The concept of master distribution is such an interesting one — and something that many likely questioned the viability of initially. Because in reality, it comes down to making a massive investment in stocking inventory that they never run out of, as well as taking on the responsibility of getting product shipped efficiently and accurately — ensuring that master distributors often “save the day” for wholesalers with an immediate need to get product into a customer’s hands. As a result, master distributors have become a key cog in the wheel of the supply channel.
Emerging trends in the wholesale PVF industry have placed an ever-increasing weight on the shoulders of master distributors to provide not only deeper inventory and wider product offerings, but logistics and service advantages that can turn soft dollars into hard savings — and increased profitability.
We recently spoke with some executives in the PVF industry to learn more about trends affecting PVF wholesalers. We also spoke with Bob Cooper, President of Smith-Cooper International, to get his views on the challenges faced by the industry, how SCI has led the way in redefining master distribution, and the increasing importance of master distributors to PVF wholesalers.
Commitment to Independent Wholesalers
One of these trends is the strengthening of some traditional industry practices. That’s why the master distributor’s exclusive commitment to wholesalers is more important than ever in a fragmented market, according to Gary Jackson, Vice President of Affiliated Distributors' PVF Division. “We expect all of our master distribution partners in Affiliated Distributors to have a rock-solid ‘no direct selling’ policy,” he said, “Our members are strong independent wholesalers who are committed to carrying inventory and supporting PVF end user and contractor markets, so we expect our Preferred Suppliers to be partners in developing business, not competitors. Smith-Cooper has been just such a partner for AD since 2007.”
Jackson added, “Obviously, master distributors such as Smith-Cooper also play a big role in helping us to cover the growing demands of our customers by carrying additional inventories and providing good response times to support our local efforts.”
Indeed, this is another traditional distribution function, reliable inventory and delivery, that has become ever more important in an era of global supply chains.
Inventory Depth, Logistical Excellence
Mike Taylor, President of Columbia Specialties Company, a PVF wholesaler with six locations, notes that for his company, the availability of local, will-call, inventory complements his inventory – and improves his ability to deliver the highest levels of service to his customers. “Smith-Cooper’s Los Angeles facility is only 15 minutes away, so we use their will call all the time. Our orders are always ready and always accurate. That’s why Smith-Cooper always comes in the top three among our vendors in our internal surveys of employees for ISO 9000 certification. They are accurate fast, and friendly.”
Dan Helmlinger, President of Thomas Pipe and Supply, a leading wholesaler in Arizona for nearly 40 years, has this to say about inventory requirements: “Not only do we maintain our own significant inventory, and place quarterly stocking orders, but Smith-Cooper’s inventory is so big, we also place numerous orders every week.” Turnaround of these orders is critical. “If we order by 11:00 AM we get it the next day,” Hemlinger said, “We can even deliver directly to the customer. Smith-Cooper is extremely professional — from top to bottom — including the packers.”
Thomas Pipe and Supply is also part of the Affiliated Distributors family, and Helmlinger noted that this “raises both affiliates and suppliers ability to grow, fosters a real sense of communication and transparency. And that makes it easier find better ways to serve customers.”
Cooper added, “Logistics have always been critical, and since the last recession has driven a trend to lower inventories at the wholesale level, rapid access to master distributor inventories is essential. That’s why we invested in our recent expansion to a 127,000-square-foot facility in Chicago, making one- to two–day service on nearly every order a reality across the country, from Chicago, Atlanta, Vancouver, or Los Angeles.
“Today you also need to do more than provide products quickly. You need to provide information quickly, and that’s why we developed our OrderPro online tool. Now our distributors have full access to our up-to-date inventory and their specific pricing and shipping information.”
Product Line Diversity
Helmlinger also commented that Thomas Pipe has a diversified customer base, from commercial and new construction to copper mining and processing, as well as semiconductor manufacturing and a large presence in power generation, including the Palo Verde nuclear plant. “Smith-Cooper has a very wide product range – from malleable to stainless to valves to the CoopLok® Grooved Product line,” he said. "Smith-Cooper’s 'Sharpe' valves are also an important product to get in the door on those applications requiring automation and control.”
