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Berkshire Hathaway, the Omaha-based international conglomerate holding company, acquired Production Tool Supply, a master wholesaler of metalworking and MROP industrial supplies, in August 2017. Prior to the acquisition, Production Tool Supply’s value proposition included providing its customer base of independent distributors a range of services – catalog and direct marketing support, website and e-commerce programs, vending and a portfolio of private-label brands across eight core product categories. With the backing of its parent company, Berkshire eSupply is expanding its digital platforms and logistics capabilities to extend its core services as a competitive advantage for its customers.
A little more than a year later, MDM CEO Tom Gale interviewed Berkshire eSupply CEO John Beaudoin to check in on the company’s strategy and focus in its transformation into a more powerful digital services provider to augment its traditional role as a master wholesaler of industrial products.
MDM: Welcome. Tell us about your history with the company, and what’s happened since Berkshire acquired Production Tool Supply in 2017.
Beaudoin: Thank you, Tom. Production Tool Supply has been in the wholesale business since 1951, starting in Detroit. I’ve been here now just over 17 years, and we thought that if Berkshire would allow us to use their name, it’d be a great leverage to also go through a renaming convention in the marketplace. Our wholesale business today has been born again, remarketed and rebranded as Berkshire eSupply. Through that rebranding process, we are building an infrastructure that is going to support our wholesale aspirations throughout the marketplace. We’re in the process of strengthening our distribution center network. The new headquarters and state-of-the-art distribution center is being built with a target date to open in 2020 in Novi, Michigan, a suburb 30 miles northeast of Detroit. It’s big, fully automated and we’re very excited to leverage that to support our customers even better.
The goal is to deliver to the distribution market next-day; we provide quick delivery to our distributor partners and allow them to compete with the national chains, if you will, and at the same time to also support what we’ve been building for many years as our private-label web application. The web application has been in development for more than seven years. In the last year, with Berkshire’s support, we’ve accelerated the development of this e-commerce site. Today, it’s up and running. There are over 150 independent distributors throughout North America on the platform, and those distributors are now experiencing revenue gains and increased customer engagement on their sites.
We are in the process of moving to a more significant platform, a more powerful marketplace platform, that’s going to provide our distributors with several million SKUs and continue to scale. Today, we have 1.2 million-plus SKUs on the platform. Our objective is to add millions more SKUs, providing not only what I would call a metalworking/heavy industrial product portfolio but to extend across the other verticals throughout the overall industrial market space. The product categories will expand exponentially along with the SKU counts, so we’re looking into other categories within the market that include the additional vertical product sectors that MDM tracks.