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www.inddist.comRespected by Leading Distributors for More Than 100 Years
November/December 2012
See what your peers think about their pay in the 2012 Salary Report - p 22
The AlmightyThe Almighty
DollarDollar
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Guest ColumnWhether regular 3PL evaluation is cost effective
Salary ReportIs your compensation plan on target?
Guest ColumnStrategic planning tips from Brent Grover
Q&AB2B e-Commerce and AmazonSupply
Industry FocusCompetitive wars in supplier management
Construction ReportThe latest construction industry numbers
STAFDA GuideNavigate this year’s convention
54
Guest ColumnIt’s a pricing problem, not a price problem
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[CONTENTS 2012]F E AT U R E S
D E PA R T M E N T S 6 Editorial 8 Around & About12 Market Pulse30 Product Focus34 Industry Focus38 Strictly for Sales40 Tech Talk68 Legal Watch
18 Distributor ProfileAPEX Industrial Automation ratchets up size and scope
A Guide to the 2012 STAFDA Convention - p 54
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[CONTENTS 2012]November/December
F E AT U R E S
INDUSTRIAL DISTRIBUTION® (ID) Vol. 101, No. 6 (ISSN #0019-8153), (GST Reg. #844559765) is a registered trademark of and published 6 times a year (bi-monthly) by Advantage Business Media, 100 Enterprise Drive, Suite 600, Box 912, Rockaway, NJ 07866-0912. All rights reserved under the U.S.A., International, and Pan-American Copyright Conventions. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, mechanical, photocopying, electronic recording or otherwise, without the prior written permission of the publisher. Opinions expressed in articles are those of the authors and do not necessarily reflect those of Advantage Business Media.Standard Class postage paid at Rockaway, NJ 07866 and at additional mailing offices. POSTMASTER: Send return address changes to INDUSTRIAL DISTRIBUTION, P.O. Box 3574, Northbrook, IL 60065. Publication Mail Agreement No. 41336030. Return undeliverable Canadian addresses to: IMEX/Pitney Bowes, P.O. Box 1632, Windsor Ontario N9A 7C9.Subscription Inquiries/Change of Address: contact: Omeda Customer Service, P.O. Box 3574, Northbrook, IL 60065-3574, 847-559-7560, Fax: 847-291-4816, email: [email protected]. Change of address notices should include old as well as new address. If possible attach address label from recent issue. Allow 8 to 10 weeks for address change to become effective. Subscriptions are free to qualified individuals. Subscription rates per year are $54 for U.S.A., $62 for Canada, $80 for Mexico & foreign air delivery, single copy $10 for U.S.A., $15 for other locations, prepaid in U.S.A. funds drawn on a U.S.A. branch bank.Notice to Subscribers: We permit reputable companies to send announcements of their products or services to our subscribers. Requests for this privilege are examined with great care to be sure they will be of interest to our readers. If you prefer not to receive such mailings, and want your name in our files only for receiving the magazine, please write us, enclosing your current address mailing label. Please address your request to Customer Service, P.O. Box 3574, Northbrook, IL 60065-3574.Printed in USA: Advantage Business Media does not assume and hereby disclaims any liability to any person for any loss or damage caused by errors or omissions in the material contained herein, regardless of whether such errors result from negligence, accident or any other cause whatsoever. The editors make every reasonable effort to verify the information published, but Advantage Business Media assumes no responsibility for the validity of any manufacturers' claims or statements in items reported. Copyright ©2012 Advantage Business Media. All rights reserved.
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Volume 101, No. 6
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D E PA R T M E N T S
6 Editorial
8 Around & About
12 Market Pulse
30 Product Focus
34 Industry Focus
38 Strictly for Sales
40 Tech Talk
68 Legal Watch
Editor’s Note: DXP has been added to the online version of the Big 50 List. The company would have landed at #22 with a 2011 revenue number of $807 million. Visit www.inddist.com/articles/2012/09/2012-big-50-list for the full list.
