From 2009 to 2013, Lawson Products converted all of its sales representatives from a network of independent sales agents to sales employees, today numbering 1,000. It went live with an SAP conversion in 2011. It then started a Lean Six Sigma process in 2013 that continues today. So I was excited to interview President and CEO Michael DeCata recently to get the rest of the story since we last checked in with him in 2014.
Lawson has a unique value proposition in the way its combines what it calls its Lawson Managed Inventory on-site service, coupled with the technical expertise of its sales reps. It’s a great example of how a distributor can build a unique moat of customer value that is very hard for competitors — digital or otherwise — to compete against.
I was particularly interested in learning DeCata’s thoughts on how the company’s strategy and initiatives support this very service-intensive model. I asked him about the cost-to-serve aspects of this model, and how Lawson controls that to make it a profitable proposition. His answer was that the company managed it in a number of ways:
“We’re controlling our costs and enabling productivity of our sales reps through the combination of great training, data and the analytics delivered in an effective manner for the sales rep. We rolled out a number of years ago a software package that gives the sales rep complete line of sight to product availability, pricing, application data, customer history, all completely available to the sales rep at all times. The combination of all of that has enabled our sales reps to become more productive.
“So yes, there are a number of moving parts. Our value proposition integrates product and service-intensive VMI. It’s a different way of going to market than an e-commerce only model. We believe that this approach offers the lowest total cost for our customers and differentiates us from competitors. Customers value this high-service, high-touch model, and they recognize that it is the lowest cost alternative they have. It’s a very simple model, but it is a cost-based value proposition, not a price-based value proposition.”
Listen to our interview using the podcast player below, or go to mdm.com/podcasts.