Building a Partnership with Distributors

August 20, 2007
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More than 500 distributors in the United States and Canada depend on Source 1 to supply HVAC aftermarket parts and supplies for their retail stores.

Source 1®, the aftermarket arm for the residential and light commercial HVAC brands marketed by Johnson Controls, understands the meaning of the word “partnership.”

While the Wichita, Kan.-based organization provides aftermarket parts and supplies to more than 500 distributors in the United States and Canada, it understands that the HVAC industry is a people business. As such, partnership is a key to Source 1’s success.

“We involve our customers in an advisory council format to continually try to understand their requirements from a product and services standpoint, and then we deliver,” said Frank Kern, director of Source 1. “Or we share with them why we cannot deliver certain aftermarket parts or supplies. We are not autocratic in our approach because we understand that our customers have choices. Our job is to make that choice easy for customers.”



Source 1 represents some recognizable names in the industry, including the York, Coleman, Luxaire, and Fraser-Johnston brands. Source 1 also provides a full line of universal replacement parts for application on other brands of HVAC equipment.

“We offer the brands and breadth of products that make us a one-stop supplier,” Kern said. While partnership is Source 1’s primary differentiator, the organization achieves success by following three key objectives: availability, product breadth, and competitive pricing. Source 1 distributes more than 26,000 parts out of its 150,000-square-foot facility in Wichita.

“We identify aftermarket products in specific groups, such as installation-related, service-related, consumables, etc.,” Kern said. “We then identify those products that we can supply at competitive market prices with the brands and breadth of offerings that our customers tell us they require. We also identify those products that are beyond our competency to supply competitively, either from a pricing, freight, or brand perspective, and, in some cases, we elect not to offer those products.”



Source 1 represents some of the most recognizable names in the HVAC industry, including the York, Coleman, Luxaire, and Fraser-Johnston brands.

CUSTOMER SUPPORT GOES A LONG WAY

Supplying replacement parts and supplies is one thing, but Source 1 understands there are other ways to offer customer support. For example, Source 1 offers monthly specials and discounted pricing on certain products as well as a free gift with purchase to contractors. Source 1 also conducts heating and cooling preseason stocking programs on replacement and aftermarket parts. The preseason programs provide extended payment terms and gifts with purchases to distributors.

In addition, all product promotions and product launches, as well as any new parts added to the Source 1 inventory, have marketing collateral pieces, such as signage, tied to them. The signage supports Source 1’s Ideal Store program, which is now being used by more than 150 stores in the United States and Canada.

According to Brand Manager Renae Turn-baugh, Source 1 is the only manufacturer that has a complete retail merchandising program that includes signage to support all of its suppliers’ products and highlight their brand logos. The Ideal Store program has won praise from distributors across North America.

“This program is helping to grow my company’s HVAC parts business,” said Brian Dey, purchasing manager at Dey Distributing in Vadnais Heights, Minn. “The Ideal Store program is a great program that is working well for us. Others have copied parts of the program, but no one offers it to the scale that Source 1 does. What’s more, after we purchase a package, Source 1 gives us the option to use as much or as little of the package as we want, based on the size and needs of each store. We appreciate that flexibility.”

Source 1 has also developed freight and shipping policies that allow its customers to bundle proprietary and aftermarket product orders. The goal is to allow distributors to turn their inventories more often by restocking through Source 1. This reduces the overall number of suppliers a distributor needs to purchase from, thereby reducing purchasing and accounts payable activities.

In April 2006, Source 1 introduced a Counter Sales Person Training Program to its distributors. “Selling from the Inside” was the first in a series of training events taught by Source 1 staff. The two-day regional classes covered several sections, including Personality Traits, Conflict Resolution Styles, Phone Skills, and Teamwork. The classes also highlighted the use of open-ended questions to up-sell a parts purchase.

Speaking of the human element, Source 1 personnel bring a broad range of expertise to support their distributors’ businesses. Some of those positions include sales managers, marketing personnel, order management and customer service representatives, replacement parts planners, materials and distribution personnel, and technical service and application experts.



Source 1 is the only manufacturer that has a complete retail merchandising program that includes signage to support all of its suppliers’ products and highlight their brand logos, according to a company spokesperson.

WEBSITE ADDS VALUE

There’s one more way that Source 1 supports its distributors - through an informational Website. The site, www.source1 parts.com, features an online product catalog, a list of distributors, news and events information, VIP software, a library of downloadable publications, and an online apparel and promotional products catalog. Distributors can also contact regional sales managers through the site.

“In addition to the Website,” Turnbaugh said, “we keep the communication channels open by giving distributors access to secure, members-only Websites as well as by providing weekly and other direct communications on an as-needed basis. We also continuously communicate with our customers regarding both new products and changes within existing product offerings to further enhance or position Source 1 as a one-stop supplier.

“By using the generally accepted premise that 30-35 percent of a distributor’s revenue stream comes from parts and supplies, we feel we have significant opportunities to grow our business.”

For more information, visit www.source1parts.com or contact Frank Kern at 316-260-2914 or frank.kern@jci.com.

Publication Date: 08/20/2007

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