Like so many other distributors in this industry, Joe Poehling’s work experience began with warehouse duties while a lad not yet even in high school. “One memorable hot and humid summer, I helped reseal the 54,000-sq.-ft. roof of the main building,” he recalls not exactly with delight. “I consider this to be an early overview of our business. As I got older, the jobs varied to include driving trucks and filling orders for the city counter sales.”
The family business of which he speaks is the Wisconsin-based regional chain, First Supply, which dates all the way back to 1897. Joe Poehling is the 4th generation of his family to lead the company. After graduation in accounting from the University of Wisconsin, Joe entered the family business full-time at its La Crosse location as a salesman and credit manager in 1979. He became president in 1997 and chairman in 2005, following the retirement of his brother-in-law Ed Felten, a well-known past president of ASA.
First Supply LLC was created in 1999 from a group of supply houses operating under different names. The flagship company, La Crosse Plumbing Supply, was namedSupply House Times’ Wholesaler of the Year in 1989. The company featured then operated from four locations, which carried individual locale names, and had sales of around $50 million.
Fast forward to 2008 and we find First Supply encompassing 27 locations, mostly in Wisconsin but also branching out into neighboring states of Minnesota (5 facilities), Iowa (2) and Illinois (1). Sales volume today is around $225 million, derived from a diversified business that spans plumbing, HVAC and industrial PVF, along with a central distribution center (CDC) in La Crosse, WI, two Premier Kohler showrooms and five more showrooms operating under the Gerhard trademark name.
Joe is an uncommonly thoughtful and articulate person, and in this interview he addressed a wide range of topics touching upon his company’s operations, PHCP distribution in general, and of course the challenges and goals of the American Supply Association as he ascends to the top executive position with that organization. Our interview begins.
Poehling:We’ve been very fortunate in this company to get good people around us. I learned early on if you’re going to be successful, surround yourself with successful people.
And we’ve had some great leaders before me. I think a lot of credit must go to Ed Felten. He came into the company and said we will run it like a business. He, along with my brother Bob Poehling, organized an outside board of directors, and established a policy that said if you get along and do the job, as a family member you’ll be slotted into a position that makes sense, but just because you’re a family member is no guarantee of a senior management position.
We’re also very excited the fifth generation of the family is a member of the management team as well. Most of the family members currently working in the business are now over 50. Todd Restel, a nephew of mine, is our chief financial officer and doing very well. We’re very optimistic about how that is going to work out.
In 1989, we named your predecessor company, La Crosse Plumbing Supply, as Wholesaler of the Year. What do you see as the biggest changes occurring in your business since then?
The most far-reaching change would be the growth and complexity of the technology that we use to service our customers. In January of 1969 we started out with a computer containing 8K bytes of information that basically handled accounts receivable and accounts payable. Today we are at 34 billion bytes that coordinates over 30 major business functions and a terminal network of 450 users. In the near future this technology will integrate a communication system to link our customer service with everyone in our trading area.
These changes mean everyone in the company will be progressing. Today, my job is focusing more on relationships between vendors and customers, ensuring projects and developing the leaders that this company needs as we continue to grow.
How do you define your company’s core values and approach to the PHCP distribution business?
First and foremost is providing the customer with quality products and services in a timely, accurate and cost-effective manner. Through all four generations we have always emphasized aggressive customer service via a well-stocked inventory.
Aggressive customer service is only possible with dedicated, knowledgeable employees who are appropriately compensated for hard work and share in company benefits. If you give employees the ability to progress and give them the tools they need to succeed at their jobs, your company will prosper.
Well-stocked inventory doesn’t mean overstuffing warehouse shelves. It means selecting quality products that your customers need and want and making sure they are available when needed.
First Supply has become quite a large regional chain. Do you have ambitions to grow beyond the four-state region now serviced?
We define ourselves as a regional distributor and will grow only as opportunities are made available to us in this area and as we have the talent to support that growth. We do feel that as we grow, the better we can service customers with greater inventoried product, strengthen vendor relations and encourage employee skills. Our various warehouses and CDC make a wider variety of products available to a much broader customer area. We have not only added more brand products but have increased the depth in product lines such as Kohler, Elkay and A. O. Smith.
