Forecasting: A Wholesaler's Reality Check
This past summer, I was chatting with Bob Engel, Jr., president, API of NH/Delta T, and he mentioned that he was opening a new branch in East Weymouth, Mass.
But what really caught my attention during the chat was Bob’s comments — totally out of the blue — about Alan Beaulieu and the benefits of HARDI. He had no reason to pander to me or to HARDI. It was a moment where he was simply speaking frankly.
Our chat set me thinking about this December forecasting issue and I suddenly realized what I heard was forecasting in practice — not forecasting theory, not maybe yes/maybe no, but real world cause and effect. Bob and his team not only listened to Alan Beaulieu, they implemented a plan to expand, basing it on his forecast. Obviously, no one (not even Alan) is correct always. But here’s some insight that might be helpful as you forecast for the next year.
Tom: Bob, I want to talk about what prompted your business to expand. What is it that you actually do when you think about opening a new location, including the new East Weymouth, [Mass.] location, that brings your operation to a total of nine branches including two sheet metal shops?
Bob: Yes. Here are some of our basics. Obviously, we want to give our customers a new location that might be close to them and to their job sites. The key to a branch, in our eyes, is that you must do your due diligence. We were shipping into that area [East Weymouth] already.
When we are looking to open up a branch, we do a little math and figure out: OK, where are we doing business in that area? Then, we ask: How much business is actually in that area? But the key to the branch, quite frankly, is the pick-up business. I mean, that business is made up of customers who simply will never go to your current locations. Customers are not going to drive out of their way to you. You are not going to get people that are in the Weymouth area to drive to Bridgewater [Mass.] or Waltham [Mass.], where our other two closest branches are located.
We knew we could get pick-up business in this area. We could service customers quicker, with better logistics. I guess the bottom line is, you could say that it is more profitable when you get business that you normally don’t get.
Tom: You’ve opened up a new branch and several more in recent years. What was the tripwire for all this activity? You talked about “doing a little math.” But even before you do the math, is there something that sends you into a direction of expansion beyond just knowing that you should expand?
Bob: You’re right. I think a big part of it was the result of a HARDI meeting that we attended in December 2013 and the impact it had on our local operations.
If you think you might have the potential for growth, you have to jump on that. You have to find pockets [of business] where you can grow. We heard Alan Beaulieu of ITR speak. He was awesome! He predicted the economy would grow and we felt this was a good pocket of opportunity. We saw a few locations that didn’t seem to have that much competition and, geographically, it made sense. The essence of his presentation was that you have to be ready for growth and his comments forced us to think about that. We had to strategize and we were ready to grow. It got us moving and growing again.
Tom: So Alan Beaulieu became the catalyst?
Bob: Yes. But that’s only part of the answer. I cannot say enough good things about that organization [HARDI]. If it was not for HARDI, I know we would not be as successful as we are right now. I honestly can say that.
When we go there [to HARDI meetings], we always get something of value. Every time we go. If you listen to what they say, and go to these meetings, and then you bring that information back to your management team and you discuss it openly, it matters. You go back and tell your team, “This is what we are talking about. We need this. Let’s listen to what they [the HARDI experts] are saying, and let’s do it.” There is so much credible information from the organization and from the people that they have there as speakers.
Tom: So one HARDI meeting, one speaker and a trickledown effect when you got back and your company started thinking about expanding?
Tom: But doesn’t the implementation of that bigger picture still come down to the ground-level or street-level economics?
Bob: Yes. We believe that because of the economic picture, it was an excellent time to secure a better working relationship [with customers]. And to better service them, we decided that it would be a good business decision to open the branch.This would enable us to get pick-up business that we did not enjoy. Our customers have been asking us to open in that area to better support them. Having more confidence in the economic conditions prompted us to listen even more carefully to our customers.
Tom: For readers who might be unfamiliar with API of NH/Delta T, tell us some of the lines you carry.
Bob: We carry a lot of stock. Aprilaire, Hart & Cooley, ZM, Certainteed, LG, Panasonic, Lochinvar, Viessmann, Reznor, Rheem, Unico.
Tom: Anything else that you picked up from those HARDI conferences?
Bob: The other thing we are working on is a survey. It’s a form at the counter, asking customers what they want us to stock. We tell them that “we can service you better if we know what your needs are.” Seems simple, but it can be very effective.
Tom: So you’ll stock whatever they want?
Bob: We will stock what their business needs are. Our goal is to have the products that they want on the shelf, in the branch where they need it.