When you’ve spent 30 years in the industry and visited hundreds of supply houses, not a lot of surprises are left to see in any distributor’s warehouse. Porter Pipe & Supply offered one, though, that made this veteran reporter do a double take.
A couple of plaques by a workstation honored warehouse employees for processing well over a million dollars worth of returns. The closest analogy I can think of is when people throw parties to celebrate getting divorced.
“Yeah, it’s kind of unusual,” said President Jim Porter upon seeing the quizzical look on my face. “As a rule wholesalers don’t like returns, but we look at them as another opportunity to offer exceptional service to our customers. Our people do everything they can to take the hassle out of returns.”
Based in the Chicago suburb of Addison, IL, Porter Pipe & Supply is a PVF specialist that has raised the bar on customer service to a rarefied level probably unmatched in the industry. Hassle-free returns are only the tip of an iceberg’s worth of extraordinary service offerings.
24-HOUR ServiceProbably the company’s biggest claim to local fame is its 24/7 hours of operation. They open the doors of the Addison supply house at 3 a.m. on Monday and remain open until 1 or 2 a.m. on Saturday. Employees then vacate the premises until reopening from 8 a.m. till noon on Saturday.
Official hours are ended for the rest of Saturday and all day Sunday. However, all customers receive a “24-Hour Weekend Emergency Open Card.” It’s a plastic card with phone numbers, both home and cell, of employees who volunteer to be on call to open up when needed. There are eight names on the Addison list, including owners Jim and Bud Porter, and four for a downtown Chicago will-call branch. The people on call tend to be employees who live closest to the facilities. There is a modest charge for opening after hours, with the money going to the employee who opens up as payment for the inconvenience.
This service is not just for show. According to Jim Porter, a typical weekend will bring six to eight calls for special openings. Theirs is a niche business with about 80% of sales coming from mechanical contractors who service Chicago’s commercial buildings, public works and O’Hare Airport. A lot of their work takes place in the wee hours and on weekends so as not to disrupt client operations during regular business hours. So Porter trucks are a familiar sight to Chicago area night owls.
The largest warehouse crew starts work at 3 p.m. They pick orders and load trucks that, aside from the aforementioned wee-hour deliveries, typically hit the road at 5 a.m. to beat morning drive time congestion. Fab shop personnel also work at night. A customer can place a fabrication order at 6 p.m. and get it delivered the next morning.
It says a lot about this company’s culture that the weekend on-call list includes the home and cell phone numbers of the co-owners. “Bud and I are both hands-on people,” said Jim. “There’s nothing we can’t do for our customers, whether it’s picking orders, driving a truck or threading and grooving pipe if necessary.”
Jim recalled the time some years ago when the company still operated out of an old facility in Chicago. A neighborhood customer was in desperate need of two lengths of Schedule 80 pipe, but all Porter trucks were out. So Bud and the sales manager carried those two lengths of pipe to the customer several blocks down the street. Whatever it takes.
No Empty WagonsTwenty-four-hour accessibility won’t mean much if a distributor doesn’t have what the customer needs. Porter goes several extra miles to assure filling orders completely - something they do 98.6% of the time, a fill rate calculated per line item. They are helped by a $7 million inventory that is even larger than it sounds considering the specialized nature of Porter’s business. They target the commercial wet heat needs of mechanical contractors, along with some property management clientele and a few OEMs. They sell a lot of commercial boilers, radiation, heating specialties and, especially, PVF up to 36 inches, but virtually no plumbing, warm air, etc.
Even so, nobody can possibly stock everything anyone might need at a given moment. “We become aware of back orders instantaneously from our sales department,” said Purchasing Manager Paul Mendez, calling up a report on the computer screen. As soon as one gets reported, he goes to work tracking down the missing component from sources mostly near, though from afar if necessary.
Porter takes advantage of its location in the largest metropolitan area of our nation’s industrial heartland. This puts them close to many vendor factories and warehouses. They are practically in Weldbend’s backyard, for example, and not far from an Anvil distribution center. If necessary, they’ll buy missing items from a competitor in the greater Chicago area. “A luxury of having 12 delivery trucks on the road every day is it becomes easy for them to pick up fill-ins as they go about their rounds,” said Mendez. As a last resort he will patronize master distributors that can ship within a day, but usually they can find an item locally and get it to a customer even quicker. Here, too, is an edge gained by their 24-hour operation.