Is further consolidation of the industry inevitable, and what do you see in the future for independent wholesalers - both regional chains like your company, as well as smaller, single-location distributors?
Yes, consolidation is inevitable, but there is room for strong regional chains as well as smaller distributors. In order to survive and thrive, we have to change to meet the challenges of everyday business. We have to be knowledgeable on the trends that are developing and be proactive in preparing for those changes.
We have to train for those changes and evaluate the results. Then we repeat the process and evaluate, evaluate, evaluate. For instance, online shopping and buying is becoming more and more prevalent in all product lines. First Supply’s response to this trend is our proprietary e-supply program, where contractors can fully manage their business with First Supply online. For example, they can search for product information, price it, check availability, place orders and view order status. E-supply goes further by letting customers check order status, retrieve and download statements and invoices and pay their bill. Pending orders can be edited and/or deleted.
Whether you are a regional chain or a single-location distributor, you have to keep up with changes in the industry that are coming from many different areas, including Washington, D.C., the Federal Reserve or the research labs at the manufacturers. These all are creating challenges and opportunities that we can either choose to take advantage of or to ignore.
The whole concept of “Green” is a great example of change facing our industry and society. Conservation concerns have pushed codes and regulations that manufacturers have to meet and that we as suppliers have to sell to our customers.
Any company is only as strong as its employees. If your employees are happy and feel successful at their jobs of servicing the customer, then your company will prosper. Training and education of your employees is paramount. First Supply has always put emphasis on product education at weekly sales meetings and always welcomed the expertise of many sales reps. Education doesn’t end with just product knowledge. Although that’s the most challenging for us to do a good job at providing, we also work to provide skill sets for the jobs as well.
We also view our benefits programs as another important key to our low turnover as well as our college recruitment programs. Our employee wellness programs especially have been successful in this area.
What advice can you give fellow ASA distributors about coping in today’s sour economy?
The economy is always in a pendulum movement swinging from stronger to flatter and different segments are in constant movement. I don’t think of the economy as sour so much as evolving. If you think in terms of evolving, you think of the ways you are going to cope with those evolutions. Your company has to meet challenges with long-range planning and the ability to adapt quickly.
The new construction market is soft at this point but home renovations are doing well as our showroom sales show. When the economy recovers, as it will, distributors should have their response to that change ready to continue servicing their customers.
In today’s economy, you have to look at all expenses. There’s no fat to cut anymore, and you have to focus on expenses that are rising in a big way. Incoming freight charges are exploding, and we have to make sure they are billed properly. Surcharges are almost impossible for distributors to pass on to customers, so we try to discourage our vendors from enacting surcharges.
We at First Supply enact a delivery charge and have to keep raising it. We try to lead the market in that regard, but it proves troublesome and doesn’t come close to covering 100% of the cost of delivery.
Right now we are looking to partner with companies outside of our industry, such as a relationship with certain electrical distributors to coordinate deliveries. Frequently we are going to the same town, often to the same customers, because in rural areas it’s common to see plumbing-electrical contractors. This is still in a discussion stage. By the end of the year we may be able to start that program.
What do you see as ASA’s biggest challenges?
The power of any national association comes directly from its membership. For ASA - and any other national association - to be effective in advancing the interests of the industry it serves and its members, we need to engage our members. Whether it be in the programs and services we offer to help them run a better business, or in our efforts to effect change in the best interests of the overall industry, the power to do all that comes from the members of our association and our industry.
Competition from buying groups often has been cited as a factor in diminished participation in ASA. What can ASA do better than the buying groups?
I’m really glad you asked me this question because it gives me the opportunity to talk about how that perception is changing at a very rapid pace.
In the past year or two, ASA and four of our industry’s major buying groups have reached out to one another in an effort to eliminate that feeling of competition and forge partnerships that promote cooperation. The power that ASA wields in terms of education and advocacy, the buying groups can’t duplicate in a fiscally reasonable manner. And as an industry association and not-for-profit organization, ASA cannot even consider getting involved in rebates and pricing issues between the wholesale distributors and manufacturers, which is where the buying groups have proven their strength. But every distributor needs some combination of all of these things in order to be successful.
