A distributor’s customer is the HVACR contractor. Everyday the distributor brings in new supplies and then sends them out the door via pick up or delivery. Their job, however, is more than just slinging parts.

According to the Heating, Airconditioning & Refrigeration Distributors International (HARDI), a typical HARDI distributor has 1,200 active customers, ships 7,725 orders per month, receives 666 orders per month from suppliers, has approximately 9,000 SKUs in inventory, and averages almost $24,000 in sales per customer, per year. In the midst of all this activity, finding new ways to deal with customers demands distributors to run the same gauntlet of industry change as everyone else in the supply chain.

ON DEMAND PRODUCTS

“Customers are expecting more refrigeration and IAQ products,” said Kevin Morris, parts manager, cfm Distributors, Kansas City, Mo. “In reality, we are being asked to be a one-stop shop.” Morris reported the green movement is prompting his entire customer base to demand that his company and the products he supplies be environmentally friendly, as well as energy efficient. These demands are being expected not only in two-stage, variable-speed residential and commercial HVAC equipment, but they are also being required for refrigeration systems as well, he said.

“I am seeing a consistent demand for immediate gratification, expert counter and technical support, green education, and financial support,” noted Morris.

Most likely resulting from the high demand that end users place on contractors for immediacy, distributors are also finding themselves dealing with a surge of contractors requiring products right away.

“They expect everything we say we stock to be instantly available at all times,” noted Arthur Franklin, owner and president, S. Franklin & Son Inc., Fairfield, N.J. “If we don’t have it, they do not want to wait and will often find a second source.”

This impatience, along with a mild business slowdown, brings the distributors’ prices under great scrutiny, said Franklin.

“Customers require a quick turnaround on the quotes we prepare,” he remarked. “This is truly a more competitive environment.”

ALWAYS OPEN

With product demands in-creasing, delivery expectations and store accessibility requirements are raised as well.

Many of Manny Kaiser’s customers are looking for 24 hour a day, year-round service and direct delivery to the jobsite. The president of Acme Refrigeration of Baton Rouge Inc. in Baton Rouge, La., Kaiser is searching for ways to better his delivery system to meet the growing needs of his customers. One strategy the company is working on is online ordering.

“We have long believed in the value of allowing the customer to take control of his ordering process,” said Kaiser.

“We are implementing an imaging system right now, and look forward to the day when our customers can access their information, such as copies of invoices, online via our Website.”

The company is still a little ways from an online catalog with a shopping cart, but Kaiser believes it will “one day be the thing.” His concern, however, is the rate at which his customers adopt new technology.

“We have not seen a lot of adoption yet, but we believe that the more of our processes that are automated, the more we will increase our accuracy, and increasing our accuracy increases the benefit to the customer,” he said. “Our customers rely on us to solve their problems and have what they need in stock.”

Franklin echoed Kaiser’s concerns over technology adoption. According to him, it will be the progressive distributors that will offer distribution-supply chain technology advances because contractors aren’t typically asking him for it at this time. “My opinion is that as distributors, we need to pull from the contractors, and they are not currently pushing it [automated systems] on us,” he said.

Kaiser is also trying a new strategy in regards to store locations. He considers his home market a place to “be aggressive, having multiple stores in the area that are conveniently located for our customer base.”

This not only makes his company more accessible to the customer, but it also helps save both he and the customer’s fuel.

“Looking to the future, I am truly concerned as to how we will be able to afford to continue deliveries with the cost of fuel, and where I believe it will go,” he cautioned.

ASK THE COUNTER PERSON

As new technology enters the HVACR industry, both on the contractor and on the distributor side, each supply chain participant is requiring more training.

“Even at the counter level, the service technician is expecting us to be very familiar with new technologies and to be able to answer all their service questions,” said Morris. “We are also being asked for the higher-end meters and tools. Thankfully, we have the training in place to handle these questions and requests.”

WHAT LIES AHEAD

As trends naturally shift, Morris pointed out that HVACR brands have become less of a focus. “The buying decisions are turning back to being based on customer service and support from the locally owned and operated wholesaler,” he said.

Looking ahead to the future, however, distributors will be watching as new situations and concerns reach into their daily work scenarios. One such concern is a labor shortage and the increasing diversity in the up-and-coming multilingual workforce. According to Morris and Franklin, the multilingual factor is creating a communication issue.

Franklin was also concerned about contractors’ dropping participation at the local trade association level.

“For my customers to survive, they need to continually better manage their workforce,” said Franklin. “Trade level association involvement, installing GPS tracking in trucks, and service contracts are just some of the things my customers should be looking at to improve.”

Morris cautioned that his customers also need more distributor-offered education. “The lack of available talent in the employee pool makes recruitment and retention critical,” he said. “Everyone must be careful of rising labor and products cost. These factors, and others, force us all to be as efficient and well-trained as possible.”

Publication date: 12/10/2007