Home » 2. Preferred Pump: Decentralized Operations
Branch managers at Preferred Pump receive a monthly profit and loss statement that provides all of the information they need to run the branch like their own business.
The branches also have their own purchasing power. Preferred Pump has 30 branches but each has its own unique characteristics.
“We are a market-driven company,” says Tom Bowers, director of marketing/group manager. “We buy for each market. We don't use central purchasing except to maximize profits or get special deals.”
The purchasing department at headquarters mostly manages inventory and handles big buys, according to Scott Sizemore, vice president of purchasing and information technology.
“If a vendor has a special discount we will handle the primary lines and large purchases,” Sizemore explains. “A lot of our purchasing is done at the branch manager level. He has the flexibility to order what he needs. The corporate office has a list of preferred vendors. In most cases the branch manager can opt not to buy from the preferred vendor if the brand is not accepted in his market or if there is a conflict of interest.”
Unlike some larger wholesalers, Preferred Pump does not manage its assets from a central office. “We are more old-fashioned, low tech,” Bowers says. “We still use a lot of intuition, gut feelings. We talk to our customers.”
The corporate office handles accounts receivable, accounts payable and human resources. Scott Sizemore oversees technology and inventory and West Soward takes care of the budget and banking functions.
“I am a big fan of having the home office treat its branches like customers,” Soward says. “That is my mantra. The home office is not here to be served - it is here to serve the branches.”
This is confirmed by Mike Floyd, a group regional manager. “We don't get commands from the corporate office,” he says. “We get requests. It feels like we have people serving us vs. managing us.”
By centralizing accounting, human resources and the promotional parts of its business to the Texas home office, Preferred Pump's branches can focus most on what they do best: recognizing customers' needs, knowing what and how much inventory to stock, providing efficient product delivery, offering customers technical assistance both by telephone and in the field, and providing customer training, says Joe Thein, a group manager.
Other than a corporate training program for its computer system, each regional branch takes charge of its own training.
The group regional managers meet three or four times a year. Usually it is tied in with the company's dealer awards program, which rewards customers for their purchases.
“There is no competition between the group managers,” Floyd says. “We all want to do well. When one person is successful we are all happy. We can take a new branch and make it profitable immediately. No matter whose branch it is, we are all excited about it.”
The decision-making power given to its branch managers is one of the big reasons why Preferred Pump has been so successful, Sizemore says.