Competition Forces InnovationHaving what customers need when they need it is the defining job description of a distributor. Any company that can fulfill that task almost 99% of the time like Porter does is virtually guaranteed success. The really interesting thing about this company is that they go so far beyond those business fundamentals. The range of customer services offered by Porter Pipe & Supply is dazzling and frequently innovative. They include:
Because of the strong competition, Porter management meetings include a lot of brainstorming for new twists and turns to “wow” customers. “Some crazy stuff gets thrown out there,” Jim said. “We’re always looking for ways to raise the service bar.”
Customer service goes hand-in-hand with relationship building. Porter maintains a 10-person field sales force, along with 12 inside sales reps. That’s a large ratio of outside sales staff in an era when most people are cutting back, but the Porters and Outside Sales Manager Kevin Roche think regular personal contact is integral to their success. “I’m managing a great group of people who have been in the industry a long time,” said Roche. “They are key to keeping a leg up on the competition.”
Jim said that he and brother Bud average about three evenings a week dining out with customers. They are both devoted family men - Jim with six sons, Bud the proud dad of two daughters - but the business is very much an extended family to them. “My top 20 customers are among my 20 best friends,” said Jim. “It’s hard to call spending time with them work.”
One of the Porters’ favorite non-work activities in summertime is hauling customers to outings on a couple of racing boats owned by the company. They cross Lake Michigan lickety-split in the morning, spend the day and have dinner at a recreational area on Michigan’s shoreline, then return by nightfall.
“I'd take a bullet for this man.”This quote is from Inside Sales Manager Bob Langton, a 21-year company veteran who started working for the company right out of high school. The object of his affection is President Jim Porter, and I heard similar comments about him and brother Bud from various employees out of their earshot.
“If Jim told me to follow him into a burning building, I’d do it without hesitating, and would expect to come out fine,” said CFO John Galati. “This is as fine a place to work as I can imagine. The Porters pay their people well and treat them even better.”
Comments like these answered a question I’d posed earlier to Jim. How does he manage to get employees to work goofy hours and bend over backwards for customers? Everywhere I go in this industry I hear people complain about how hard it is to find good people. Good ones tend to gravitate to Porter Pipe & Supply, and they seldom leave.
Jim expressed pride in the fact that only four people working in his company are older than his 51 years, yet many of them have been with Porter for decades. As part of his job, CFO Galati keeps track of industry pay scales, and he told me theirs are well above in all job categories. The outside sales force works on straight commission, and according to Kevin Roche, they aren’t exactly shortchanged. Additionally, the company offers an employee loan program with better deals than they can get from commercial lenders.
Money is great, but the Beatles told us it can’t buy us love. Employee morale at Porter Pipe & Supply is in the stratosphere because everyone is made to feel a part of the family. The Porters practice a version of open book management by sharing company goals and sales performance with everyone, and continually seeking employee input. Once a quarter they host an employee dinner meeting with about 40 participants for an evening of reports and brainstorming. They plow all profits back into the company, and share those profits. Then there are a bunch of special touches, like hosting a company family picnic every summer, and every year giving a Rolex watch to an employee who, in Jim’s words, “has gone way out” with extra effort. Paul Mendez was the latest recipient, and proudly showed me the inscription on his watch: “Strength and honor, brother Paul.”
Anyone in the company is welcome at any time to enter the offices of the Porter brothers for any reason. Coincidentally, we were discussing this very subject in my interview with Jim when his closed door flung open. A retired staffer, Dick Sims, one of the company’s earliest employees dating back to the 1970s, just stopped by to say hello. It was perfectly natural for him to barge into the president’s office without knocking.
Family bonds mean a lot to the Porters. Jim said he knows the names of the spouses and children of all 97 company employees. Those kids are a common sight around the building. Youngsters love to come into Jim’s office and gaze at his colorful tropical fish. They especially delight in saying hello to the company mascot, Moe. Moe is a macaw, who Jim said, “started with the company as an egg” some 18 years ago.
It’s not all about fun and games. Tuesday evenings are given over to training seminars at the Addison facility. “We pay our people for their knowledge, we’re not just buying their time,” said Jim. “The more you know, the more you’re worth.”
The company is about to implement a formal program of management recruitment and training, aimed at taking college graduates with degrees in distribution curricula and turning them into outsides sales and management personnel within three to four years. Jim and a couple of his managers picked up this idea from the “Innovative Thinking” conference sponsored by Supply House Times last June. Porter is working with one of the conference presenters, Megan White, who set up an innovative management training program at Florida’s Castle Supply.
