• Lawson Products intends to add more sales reps in 2021 to serve its approximately 90,000 customers.
• The company’s ongoing growth strategy includes developing new sales territories.
• The distributor is investing in improved technology to increase sales rep productivity with enhanced backend customer support.
As a distributor that takes pride in its high-touch approach for serving its customers, Lawson’s goal this year is to add more sales reps, according to EVP and CFO Ronald Knutson, who, along with President and CEO Michael DeCata, spoke earlier this month at the UBS Global Industrials and Transportation Virtual Conference.
Lawson, which maintained its No. 35 position on MDM’s latest Top Distributor rankings, has been in business for 68 years and serves MRO markets in all 50 states and parts of Canada. DeCata says Lawson has about 90,000 customers across its 12 product categories.
Lawson provides a service-intensive “high touch” value proposition to its customers, including making sure in-store inventories are stocked up. “We will visit them on average every 10 days,” DeCata says. “That translates to every week or every other week, we will visit the customer. First and foremost, we will have shipped product from the previous visit. In general, the customers wait for us to open the product and put it away. We do not do consignment. What our sales rep does is they’ll open the boxes and put out everything that was ordered. Then we count inventory and look at everything that was consumed since our last visit.”
Lawson customers know that their sales reps will be there every week or every other week, so they save up problems for those visits to get help from their sales reps.
“The customer knows us and depends on us,” DeCata says. “Lastly, in the hierarchy of what our service sales reps do, is they’ll translate best practices between applications. So a customer may not know a problem can in fact be solved. Our sales reps, since they’re seeing applications across multiple industries and the use of equipment and products and solutions across multiple industries, very often show our customers proactively that problems can be solved.”
Growth in customer service investment
Thanks in part to 2020’s deal to buy Partsmaster, which Lawson paid off in May, Lawson currently has about 1,100 sales reps. Sales reps that have been with Lawson for 10 years each generate, on average, $460,000 in revenue, which is why adding sales reps is important for Lawson, according to Knutson.
“Our growth strategy is really being driven by continuing to add sales reps, putting feet on the ground and covering territories where we currently do not have representation,” Knutson says. “How do we enable our sales reps to produce more on a daily basis? Through technology. Our back-end support leads to new customers.”
In addition to adding new sales reps and making acquisitions over the past few years, Lawson is improving sales reps’ productivity through its ERP platform, network optimization and adoption of Six Sigma principles, along with leveraging its infrastructure.
“We have an extremely strong distribution network,” Knutson says. “We have strong technology that has been in place for multiple years. We have incredible insight into our transactional type of data that allows us to be able to use that information to make smart decisions going forward.
“I don’t think you’ll find anybody else that services their customers to the level that we do. We operate in a large, fragmented market so there are tremendous opportunities to not only acquire new customers, but also [new companies] from an acquisition standpoint.”
DeCata says that while there’s a shortage of shipping containers, Lawson’s supply chain team has done an “extraordinary job” last year and this year. The labor shortage has also been an ongoing challenge for Lawson’s suppliers.
“I will say that all of these challenges that our industry is facing have actually worked to our benefit,” DeCata says. “For the last many, many years, there has been an acute shortage of maintenance mechanics, job supervisors, diesel mechanics and welders. Our value proposition enables those people to be more productive. It enables our customers with limited access to more maintenance mechanics to get the most production and capability out of their maintenance mechanics and their machines.
“So while none of us like these labor challenges, and the other challenges that we’re facing, they actually serve to drive us forward. These demographics will favor us for the next 10 to 15 years as well. Over time, I believe that more and more folks will choose to outsource consumable inventory management and because of our superior operational excellence, I believe we will get a disproportionate share of the shifting markets.”
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