Changing times

General Rubber Company adapts to major changes in Wisconsin's manufacturing sector.

by Richard Vurva

Many people are surprised to learn that Wisconsin produces more than cheese, beer and bratwurst. With a diverse manufacturing base, the Badger state is second only to Indiana in the percent of workers employed in the manufacturing sector (23.4% vs. 22.6%).

Unfortunately, like much of the rest of the country, Wisconsin’s manufacturing sector shrank in the past decade, losing more than 80,000 manufacturing jobs. That has put increasing pressure on supplier companies such as hose and accessories distributor General Rubber Company to increase productivity.

Since acquiring the Milwaukee company 10 years ago, Jack Kacsur witnessed a change in the number of factories closing, downsizing or restructuring. He estimates General Rubber lost as much as $500,000 in sales to companies that shut down or moved offshore in search of cheaper labor costs. With annual sales of approximately $2.3 million, half-a-million dollars in lost sales is hard to stomach.

Fortunately, General Rubber salespeople managed to make up for much of the lost business by focusing more of their efforts on value-added activities that help customers lower their manufacturing costs.

The company does more than sell off-the-shelf hose and fittings. It’s in the value-added category, producing made-to-order rubber products including hose assemblies, cut-to-length hose and tubing, die-cut rubber, custom gaskets, molded and extruded rubber and similar products, where the distributor shines.

Kacsur urges his three outside salespeople to discover ways to add value for customers by looking at a customer’s current buying habits.

“The idea is to take what a customer uses today, find out what he’s doing with it, and determine if there’s anything we can do for him to make his life easier, streamline his operations and thus increase our sales dollars and profit dollars,” says Kacsur.

For one original equipment manufacturer, General Rubber typically supplied a wide variety of hose and fittings used during assembly of transportation equipment. Despite their best efforts to put the OEM on a predictable delivery schedule, the customer often placed rush orders.

“We’d receive phone calls and faxes for 1,000 fittings they needed tomorrow, 500 fittings of another size, seven reels of hose and that kind of thing,” says Jim Mallatt, the salesman assigned to the account. “You’re paying huge freight costs and it’s taking enormous amounts of time to cut separate purchase orders for 18 different line items,” he told the customer.

To smooth production schedules and lower freight costs, Mallatt suggested General Rubber could assemble the various components the OEM purchased on a regular basis, package and ship them as complete kits.

“If they’re making a certain product that requires two hose assemblies, five fittings and a couple of clamps, we’ll kit those and send them as a complete kit. Previously, we sold all the components separately,” Kacsur says.

Kitting lowers freight costs because the OEM places fewer rush orders, and it reduces accounts payable costs by decreasing the number of line items on invoices. The change also enabled the OEM to reassign warehouse employees, since General Rubber ships each kit to the appropriate department, eliminating inventory handling and carrying costs.

“In the past, they’d order 1,000 items, put 15 in that area, 15 in this area and so on. Now, we pack them in kits. All they do to order is refer to that particular kit number, which may be comprised of 30 different products. It saves them time, plus it’s better for us because I can get a three-week lead-time,” Mallatt says.

Bin-stocking and line-stocking
General Rubber also benefits OEM customers by providing bin-stocking and line-stocking services. In a bin-stocking program, General Rubber employees regularly visit the customer’s site to replenish hose and fittings inventory, freeing the customer’s employees for other duties.

“Instead of them going through and determining what they need, one of our salespeople will go in and come up with the recommended product and have them sign off on it. When the product arrives, we restock it for them,” Kacsur says.

A line-stocking program takes place on the manufacturing floor. “We’re putting product in a bin right next to or behind the assembly line. When the production line person turns around to reach for it, it better be there,” he says.

An Appleton, Wis., branch supports a line-stocking program for Miller Electric, manufacturer of Miller and Hobart brand arc welding equipment and related systems for metalworking, construction, maintenance and other applications. Kacsur says the effort is an alternative to OEMs who like the advantages of a managed inventory program such as integrated supply, but don’t want to lose the expertise that specialty distributors provide.

“A managed inventory program looks attractive, but very often what happens is the people who interface with the customer don’t know anything about the product. They’re not adding any value in terms of selecting the right product or how to use the product. Our value is the product knowledge and the application of the product,” Kacsur says.

General Rubber is one of about a half-dozen suppliers in Miller Electric’s Automatic Replenishment of C Items (ARC) program, which reduces acquisition and inventory management costs for low-dollar supplies.

“In the past, we were handling the part probably three or four times prior to actually putting it on the welding equipment we manufacture. With this program, the only time we touch the part is when we’re actually putting it into an assembly. We’ve eliminated all of those non-value-added steps,” says Mike Geurts, material specialist for Miller Electric.

Geurts says it’s critical for suppliers like General Rubber to have a local presence.

“We communicate with suppliers on a regular basis so they know if a line will be working Saturdays or 10-hour days so they can keep additional parts in stock,” Geurts says.

Mallatt adds that hose manufacturers won’t likely offer the value-added activities such as bin-stocking and line-stocking programs that distributors can provide.

“In my first year at General Rubber Company in 1988, the biggest fear I had was when somebody said to me, ‘We buy factory direct.’  Now, I love to hear that,” says Mallatt.

Buying factory-direct means acquiring multiple hose and fittings separately, holding it in inventory, assembling it when needed, and assuming liability if an assembly fails.

“There are so many reasons why we as a distributor can justify why it’s so much smarter to go through us locally than to go factory direct. There are the freight costs, the cost of time, service. Another thing we do is take inventory for them. Is the factory guy going to do bin-stocking for them? I think not,” says Mallatt.

Extra-ordinary service
Gary Bodendein is a long-time customer of General Rubber. The manufacturing supervisor for Seats Inc., a Reedsburg, Wis., manufacturer of seating for trucks, off-highway vehicles, school buses and industrial equipment, buys plastic tubing for air lines in air-suspension seats, brass fittings used in seat assemblies, plus pneumatic tools used during assembly and a variety of other maintenance products.

He says General Rubber goes out of its way to satisfy his needs, even if it means supplying products not on their line card, like baby wipes.

“A lot of people think that’s strange, but it saves a lot of time and money when people have to leave the production lines to wash their hands. They use the baby wipes to clean their hands because when you go from a dark-colored vinyl seat to a light-colored one, you don’t want to have a greasy film on your hands,” he says.

Before buying the disposable wipes from General Rubber, Bodendein sent maintenance employees to the nearest grocery store in search of baby wipes. “This saves our maintenance department from running downtown,” he says.

Bodendein says Mallatt will frequently go out of his way to get him the product he needs, once driving more than two hours from Milwaukee to Reedsburg to personally deliver a product he needed that day.

“It’s critical to have products here on time. When you’ve got a machine down and we need a part, he responds pretty quick,” Bodendein says.

Kacsur says all General Rubber employees have a similar attitude when it comes to providing customer service.

“We pride ourselves on being able to sit down with a customer, regardless of what their requirement is, and have the knowledge and contacts and experience to find the right part for them,” Kacsur says.

This article originally appeared in the March 2004 issue of Progressive Distributor. Copyright 2004.

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