Wholesalers are realizing that through memberships in their buying group and ASA each organization provides benefits that complement the other. They’ve started looking to both entities to provide very different kinds of support for their businesses.
The logical conclusion was for ASA and the buying groups to look to how we can better partner to focus our limited resources in our areas of strength and combine our efforts in the best interests of our respective members and the industry as a whole. Working together, we can get some monumental things accomplished that create a win-win-win for everyone involved.
What do you think are ASA’s main strengths and weaknesses?
Our greatest weakness is the fact that not every wholesaler and manufacturer in our industry is a member of ASA. That weakens us both from a vital resource standpoint as well as the benefit that comes from having a unified industry voice.
Our strengths are many. I like to look at it and explain it to people as “The Power of Membership.” The power of membership is twofold: there is the power that comes from being a part of the collective voice of an industry, and then ASA also provides distributors tools and resources to make us more powerful as individual companies. Being a member is about both giving and receiving.
ASA members give as part of that collective voice, through an aggressive advocacy program that is delivering results for the advancement of our industry. That’s a strength that cannot be found anywhere in our industry besides ASA.
ASA members receive back strong educational programs, outstanding networking opportunities and reliable benchmarking information that give us the ability to better our company, our employees and put us at a competitive advantage. That strength is something every distributor is looking for, especially in times when the economy is not treating us kindly. We need to look elsewhere for support and in this regard, our greatest ally is ASA.
Tell us your impression of the activities of the ASA Education Foundation, and what you think are its most important programs.
I’m really excited about the projects that are being developed by the Education Foundation. For example, in response to a growing need that our members have shared with us, we’re creating a new curriculum called “Fast Track.” It’ll combine three critical training programs, including product knowledge, business literacy skills and sales skills, aimed at relatively new employees who’ve demonstrated their ability to move up the ladder within our companies. We’ll be announcing the details of “Fast Track” at this year’s convention in Atlanta, including a terrific new, navigable 3-D training resource to illustrate the use of all of the products we sell in a typical residential setting.
In fact, much of the Foundation’s agenda this year involves preparation for getting our programs into digital media and available online for our members, where the demand is quickly growing for training programs that they can access 24/7. So we’re not only creating new training materials for online use, we’re also converting our existing catalog, including the great “Essentials” series of courses, into online media. Thanks to the Neupert Endowment Fund, we’re able to afford these kinds of multiple priorities.
While there are a growing number of companies who are now using our training programs, I do wish that number would expand. Unfortunately, training is not something that is always budgeted for within a typical distributorship, which is something we’d like to change. A distributor should not underestimate the power of a well-trained staff and its impact on the bottom line.
What will be your main priorities as ASA President?
ASA recently completed work on the development of a new Long Range Strategic Plan back in February. One of my main priorities will be to focus our efforts on getting the association on the pathway to achieving our goals. In addition, with such a major investment from the Education Foundation into new programs, I would like to assist in any way that I can to ensure that our resources are best allocated to make the greatest impact.
Lastly, I am excited about the direction that the association is taking with regard to increasing our role in the advocacy front. With the convention being in Washington, D.C. next year, I will focus some of my attention on getting the largest number of members to that convention and help them discover the power of membership first-hand.
It’s pretty clear that this will be the last year of ASA’s involvement with the ISH North America trade show and joint partnership with PHCC. What are some of the ways ASA will make up for the rather large revenue shortfall that will entail?
While a clear-cut decision has not been made about ASA’s continued role in ISH NA, there is no doubt that the revenue stream has become smaller over the last several years. This has forced us to look for offsets to that dependence on exhibit revenues. For the past year, our new Executive Vice President Mike Adelizzi has engaged the help of our Vendor Member Division and other key stakeholders to explore ways to lessen the dependence on the revenues from exhibits. We have tightened up our administrative operations, and for the first time in years we will experience a net growth in membership. The main thing that our Board is looking at is to ensure that our revenues are sufficient to achieve the goals outlined in our new Long Range Plan. I think we will accomplish that.
In response to economic challenges, ASA has made some staff cuts and eliminated its Center for Advancing Technology. CAT made a huge effort toward a standard industry numbering system and other technology initiatives that never reached fulfillment. What do you think went wrong?
