Engman-Taylor Creates Cost Saving Teams - Modern Distribution Management

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Engman-Taylor Creates Cost Saving Teams

This article is a part of MDM's 2014 Distribution Trends Report. The article reviews industrial distributor and integrated supplier Engman-Taylor, which trademarked its Cost Circles program, reducing costs for customers in manufacturing, price and administration.

The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.

The full report is available to download in PDF format to MDM Premium subscribers. Subscribe below for full access. Or log-in if you are already a subscriber.

Trends outlined in the 2014 report include:

  • Leaving Economic Uncertainty Behind
  • Connecting the Dots Online and Offline
  • Need for Access Whenever, Wherever, However Drives Mobile Adoption
  • Avoiding Information Overload Essential with Analytics
  • Making the Case for Millennials in Distribution
  • Training, Technology Take Front Seat in Employee Retention Strategies
  • Better Inventory Management Through Data, Collaboration
  • Distributors Seek More Complete Strategy for Vending
  • Private Equity Consolidating Markets
  • A More Practical Approach to Product Expansion
  • Trend Snapshots for 13 Sectors

The report also includes the following case studies and interviews:

  • 2014 MDM Market Movers
    • Engman-Taylors Cost-Saving Teams
    • Capitol Coffees Proactive Problem-Solving
    • Redwood Plastics Online Success Story
  • MDM Market Leader Profiles
    • DGI Supply: Building on the Core
    • F.W. Webb Takes Diverse View of Market

In 2014, MDM is recognizing distributors that are innovative in their approach to their markets. Engman-Taylor Co. Inc., Menomonee Falls, WI, was selected as an MDM Market Mover for its three-pronged approach to providing cost savings and value-add for its customers.

2014 MDM Market Mover

Company:Engman-Taylor Co. Inc.
Headquarters: Menomonee Falls, WI
Leadership: President & CEO Rick Star
Details:Industrial distributor and integrated supplier Engman-Taylor trademarked its Cost Circles program, reducing costs for customers in manufacturing, price and administration.

Engman-Taylor Company Inc., Menomonee Falls, WI, has woven cost savings and value-add into the culture and structure of its business.
The industrial distributor and integrated supplier of cutting tools, assembly and power tools, abrasives, gauging equipment and general mill supplies has even trademarked its approach to saving customers money in its Cost Circles program developed in 1994.

“The key driver for us is cost savings for the customer,” says Jim Mueller, the distributor’s vice president of operations.

Cost Circles takes a three-pronged approach, examining and reducing costs in manufacturing, administrative and price circles for the customer. Mueller says that if a company focuses on just one of those, the impact will be small. “The maximum impact is if you focus on all three,” he says.

Due to the often shorter-term nature of savings in the administrative and price circles, Engman-Taylor has invested the most in the manufacturing realm, dedicating teams known as Customer Cost Savings Teams that operate on-site and in the distributor’s in-house Solutions Centers. The teams are built of engineers and technical specialists.

The distributor’s applications specialists form an autonomous technical support group. “Our specialists will look at all possible manufacturers and choose the best solution for the project. It allows us to provide autonomous support that we really believe is important.”
Solutions Centers allow ETCO to test products in-house before applying them at the customer sites. And whenever possible, the distributor brings customers to the Solutions Center.

In one case, a customer experienced an employee injury during a loading process. The distributor brought some of the material into its facility and simulated a material handling solution for the problem that caused the injury. The customer bought the equipment, which was then installed.

Price becomes less of a factor when Engman-Taylor can provide a real solution to a real problem, Mueller says. “It really strengthens that relationship,” he says. “It solidifies it.”

Engman-Taylor has also integrated vending programs into its solution for customers. A Cribmaster distributor for more than two decades, Engman-Taylor takes the same approach to that service as it does to the rest of the business. “You don’t just want a vending machine in the corner that’s telling you when to order something,” Mueller says.

Engman-Taylor uses what it calls a “What’s Used Where” analysis for its customers. The analysis helps the distributor understand the layout of the plant, which products are used where and in what quantities. The analysis is done at the start of a program, but he says it has to be monitored throughout. “You’re never done,” he says.

Tracking and communicating cost savings is critical. The distributor developed a program to do this: a cost reduction documentation software called CODEX. Each month, the distributor reports to customers on savings, as well as other metrics it tracks. Increasingly, the distributor is also implementing dashboards that allow for the posting of live data to customers through a Web portal.

“I always tell everyone that I never want a customer to come and ask me what we’re doing for them,” Mueller says. “I want it to be in front of them constantly so they never ask themselves: ‘What are you guys doing for us anyway?”’

To drive this, on-site engineers are paid a bonus, or “reverse commission,” on savings they find and implement for customers. A solution may even cut Engman-Taylor’s sales on a product by half.

“The reality is, that’s how passionate we are about cost savings,” Mueller says. “We realize that is how you keep the customer.”

Customers are operating with a lean work force today, he says. “They are leaning more and more on us to come in and assist them. That’s what we’re doing.”

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