Achieve IT Solutions .......................................................................................................35All Metric Small Parts .............................................................................................. FD, 49Amtech Drives ................................................................................................................ FDApex Tool Group LLC ......................................................................................................13Brush Research Mfg Co Inc ............................................................................................50California Torque Products ............................................................................................. FDContiTech AG ..................................................................................................................17COXREELS ......................................................................................................................42Duracell .......................................................................................................................7, 39Electronic Ally Avenue .....................................................................................................67Flexovit ......................................................................................................................43, 64INCOM Distributor Supply ................................................................................................5Infor ..........................................................................................................................51, 70InSite Solutions LLC .......................................................................................................41Intertape Polymer Group .................................................................................................53K & E Tools .....................................................................................................................43Legacy Mfg .................................................................................................................... FDLogistics Corporation ................................................................................................29, 61Lubriplate Lubricants ......................................................................................................46Magnalight - Larson Electronics LLC ............................................................................. FDMartin Sprocket & Gear Inc ............................................................................................35Master Magnetics .......................................................................................................... FDMercer Abrasives ........................................................................................................... FDORS Nasco ........................................................................................................................3PFERD INC ........................................................................................................................2PLI LLC .......................................................................................................................... FDPNC Financial Services Group Inc ...................................................................................11Precision Instruments .....................................................................................................32PrimeSource Building Products Inc ................................................................................15Pro-Line ..........................................................................................................................45QA1 Precision Products Inc ............................................................................................36Royal Products ...............................................................................................................67SAP .................................................................................................................................27Schrader International .....................................................................................................63Texas A&M University .....................................................................................................33
Guest ColumnWhether regular 3PL evaluation is cost effective
Salary ReportIs your compensation plan on target?
Guest ColumnStrategic planning tips
from Brent Grover
Q&AB2B e-Commerce and AmazonSupply
Industry FocusCompetitive wars in supplier management
Construction ReportThe latest construction industry numbers
APEX Industrial Automation
STAFDA GuideNavigate this year’s convention
54
Guest ColumnIt’s a pricing problem, not a price problem
6218
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6 INDUSTRIAL DISTRIBUTION / November/December 2012
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[EDITORIAL]ANNA WELLS
A Larger-Than-Life PerceptionIt happens here all the time.Every so often, we’ll receive an email
from our IT department or audience development team, highlighting some slick new feature or internal method designed to improve upon a task they see as time or labor intensive. And despite their efforts to help us, we editors uni-versally pick these new strategies apart, examining them for weakness and exco-riating the finer points based on our assumptions of what good these efforts do or do not serve. Sometimes we find ourselves even defending the old process, however tedious. Why? Because that’s the way we’d always done it.
This month’s Distributor Profile (page 18) is on APEX Industrial Automation, a company that’s undergone a pretty dramatic technological facelift over the course of six years. In fact, company owner Ryan Watts – who purchased this business in 2006 – cited “infrastructure” as the biggest challenge he faced when embarking on his first year at the helm.
Developing infrastructure can be a daunting task, just like the word itself is daunting in its vague magnitude. For Watts, developing infrastructure meant streamlining tasks through technol-ogy and automation. The business he entered into had one computer – used once a week – to enter an online order for a primary customer. It almost smacks of urban legend — the proverbial old woman’s car that’s only been driven each Sunday to church.
As any transition, it hasn’t been seam-less (You can’t take your car out once a week and be much good at driving). It has, however, been successful. Watts describes his company’s ability to work quickly and communicate both internally
and with customers on the fly through a stock of mobile devices providing real-time access to products and systems.
I liked the APEX story because Watts didn’t see the size of his business as being an impediment to progressive growth. We hear so often about large distributors being head and shoulders above the smaller outfits when it comes to technology implementations. In fact, there is this perception that smaller companies are just dipping a toe into the water or, worse, are indifferent to or actively resisting change. I know we all have to fight against the ‘this is the way we’ve always done it’ folks. Like me, I’m sure you each fight this instinct on occasion in yourselves. But what APEX Industrial Automation shows us is that fresh perspective, tenacity, the right peo-ple, and the right technology can take a small, one computer operation and turn it into a cutting edge distributor. Says Watts: “We were able to use technology to give us a larger-than-life perception.” Being able to accomplish this through stock visibility, mobility, and better access to the supply chain gave this business an edge to compete with some of the larger distributors in the field – a serious boon for the small business Watts walked into in 2006.
Developing new infrastructure or streamlining existing work flow some-times just takes building the value of the new tools and processes — an undertak-ing easier said than done. Yet if embrac-ing change could be 'the way we've always done it,' it might make for a stron-ger building block for business improve-ment. Because it's often the smallest of building blocks, with time and attention, that yield larger-than-life results.
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18 INDUSTRIAL DISTRIBUTION / November/December 2012 www.inddist.com
DISTRIBUTOR PROFILE
Nestled on a quiet street at the back of an industrial park, just off of I-88 on the west side of Chicago, is a company who is anything but quiet. APEX Industrial Automation is
a place bustling with activity and enthusiasm, from the walk-in counter where its motor repair customers can drop off projects or check on part availability, to the employees in the warehouse shooting a few baskets during the occasional lunchtime ball game.
The company began in 1946 as Apex Power Equipment, a small, family-owned enterprise that operated a modest distribution busi-ness. The company underwent a name change and a reorganiza-tion when Ryan Watts completed the purchase of APEX in April of 2006.