Besides product and industry knowledge, Porter’s people receive heavy doses of indoctrination about customer service. “It’s something we breed into all of our people,” said Jim. “If a customer came in the wrong door and walked into where guys are washing trucks in the warehouse, they’d know instinctively to stop what they’re doing and ask how they can help.”
Service SellsPorter’s high-priced employees and extraordinary services do not come at bargain basement prices.
“We’re in a commodity business and there are about eight other distributors around this town selling the same stuff we sell,” said Jim. “We can’t give the service we give at the prices that are out in the field. Our customers know we’re not going to be the cheapest on the street, but they also realize that buying from us they’re not going to lose any field time with their men putting down the tools because of late delivery or back orders. The big jobs of our mechanical contractors typically have about 15-18% material cost, the rest labor. What we save them in labor is where our value comes in. Our best customers really understand that.
“Service still sells,” Jim emphasized. “The more this is understood by any company in any industry, the better positioned they will be.”
The Big Gamble That Paid OffJim Porter has made many friends during three decades plus in the supply business, but said his best friend is still his father and company founder, Ralph. Bought out by sons Jim and Bud in 1996 and now retired in Florida, Ralph Porter took about as big a gamble as anyone ever did when he started Porter Pipe & Supply in 1976.
Ralph was a hydronic engineer working for a heating supplier in Chicago when the company gave up wet heat in favor of warm air. Rather than look for another job, the patriarch - then age 50 and the father of eight children - decided to parlay the goodwill he had built with local mechanical contractors and start his own business. Jim was a sophomore in college at the time and hadn’t determined what to major in yet. So he decided to take a semester off and help his dad get started.
That semester break turned into a 31-year career that Jim fell absolutely in love with, despite early hardship as grueling as any in an industry teeming with tales of bootstrap entrepreneurs. “Dad and I worked 17-hour days,” Jim recalled. “I would start in the morning delivering orders in a pickup truck, and come back at 6 p.m. to pick orders for the next day. We’d eat dinner, then load the trucks until midnight.” Then he and his father would sleep on cots at the supply house before repeating the cycle the next morning.
A new company starting out needs an angle to gain a competitive edge. Ralph came up with the notion of delivering all back orders the same day. If they couldn’t source it from a vendor or rep, they’d simply buy it from another supplier. “We would send a car out to pick it up, and drop it off at the jobsites,” said Jim. “We became known for that kind of service.” That’s been the company’s M.O. ever since.
Jim said his dad went the first three years without taking a salary. His mother went back to work to help provide for the family during those years. Thus the seeds were planted for what germinated into today’s Porter Pipe & Supply.
Jim’s younger brother, Bud, joined the company in 1983, and currently serves as vice president. Whereas Jim handles most administration, Bud typically spends four out of the five weekdays calling on customers. The Porter brothers now preside over a $50 million company operating out of a 90,000-sq.-ft. facility in suburban Addison, with a 12,000-sq.-ft. will-call facility near downtown Chicago. The company has grown in sales every year in business.
Jim has taken to heart Peter Drucker’s “grow or die” dictum, but with a controlled growth strategy that doesn’t outpace their ability to provide super service and build strong relationships. This April is the target date to open the company’s first full-fledged branch operation in Indiana, and they plan to open another branch in Wisconsin early next year. Although focused on the Chicago metro area, Porter Pipe & Supply’s mechanical contractor clientele includes some powerhouses that gain work throughout the Midwest and beyond. Porter’s trucks are licensed to deliver in nine states throughout the Midwest and as far away as Tennessee.
Jim Porter has his sights set on hitting $100 million, but taking six to eight years to reach that goal. He sees the trickiest part not as doubling sales, but doing so without losing the company’s soul.
“We still feel like first-generation owners,” he said. “Dad taught us everything we know about how to run a business - most importantly, respect and honesty with both customers and employees. We don’t want to get so big, so fast, we won’t be able to operate as a family.”
The oldest of Jim Porter’s six sons has been out of college and working for the company for the last year and a half, learning the business from the ground up. Another son is a junior in college with plans to join the family business after graduation.
“The biggest joy of my life was working with Dad,” said Jim. “I look forward to doing the same with my own sons.”
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