From its beginnings in 1953 as a lone store in Portland, Ore., Johnstone Supply is now the industry's most successful HVACR wholesale distributor cooperative with 121 members and more than 300 independently owned stores throughout the United States and beyond.
Store owners and corporate employees gathered for the company's annual trade show and meeting on Sept. 18-23 at Caesars Palace Hotel and Casino, Las Vegas. The trade show was the largest in the company's history and the final night awards banquet "is the equivalent of an Academy Awards program," according to current President-CEO Gary Daniels.
Daniels presided over the 25-year celebration and walked the aisles of the trade show exhibit where more than 150 suppliers displayed their wares. He made a visit to every exhibitor's booth at the Caesars Palace convention center.
The NEWS caught up with Daniels on the trade show floor. "We usually have to turn some of our suppliers away because of space limitations. This is the largest venue we've ever had for the trade show and more vendors than ever before were able to attend. It's great to have so many of our supplier partners with us this year," said Daniels.
John Miles of Quietside-Samsung was one of the many exhibitors attending the meeting. He commented on the trade show and working with the cooperative. "Johnstone is one of the easiest companies in the industry to work with," said Miles. "We make just one call and - well, it's Johnstone - we've reached every one of their members. Johnstone handles everything for us."
Of course, it wasn't always that way. In the early days, Johnstone Supply would identify key players and seek them out to join the cooperative, while advertising membership opportunities in the trade magazines. Today, because of exclusive relationships with current members, and the markets being served, it would be a rarity that a newcomer could break into the co-op.
In fact, Adcox said the company is not likely to be doing any start-ups in the future. "Expansions most often occur when an owner decides to put up brick and mortar in a city where he has already been successfully branching out."
The success of the co-op comes from its members banding together to take advantage of the buying power, strong brand, and distribution efficiencies. It is perhaps best known for its signature Johnstone Supply Catalog, a 1,900-plus page book with more than 27,000 products that is distributed to more than 500,000 customers annually. The catalog is available both in print and online with detailed illustrations and specifications.
"Distributors order twice weekly, thereby enabling them to improve inventory turns and replenish stock faster, while taking advantage of the co-op cost savings," said Adcox. "Most of our stores are on a one-day delivery schedule from one of our three distribution centers, Portland, Ore., Allentown, Pa., and Memphis. For example, if someone orders on Tuesday, the product ships on Wednesday to be there on Thursday. We are expecting to turn much of that into next day delivery in the future," Adcox continued with a firm conviction in his voice.
If Adcox seems determined, it may be because the company's success with inventory control provides him good reason to be. Every product coming through the system is bar coded and part-numbered. "We make it hard to make a mistake by the way we control inventory movement," Adcox said. "We have an order fill rate of 97 percent and an accuracy rate of more than 99 percent."
The confidence in what is shipped from the Johnstone distribution centers is so good that many of the 300-plus locations no longer assign someone to check in product at the door; it goes from dock to stock.
Adcox views the role of the co-op quite simply as providing value. "If we can't add value, then we do not get in the way of our members. When we create buying power, we add value. When we make inventory management easier, we add value. When we create 500,000 catalogs and many other marketing tools, we add value. That's how we can help our co-op members," said Adcox.
As the business prospered and grew with additional stores, Shank sought out other service-focused individuals to open franchise locations. By the early 1980s, Johnstone had become a multi-state operation with a dozen locations and an additional 20 franchise stores.
As Shank neared retirement he was determined to pass the company's success directly into the hands of its hard-working stores and staff. Out of this came the idea for the Johnstone Cooperative: a business model where each store owner could own and operate their individual business yet band together to share experiences and resources.
By 1981, the first year of the cooperative, Johnstone Supply had 32 member stores. The cooperative model proved successful, and in only four years Johnstone had more than doubled in size to 75 stores.
Having just crossed over the $1 billion mark after 25 years in the co-op business, how quickly will the company reach $2 billion? According to one member, the goal for 2010 is "2 by 10." A bit aggressive? With the enthusiasm shown by all the members in Las Vegas, it certainly won't take another 25 years to top the next hurdle.
For more information, visit www.johnstonesupply.com.
1981 Johnstone Supply becomes a cooperative.
1985 Jerry Schultz becomes president.
1987 100th store opens in Marietta, Ga.
1989 New distribution center, Memphis, Tenn.
1990 New corporate headquarters in Portland, Ore.
1995 First 1,000 page catalog. 200th store opens in Bremerton, Wash.
2000 Gary Daniels becomes president.
2001 Johnstone launches online catalog.
2003 50-year anniversary of Johnstone Supply company.
2004 Frank Alexander, current chairman.
2005 New distribution center, Allentown, Pa.
2006 $1 billion sales plateau reached. 300th store opens in Everett, Wash. 25-year anniversary as cooperative.
Publication date: 10/30/2006