Helmlinger added that the advantages are clear: “All of this has let us enter new markets, and find new applications where we can serve existing customers even better. That’s been a key part of keeping our business strong over the years since the recession.”
Smith-Cooper’s product line diversity was also important to Affiliated Distributors, according to Jackson: “One of the key factors in our decision to work with Smith-Cooper was their specific focus on PVF-oriented requirements. Over the last few years, that’s helped them consistently grow their business with AD members.”
Byron Morgan, Vice President of Sales at Robertson Supply, also talked about the importance of a broad product line: “As Smith-Cooper has grown and entered new markets, so have we.” Morgan serves as liaison for the OMNI Group, and he added, “Smith-Cooper’s availability to fill is extremely good, and ProPak® makes a real difference in cutting shipping, handling and inventory costs.”
Smith-Cooper’s ProPak system is a set of standardized, color-coded packaging, with a picture of the product inside on every box. “It sounds simple,” Morgan said, “but you would be amazed by how much time it saves, and how it helps make sure orders are filled accurately.”
Cooper commented, “ProPak is a good example of how we’ve been working all along to develop a seamless distribution system that cuts costs and saves time. We also pride ourselves not only on rapid order filling, but accurate paper work. Our packing slips are so accurate, most wholesalers we work with use them as an effective way to reconcile invoices more efficiently – saving them even more time and money.”
For Morgan, it comes back to increasing emphasis on traditional industry values. “We serve markets across the Northwest, and here it’s all about people, service, building real relationships,” he said, “and that’s one reason the SCI & Sharpe brands gives a feeling of comfort and quality.”
Quality is also at the top of the list of concerns for George DiMatteo, of Ferguson Fire Protection, who oversees 59 distribution locations as well as 29 fabrication facilities. As the largest distributor in the fire sprinkler industry, Ferguson Fire is almost always the customer’s single source supplier, and so while Smith-Cooper’s scale and large inventories in Los Angeles, Chicago and Atlanta are also important, quality is “simply critical,” according to DiMatteo. “We are large enough that we often receive containers shipped direct to our warehouses across the U.S.”
DiMatteo went on to add, “…and what makes that possible is the quality and the SCI brand on every product. I know each product is independently tracked and inspected by Smith-Cooper, and that Smith-Cooper stands behind their quality with every industry certification you can name – including product liability insurance.” With their quality, reputation, tracking and inspection, DiMatteo gives Smith-Cooper a real compliment: “I would consider Smith-Cooper a manufacturer.”
As Smith-Cooper’s Bob Cooper shared, “Our goal from the beginning was to provide the consistency and quality that you could expect from any manufacturer, as well as meeting all U.S. and international standards and providing the assurance of complete product liability coverage. That’s what the SCI brand on every product is all about, and we also make sure that any new products our engineers develop have this SCI-branded quality built right in, right from the beginning.”
In addition to the SCI & Sharpe branded logos, Smith-Cooper proudly and prominently casts the country of origin into every valve, fitting, and grooved product they sell.
Making a big difference with the little things
AD’s Gary Jackson shared a summary for the challenges faced by master distributors: “There is no question that wholesalers have many choices on where to place their business today – more suppliers than ever are diversifying their product lines to attract new customers and new markets from existing customers.”
“Meeting the challenges of master distribution requires both new thinking, and a new commitment to traditional industry values of service, relationship-building, integrity and, above all, quality,” said Cooper, “At the same time, master distributors must be committed to developing advances in logistics and inventory control with flexible systems from global production lines to direct delivery, one-day shipment from inventory, and will-call orders, to remain competitive.”
Cooper believes it is this dynamic that will continue to drive the evolution of master distribution best practices, and Smith-Cooper International, in the coming years. He added “I have to say a special thank you to the founding elders of SCI. Without their commitment and dedication, Smith-Cooper would not be the company that it is today. Our family culture speaks volumes to our success.”