that you feel important to communicate to Supply House Times readers?
Hester: As times seem to get tougher, the natural inclination is to cut back on expenses, and sometimes conventions and educational programs and the like are the first to go. I want to tell you that it's more critical than ever during tough times not to shut yourself off from the communication and networking that goes on during these events. You never know what you're going to miss by not being there, and catching up is a game I don't ever like to play.
SIDEBAR: Meet Jack Hester and F.W. WebbASA's new president is a 1961 business graduate of Boston College who has been part of the management team for one of our industry's most storied companies. That's Burlington, Mass.-based F.W. Webb Co., a two-time recipient of Supply House Times' Wholesaler of the Year honors.
F.W. Webb traces its roots way back to 1866, when it began as Stultz and Mansur, the first wholesaler of plumbing fixtures in Boston. The name was changed in 1900 to F.W. Webb Mfg. Co., following its acquisition by Frank W. Webb. In 1933, the company was bought by Roger Pope, who expanded it into seven locations in Massachusetts and New Hampshire. His son, John D. Pope, took over the company in 1961 after the sudden death of his dad at age 61. At the time the company was doing around $5 million in sales.
Jack Hester joined F.W. Webb in 1969 after a seven-year stint working in the finance department of General Motors' Framingham, Mass., division. He started out at F.W. Webb as an office manager, then served as company treasurer from 1972-82, and has been president of the company since 1983. He and Chairman/CEO John Pope have presided over a company that has grown to 57 locations throughout New England and upstate New York with 1.4 million sq. ft. of distribution space and sales last year of $329 million.
The company is renowned for its product diversification (96,900 SKUs) that spans every area within the PHCP acronym and then some, as well as residential, commercial and industrial. "We want to become our customers' single source for everything they need," says Hester.
In 1990, the company became probably the first wholesaler in the industry to acquire ISO 9000 certifications. It has adapted the ISO 9000 process into an internal Continuous Improvement Program called CIP9000, which is in place at all branch locations.
Like virtually everyone else in the industry, Hester identifies his company's biggest problem as "margin shrinkage. Competition is forcing wholesalers everywhere to lower prices and not charge for many services that customers demand but don't want to pay for," he says.
"This is certainly a major challenge. We have instituted an activity-based costing approach to customer profitability that points out profitable and unprofitable customers. It's becoming a major focus of ours to analyze each unprofitable customer and figure out how to make them profitable. If there is no solution, then we have no choice but to 'fire' the customer. Obviously, this is not an action we like to take, but in some circumstances it is unavoidable," Hester explains.
Price sensitivity is especially acute in the industrial sector. "The industrial user doesn't want to pay for the many services we provide through our inside and outside sales employees," says Hester. "The challenge here is to lower the cost of handling industrial business in order to justify the lower margins being forced upon us by competition." That is being accomplished in part through an e-commerce initiative called "Webb Connect."
F.W. Webb Co. long has forged a special bond with the trade both in its sales policies and commitment to contractor training. Included among its contractor training initiatives is a unique program of profitability seminars that teaches new contractors what it costs to run a business at a reasonable profit and how to charge accordingly.
Another unique characteristic of the company is its management organization. The company is headed by CEO John Pope with Hester as president. It has 31 full branch locations run by a general manager and operations manager, along with 26 "twig" or "satellite" locations that report to the branch general managers. Each of these general managers reports to Jeff Pope, vice president/branch operations.
Other key managers include: Bob Mucciarone, treasurer; Charlie Slattery, vice president/corporate purchasing; John Provencal, vice president/plumbing-heating-LP gas sales; Ernie Coutermarsh, vice president/industrial sales; Lothar Kartanos, vice president/Kentrol division of F. W. Webb; and Larry Mohr, vice president/information technology.
When asked how the industry has changed since he started in it 32 years ago, Jack Hester's response is: "In one word, computers! Computers have changed entirely the way we handle our internal operations. And, thank God, it has all been positive change. I remember that dreaded year-end inventory when we would start in October writing up inventory cards, then place them in bins in December and start counting. It took until at least the end of January to complete the process.
"Now what do we do? Nothing! Since we do regular cycle counts, all we do at year-end is push a button and the computer takes over. What a difference!" says Hester.
No doubt his appreciation of productivity growth through computerization is what has sparked Hester's abiding interest in ASA's progress through technology.