“I never thought I wanted to own my own business,” says Watts. “I can still tell you that November day: it was cold and rainy and I was sitting in my offi ce and it just hit me. I picked up the phone and called my old boss and asked if he thought a certain com-
pany was for sale in Chicago. He said no, but that I should go talk to Apex Power Equipment. I told him that I had never heard of them.”
His boss’s response: “Exactly.”
Simple BeginningsWatts did not buy APEX on just a whim. He had previously
worked at Rockwell Automation as a Global Account Manager and with its Reliance Electric division as a Product Manager for the Small AC Motors. In 2004, he became the North American Distribu-tion Manager for Danaher’s Industrial Control Group, a job which would position him perfectly to take on his own distribution busi-ness in just two years’ time.
While working for Danaher, Watts was responsible for stream-lining the Industrial Control Group’s distributor base, eliminating
160 of 600 participants in just twelve months, and then reorganizing the remaining distribution outlets to better support the Danaher business as a whole. This experience showed Watts just how many distributors didn’t make the best effort at creating and maintaining stra-tegic business plans, and so he set out to try it, purchasing APEX and stepping into the distribution landscape himself.
When asked what the biggest chal-lenge was in getting APEX up and running that fi rst year, Watts answers without hesitation: “Infrastructure.” The whole company had just one computer, used only once a week to place an order online for DODGE. Otherwise, all busi-ness was conducted on a typewriter or with handwritten receipts. “The biggest technical challenge initially was automat-ing the business systems with something as simple as QuickBooks for the fi rst couple of years. We had to learn how to create a system for us that used tech-nology as a means to eliminate waste and ineffi ciencies as part of our supply chain.”
The previous owners of APEX, the Wallin family, stayed on with the com-
The Apex of TechnologyOne company’s success in leveraging technology has helped to grow and manage its business.
BY ABBIGAIL KRIEBS
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pany for the fi rst ten months as Watts ventured out seeking new business. After eleven months of rapid growth, APEX made its fi rst acquisition, purchasing Peoria Bearing and its large MRO business. This purchase enabled Watts to hire Cheryl Sansosti as the Opera-tions Manager for the company, a decision he says was the great-est success of that fi rst year. “Cheryl was instrumental in managing the people and the operations while I was out on the road visiting customers and gaining new business.”
That next summer, Rod Miotti joined the APEX team after a bit of coaxing from Watts. Having begun his career in 1999 sweep-ing fl oors at Berry Bearing, then working his way up to an outside sales position with Applied Industrial Technologies in the Chicago area, Miotti was hesitant to take a job at a smaller company than the one he was at, feeling that it might be a step in the wrong direction. But Miotti took a leap of faith and became the fi rst legitimate sales person at APEX. Now the Sales Manager for the company, he is in charge of making sure the rest of team puts the extensive technology that APEX invests in to good use — technol-ogy that puts APEX ahead of most distributors its size.
Ahead of the Technology CurveThe fi rst year in business was a year of growth for APEX. Twelve
months, two key employees, and an acquisition later, Watts and his team were challenged with balancing the OEM versus MRO equa-tion when seeking new business. They found themselves having to fi rst sell APEX to their customers before being able to pitch them products or services. “It was extremely frustrating after spending twelve years on the manufacturing side of the business represent-ing well-known brands like DODGE and Reliance and being wel-comed into businesses just based on those names.” Now, they were challenged with just getting in the door as a smaller company.
In the end, it was technology that really propelled the growth of APEX over the next several years. Leveraging the ability to connect his own inventory directly to the systems at DODGE and Baldor and other key manufacturing partners, Watts was able to show his customers that his small 2,000 square foot business was a legiti-mate player in the marketplace, with access to the same products – and the same volume of products – as the big name distributors in the Chicago area. He even showed them that APEX could deliver those same products in the same time frame – but often for less money because of his lower overhead costs in warehouse size. “We were able to use technology to give us a larger-than-life percep-tion because of the real-time access of our systems to products that might be just down the road, but not necessarily in our warehouse at that moment.” This ability helped to put the small business on the map, enabling APEX to keep expanding.
In 2009, APEX made acquisition number two, purchasing Indus-trial Motor Service and adding to its reach and its inventory. The acquisition provided APEX with an additional 2,500 customers who had been loyal customers of IMS since 1974, and allowed APEX to unintentionally cross sell new components to those motor repair clients, and motor repair to clients who had previously been only purchasing MRO supplies. “Nothing grows your business like being
able to add over 2,000 customers to your database in one day,” says Miotti. “Thanks to that acquisition and our other growth strategies, we are ten times the size we were in 2006.”