Associations do some things very well, such as education, information transfer and advocacy. It’s very difficult for associations to do things that a for-profit company can do better. They have the resources and the focus that are needed to keep up with the trends of new technology, and to financially make the rapid changes that are required when dealing with technology.
When ASA first became involved in this area, it made sense. Today it doesn’t anymore when there are companies out there that are wholly devoted to technology. ASA decided our members are better served by us focusing on educating our industry, becoming more involved in areas such as workforce development, fighting for our issues in Washington, and promoting the industry.
But we have not completely abandoned technology. We have just left it up to the players who can do it best. In fact, ASA just signed an agreement with Activant and will soon sign an agreement with Harrison Publishing, offering services that have been vetted by us as being the most advantageous for our members. That’s how we can best be involved in this area moving forward.
ASA Executive VP Mike Adelizzi has spoken to various industry groups about sparking more political action by ASA. How do you think ASA can be more effective in this way?
ASA has thirteen issues that we are closely monitoring. Several of them will be dealt with this year, such as an extension of the Residential Energy Tax Credit. Some won’t be voted on until next year, such as the union card check legislation. We’re also putting effort into anticipating what may be coming down the road that can impact our industry and individual businesses. It’s a given that ASA is going to fight for the best interests of our members, as we always have, whatever the future brings.
One area that ASA’s advocacy efforts are moving toward is promoting industry awareness and being proactive with federal agencies and representatives on opportunities that are positive for our members. For many years, our efforts in government affairs were reactive to issues that would have negative consequences for our members. Now, much more emphasis is being given to promoting what is positive about our industry and how our members contribute to the economy and society, especially in regard to the green movement and water infrastructure. This change is really having a powerful effect on the impact we have in Washington, and agencies and legislators are taking greater notice of the power of our industry, our association and our members.
What else is happening within ASA that is particularly noteworthy?
It’s the power of ASA - everything going on seems noteworthy! If I’m forced to narrow it down, I’d have to say that what excites me the most is the energy and vision that is evident throughout the organization - it’s powerful. I see so much being developed in regard to education, thanks to the Karl E. Neupert Endowment Fund. We have abilities and options we’ve never had before. It really enables the Foundation trustees and staff to look at members’ needs in a broad way and consider solutions that would not have been available to us in the past due to financial constraints. That’s exciting - and powerful, of course.
And then taking a look at membership, we’re approaching it with a whole new attitude and it’s working! Years ago, we saw consolidation and were resigned to the fact that we would lose members, and what effect that would have on our association. Today, we tackle consolidation from two perspectives. First in new member recruitment - we are absolutely committed to getting every industry distributor and manufacturer to join and expand the strength of the association beyond what our members currently enjoy. Current members are stepping up to help recruit new members, staff is getting out in front of prospects at industry and buying group meetings, and everyone has great member benefits to talk about in the way of networking, education, advocacy and benchmarking.
Looking at our numbers so far in 2008, we can expect to have nearly three times as many new members this year as last year, and have net membership growth as well. The second perspective we’re using to look at consolidation is to identify the benefits of it. With consolidation comes consolidated resources that could provide greater opportunities for the association. When we can convince wholesalers and manufacturers to invest more in the association, that enables us to do more and we will be a much more effective organization moving forward.
What’s the best thing about being ASA president?
If you are interested in serving the greater interests of the industry, being president of the association that serves the industry is a powerfully rewarding position to be in. I see our membership - and our overall industry - being made up of many, many family businesses. I believe that ASA is run much the same way as a family business. In my experience through the years in a wide variety of volunteer positions in ASA, the people I have come to know and work with are much like family and I see us interacting and treating each other the same way we do the people in our own businesses. People matter, voices are heard, decisions are made for the greater good and being involved actually does make a difference. Being a part of all that is the best thing about being ASA president.
Is there anything we haven’t covered that you would like to say?
The only thing that I can add is a call to all wholesalers and manufacturers that are not involved with ASA to join us today. We are all involved in a great industry. In order to keep it great and see it grow, we need everyone to get involved. So if you are not a member, join us today.