The 2020 Mid-Year Economic Update_long

Three Distributors in One

Three independent distributors have decided to open a branch together. The three-in-one approach will give their customers more products in one location and makes the niche distributors more competitive and attractive to vendors. The branch will open in November.

Three independent distributors in central Pennsylvania APR Supply (HVAC/plumbing), Industrial Piping Systems (pipe, valves & fittings) and Schaedler Yesco Distribution (electrical) have teamed to open a branch in Chambersburg, PA.

The effort will cut costs for the three distributors, as well as make them more competitive and provide more options to their customers. All three do business in the area, though none had a branch in the town previously.

For us to try to take on the plumbing business or the pipes, valves and fittings business, that’s not our thing,” says Schaedler Yesco President Matt Brnik. “We’re not good at that. So why not take three people good at what they do and put them together?”

The three distributors knew each other from meetings about software they all use. As they got to know each other, they realized they serviced the same areas, had trucks running the same routes and had branches in many of the same towns. “We thought there ought to be something we could do to save money,” Brnik says.

So they started discussing best practices. That led to the idea to cohabitate. “Once we decided it was worth trying, we thought the easiest thing to do was to start from scratch,” Brnik says.

The Chambersburg area was one all three had been looking at, so they made the move and now, little more than half a year later, the new branch is nearly ready for business. To get to that point, the three distributors put together an executive team to work out the details, such as sharing expenses and processing orders.

“If you’re going to do this with anybody, you should have partners that are easy-going,” Brnik advises. “Because you have to be able to make decisions very quickly or you’ll get bogged down and nothing will ever get decided. It also has to be done at the executive level.”

When customers come into the new branch, they will see it as one business not three. Each of the distributors will have counter people but all counter people will be able to service any customer. The customer will receive a unique invoice from each company, however.

Brnik says the three distributors share many customers, so the single location will save those customers travel time.

The new facility is wired to ensure full visibility into the inventory and operations of all three distributors by all counter people. In addition, the warehouse is fully bar-coded, and the distributors will replenish the inventory daily.

“(The technology) is as good as it gets for a distributor business,” Brnik says.

The setup keeps the distributors competitive by keeping costs low. “It costs each of us a third of what it would cost us to open up somewhere else on our own,” he says. They will consolidate truck runs, as well, saving time and money.

So far, suppliers and customers have responded positively to the idea. For suppliers, “it shows some ingenuity, and our willingness to expand,” Brnik says. It differentiates the three distributors and solidifies their place in the market.

Customers are excited about the new location. “A lot of people have asked us, Why hasn’t anybody else tried this?'”

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