Success in HandAnother way in which APEX is leveraging technology to meet
its business needs and those of its customers is by putting mobile solutions into the hands of all of their salespeople. Each outside salesperson is equipped with an iPhone and iPad to take with them on the road, and each device has access to any informa-
November/December 2012 / INDUSTRIAL DISTRIBUTION 19
DISTRIBUTOR PROFILE
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20 INDUSTRIAL DISTRIBUTION / November/December 2012 www.inddist.com
DISTRIBUTOR PROFILE
COMPANY SNAPSHOTAPEX Industrial Automation
President: Ryan Watts
Associates: 30
Locations: 4
URL: www.apexindustrialautomation.com
Line: Motors & accessories
Pictured: Cheryl Sansosti, Rod Miotti, and Ryan Watts
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DISTRIBUTOR PROFILE
tion that they have sitting on their desk at the offi ce via remote desktop applications and cloud sharing services like Dropbox. With these options in hand, reps are able to turn on their device and in seconds have everything they need to assist a customer, even if they are pulled over on the side of the road in the middle of an Illinois cornfi eld.
“We have at least fi fteen apps on the iPads that make us more effi cient. Using push technology, our devices refresh every hour to sync with our ERP system and records. Customers have been impressed with our speed and our ability to complete most business activities right in front of them,” says Watts. Whether it’s placing an order, looking up a part number from a previous order, getting a quote, or emailing a statement to a customer, the iPads enable employees to have all the information they need to help a customer right before their eyes, eliminating a need to call them back or take an extra business day to have access to the information. The ability to email, talk, and text at any point in the day makes them avail-able to customers — and to each other.
Just how this technology results in cost savings and increased service to the customer can be demonstrated in one single incident that happened in July. Watts and Miotti took a couple of moments out of a meeting to dialogue with an inexperienced salesman over Facetime on his iPhone to help him diagnose a problem for the cus-tomer. The catch: the customer and salesman were in Indiana, while Watts and Miotti were able to give advice and create a strategy for the customer while sitting in Miotti’s offi ce in Montgomery, IL. The employee was able to hold his phone up to the broken machinery in order to given them a picture of what was wrong, eliminating the need for a second salesmen to go visit the customer later that day or another day entirely, saving time and money for APEX and the customer both, and making even a new employee as capable of the service call as a seasoned one.
All this talk about iPhones and iPads might make APEX look like just another member of the Apple cult, but Watts swears it isn’t so.
“We have iPads today, but a year from now, we might not have iPads. I will continue to investigate all of the technologies available to make sure that we are utilizing the best that we can to always stay on that forefront. Today, it works for us.”
Changing Technology, Changing ApproachMiotti is charged with keeping the sales team updated with the
constantly changing theme of technology. “I hold monthly sales meetings in which we not only discuss sales strategy, but also how to better serve the customer with our technology. It is my job to take the tools that [Watts] has given us and showcase it and make sure we are utilizing it. Otherwise, you are just carrying around a really expensive notebook.”
APEX also just launched what they believe to be the industry’s fi rst After Hours service and repair app. It enables a customer to contact any location or any member of the staff — even Ryan him-self — by phone, email, or text with just the tap of a fi nger. Custom-ers can create work orders for broken equipment 24/7, requesting site pickup for even heavy machinery by entering the weight, and
indicating whether emergency or overtime labor is pre-approved for the job depending on the necessity of the equipment.
APEX has also created web-based Asset Management software that allows end users to login through the APEX secured website to obtain product information or purchase components that need to be replaced. Every surveyed item is tied directly to the customer’s plant hierarchy and is cataloged with digital photos, installation and maintenance manuals, and more. Duplicate items can be easily seen throughout the plant to aid in standardization efforts, and the software provides instant information for aiding quicker decisions while standing on the plant fl oor.
Watts notes that all this technology has been key in giving APEX a competitive advantage, as well as being instrumental in his mis-sion to change the industry. He says it is a constant challenge to “raise customer awareness for what distribution can do, not just what it has done in the past.”
Staying CompetitiveEvery competitive advantage is necessary in an economy as
challenging as the one distributors are facing today, something that Watts knows very well. During the economic downturn, APEX grew over 30 percent year-over-year, thanks to Lean operations and a willingness to use technology to be better and faster than its competitors. Something else Watts thinks of as an advantage: the company’s passion and intensity for the service side of the business. His focus remains to provide value-added services to make custom-ers more successful. “As an independent distributor, we have a passion for keeping American manufacturing strong,” says Watts. “Today there are fewer manufacturing jobs in Illinois, but there are the same number of distributors competing for a smaller number of customers. We are reminded every day that manufacturers could elect to service all customers directly themselves and eliminate us from the equation.”
This is evidenced even by the change of APEX’s slogan in the six years of being in business. Watts started out saying that APEX had “The right product for every application.” Today, Watts and his team stress that “Service is our Product,” whether they are deliver-ing parts, providing technical expertise, or repairing equipment.
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