Teamwork Is Crucial For Parts Distributors

October 17, 2003
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How difficult can life be without the right parts on hand? Consider Horatio Nelson Jackson. On May 23, 1903, Jackson made the first coast-to-coast automobile trip on a bet (recently documented by filmmaker Ken Burns in "Horatio's Drive: America's First Road Trip").

Because of the poor roads and still iffy construction of the turn-of-the-century automobile, Jackson's car frequently broke down during his journey. He generally had to wait for the parts he needed to arrive - ironically, by train. Before he had gone far, two other driving teams took off after him. Their sponsoring manufacturers had parts waiting for them, through a third party, at every planned stop.

I won't tell you who won the race, in case this is something you want to see for yourself. However, it is clear that if Jackson had parts ready and waiting for him at every stop, not to mention the support of a manufacturer and a third party, the trek would have been easier for him.

This article looks at three distributors, the manufacturer parts programs they work with, and how each program benefits their relationships with their dealer-customers. It's not as romantic as "Horatio's Drive," but part of the message is the same: Teamwork is critical.

Loyalty

Tommy Taulbe handles the American Standard Service First parts program for R.E. Michel's participating branches. There are 12 such branches out of 182 Michel locations. "R.E. Michel is bigger generally in parts, more so than equipment sales," explained Taulbe. The wholesale-distributor has been with this program since 1995. "We started with one branch on the program," Taulbe said. The 12 locations are in Illinois, Indiana, Kentucky, Ohio, Virginia, and West Virginia.

"It's been quite well received. We responded to American Standard because of the total package, the support after the sale."

What's important for this wholesaler? "A top priority is that there are functioning parts in stock," Taulbe said. "I know dealers have dropped brands because of a poor supply of parts."

Same-day availability also comes into play, plus "fluid" inventory support. Like other manufacturers' parts programs, the offerings are not limited to American Standard products. This is critical to R.E. Michel, because "It allows us to service all clientele," from large heating-cooling contractors to one- and two-person shops. "We can handle all companies, no matter how large or how small," Taulbe said.

Dealer loyalty is always a big issue among distributors. The way Taulbe sees it, "Problems are opportunities. The one thing that can lose a customer is not having the part when they need it. Then people talk to other people," which could give a distributor a bad name in a hurry.

The emphasis for parts stock, he continued, is amplified by manufacturers' generally longer warranties, some of which go for up to 15 years. While extended and limited warranties tie the homeowner and contractor to the distributor and manufacturer, if the warranty part is not readily available, it can put the contractor in a tight spot.

The American Standard limited warranty covers parts; the extended warranty covers parts and labor. In the extended warranty situation, the dealer gets a markup on the replacement part. "As far as the warranty goes, we give instant credit," added Taulbe. "We don't make [contractors] wait."

Why aren't there more R.E. Michel Service First houses? It's based on territory. R.E. Michel isn't the only Service First distributor.

In general, "If we don't do a good job on parts, equipment will suffer," said Taulbe.

Inventory Control

Another advantage of Service First is that "We can order off the part number, even a partial model number," Taulbe said.

Demand-control stocking helps with inventory control. "Once we get a usage report, we try to maintain a steady inventory." For example, locations in heat pump markets tend to keep a higher stock of defrost boards and sensors. In case of a need for any particular part, there are manufacturer parts hubs. In addition, "We run our own trucks store to store" to meet various locations' needs, Taulbe said. "There are parts houses and there are equipment houses. We try to be both."

The variety of parts available through Service First "gives our stock a lot of depth." For instance, the wholesaler can stock 1- to 25-ton compressors, and fractional to 15-hp motors - "any functional residential and light commercial HVAC part," from compressor lines to coil cleaners. "We want to buy from the least amount of vendors possible."

The goal of Rheem's ProStock program is to create a one-stop source for replacement parts.

Adding Value

Jim O'Mara is the president of Comfort Air Distributing Inc., Denver, distributor of Rheem air conditioners throughout Colorado. The company has been in business since 1987, and has been with the ProStock parts program nearly since its inception a few years ago. Being a one-stop source for items such as condensate pumps, filter-driers, etc., brings more value to the contractor-customer, and therefore ties the contractor back to the distributor, he said.

The depth of products available through Rheem allows him to combine all other items with larger orders. "I can buy slower-moving items and still meet minimum order quantities" for savings.

As for the replacement parts market in his area, "Denver was not an air conditioning market for many years," he explained. "We're just now starting to replace the ones we sold in 1987.

"Almost everything ProStock is an aftermarket item."

O'Mara likes to quote the philosophy of Sam Walton, founder of the ubiquitous Wal-Mart retail chain. "If you can be a little bit of everything, the people will come."

Enhancing Service

W.L. Edwards is the regional Totaline manager for Carrier Carolinas, Charlotte, N.C., formerly Thermo Industries. Before the distributorship became a part of Carrier Corp., "we generated a relationship with Carrier and Bryant dealers in both equipment and parts sales. As we became part of a larger entity, there was a great deal of skepticism," both from contractors and the wholesaler's employees, who had been used to being part of a smaller company, and now found themselves part of a much larger organization. "It was really fear of the unknown: 'How will it affect me personally?'

"We're still here to serve the customer, still doing things we have before," Edwards stressed. "On the aftermarket side, though, it is a bit of a different business. Carrier and Bryant customers are very, very loyal: 'I'm the best of the best.'"

On the parts side, sales of contactors, relays, and universal parts during a heat wave are what Edwards called an "immediate-need business. For instance, it's 95¿F in the house, there's an elderly customer, and the contractor needs the part immediately."

To keep up with customers' needs, Carrier Carolinas is perpetually moving parts from location to location to location. "We're so diverse, so in tune," said Edwards. "In most all cases we can get what our customers need overnight or within a business day."While the Totaline program has had no impact on warranties, "It's how quickly we respond that sets us apart," to the contractor-customer and the end user, Edwards said. "It's a customer service issue. It's job one, from the person in the factory who makes the part, to us as a distributor, to the technician who installs it.

"Where is the value added to your business? I will hunt the part down for you; I know the electrical schematic you need." By doing the running, the legwork, and often the paperwork, this lets the dealer-contractor focus on his customers ... his business.

Doing everything possible to have the parts on hand is what Edwards perceives as one of his company's greatest assets. "Our entire business is value-added," he said, where he must constantly ask, "How can I help your business?

"HVAC service is no different than being in your favorite restaurant," he explained. If you get poor service from the fanciest restaurant in town, would you return? If the waitress in the family restaurant corrects a problem quickly and with a smile, would you return? "People buy from people."

As for Horatio Nelson Jackson, he was driving a Winton. Seen one lately?

Publication date: 10/20/2003

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