Planning for tomorrow

Bostwick-Braun has survived for nearly 150 years by remaining focused on the future.

by Richard Vurva

When a company traces its roots nearly a century and a half, you might expect employees to be proud of their rich heritage. Founded in 1855, employee-owned Bostwick-Braun Company of Toledo, Ohio, is one of the oldest full-service, general-line industrial distributors in the country. Although its 250 employee-owners revel in their proud tradition, they understand that future success depends on their ability to focus on where the business is headed, not the path it took to get where it is today.

Even companies with historical perspective need to place a strong emphasis on the future. That’s exactly what the management team at Bostwick-Braun set out to do when it launched a series of planning sessions in 2000 dubbed “Planning for Tomorrow.”

“We felt it was time to look at new ways of doing things to keep the top line of the business growing and keep the bottom line strong. Rather than just talking about what happened in the past in our monthly management meetings, we decided we better start looking at what we’d like to happen in the future,” says chairman and CEO William Bollin.

The management team set aside several days to attend offsite meetings where they could brainstorm about the future. Over a span of several months, the team periodically reconvened to discuss a specific topic that came up in previous meetings, such as technology or competitive intelligence gathering.

“In 2000, even though we were operating in the black, as we saw the economy slowing down, we realized we needed to be doing some long-term planning to determine where we wanted to be,” says company president Elaine Canning.

Eventually, the team hired an outside consultant to lead a formalized strategic planning process and build a more detailed two-year strategic plan.

One of the first projects to come out of the meetings was a major automation upgrade at its Ashley, Ind., distribution center. A $2 million pick-to-light, automated carousel picking system dramatically improved warehouse efficiency. The carousel can scan eight orders at a time and picks orders four times faster than a manual picking process, with twice the accuracy of other distribution center processes.

“We’re able to pick over 300 lines per hour compared to 60 lines per hour in the past. We’ve also cut our error rate in half,” says Canning.

Bollin says the automated system resulted in a 20 percent headcount reduction in the warehouse, enabling the system to pay for itself in just over two years.

Modernizing the distribution center was the first big idea to come out of the Planning for Tomorrow process, but it wasn’t the last. Other ideas to arise from the meetings included a decision to hire a communications specialist to help develop marketing materials; launching a quarterly magazine, The Anvil, for customers and vendor executives; equipping salespeople with personal digital assistants (PDAs) to manage onsite customer inventory; developing an Innovator Award program to recognize employees for ideas that reduce costs or improve profitability; and a company-mandated emphasis on training. Each year, every Bostwick-Braun employee is required to receive 32 hours of company-sponsored training, ranging from product training, data entry and computer skills and general business practices.

“So, it isn’t all huge projects to come out of the Planning for Tomorrow process, it’s a lot of little things that make us a better company,” says Bollin.

Adding new customer segments
Bollin says another key goal set during the strategic planning process was to grow the company’s industrial business by 25 percent. Currently, about 75 percent of Bostwick-Braun’s $83 million in sales come from its retail-oriented Dealer Division, which serves as a wholesale supplier to independent hardware stores.

Manufacturing customers represent about 65 percent of the Industrial Division’s sales, but the company recently expanded into government, utilities and institutional sales.

“Strategically, we decided to place less emphasis on manufacturing customers. We didn’t want to have all of our eggs in one basket when that basket is contracting. So, we’re investing more heavily in other sectors,” says Chris Beach, Industrial Division vice president.

Although customers of all types demand short lead times and high fill rates, Beach says some of the company’s newer customers have service requirements different from traditional manufacturing customers.

“In the government sector, they don’t necessarily need to see the messenger all the time,” Beach says. The government and service sector typically prefer doing business through direct mail and electronic catalogs and don’t require regular visits by field salespeople. To satisfy their requirements, Bostwick-Braun recently beefed up its telemarketing sales force, developed fax, e-mail and direct mail marketing programs and updated its online product catalog.

“We invested six figures to make our e-catalog faster and easier to use. It has features such as enabling customers to order by their own part number rather than our part number and the ability to search using a competitor’s part number,” says Bollin.

VMI leads the charge
Much of the Industrial Division’s growth will come from vendor-managed inventory (VMI) programs, which grew by 40 percent in the past two years, and are on target to increase 30 percent this year. The growth is fueled by the division’s ability to lower customers’ costs.

One of its longest running and most successful VMI programs is with Pilkington North America, a float glass manufacturer with two facilities in nearby Rossford, Ohio. It provides two facilities with a variety of MRO consumable items, ranging from fasteners, hand tools, spray adhesives and lubricants, absorbents and other miscellaneous supplies.

“Like any storeroom or facility, we’re always looking at ways to control our inventory. With this program, I don’t have to worry about running out of critical, fast-moving inventory. Because they do all of my reporting for me, it reduced my paperwork and saves me time and effort,” says Michelle Jimenez, Pilkington plant sourcing manager.

Once a week, a Bostwick-Braun representative visits Pilkington to scan bar coded items in stock. When inventory dips to a predetermined minimum level, Jimenez receives a report indicating it’s time to reorder. She receives a summary billing statement at the end of the month, eliminating the need to issue separate purchase orders for each item.

Arming salespeople with personal digital assistants helps them manage customer inventory. The PDAs enable salespeople to streamline the counting process and download inventory data directly into Bostwick-Braun’s computer system.

“We can cut out a lot of redundancy in the process. The idea is, if the outside salespeople are going to perform this function, we want them to be able to do it quickly,” Beach says.

Jimenez says an added benefit of the VMI program is the wealth of data available to her. She often uses Bostwick-Braun as a benchmark for other VMI service providers.

“I can request a report of any kind, depending on what I’m looking for. Last week I asked them to get me my biggest spend. Then I can go after my departments and say, ‘Why are we spending so much money on this, or have we looked at a different process so we don’t have to use so many of these items?’” Jimenez says.

Logistics services for sale
After NASCO Services Inc. of Miamisburg, Ohio, landed an exclusive national contract with a major retail chain, it recognized a need for logistics support. The company is a nationwide provider of retail assembly services for retailers. NASCO technicians assemble bicycles, grills and lawn and garden furniture for major retail chains and big-box stores such as Home Depot, Lowe’s, Kmart, Wal-Mart and Target.

The contract required NASCO to assemble kits filled with the tools and supplies technicians used in the field. At the time, NASCO bought about 10 percent of its tools from Bostwick-Braun, and purchased the remaining items from a variety of other suppliers. After receiving the assorted wrenches, screwdrivers, corded and cordless drills and other materials, NASCO held them in inventory and then picked, packed and shipped them to the appropriate service technicians.

“We were paying for shipping in and out of our distribution center, plus doing all of the assembly work and getting very little leverage for the volume we purchased,” says Mike Boebinger, NASCO’s vice president of service logistics.

Bostwick-Braun became NASCO’s exclusive tool provider in 2003, saving the company between 10 and 20 percent in unit costs while simultaneously improving tool quality. Today, it provides all of the tools in the assembly kits, plus handles all inventory responsibility and shipping of assembled kits to technicians, enabling NASCO to free up warehouse space and reassign employees. The time required to process orders also dropped from two weeks to two days.

“We were shipping an average of 5,000 orders per month from our warehouse two years ago. Now, we’re shipping an average of 1,500 orders per month. We also cut manpower on the project in half and cleared out one-third of our warehouse and reassigned it for other purposes,” says Boebinger.

This article originally appeared in the November/December 2004 issue of Progressive Distributor. Copyright 2004.

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