International ties
Rising to the challenge of a global economy, Norwegian distributor TESS reaches out to the United States
By Victoria Fraza -- Industrial Distribution, 5/1/1998
When oil was struck in the North Sea more than 25 years ago, many of the rigs sent to extract it were manned by Americans -- Americans who needed a local source for a range of U.S.-made replacement parts and other products. Norwegian hose and accessories distributor Erik Jolberg realized that need, and set out to fill it by partnering with American manufacturers.Though Jolberg has continued to partner with American firms, up until a few years ago he had little involvement with the global economy -- a fact he knew he should do something about as the 1990s approached.
Jolberg and his partner, Olave Nygaard, founded Teknisk Service (TESS) in Drammen, Norway (just 20 miles from Oslo) in 1968. The distributorship quickly took off and today is Norway's largest supplier of hose and accessories, employing 430 people in 63 locations across the country. Now known as The TESS Group of Companies, TESS consists of the original hose and accessories distributorship; TESS Engros, an import and wholesale company; TESS Production, a hose assembly fabricator; and Regnskap, the company's financial division. Annual sales totaled $95 million last year.
The global turnaround for TESS came in the late 80s when a business partner at U.S. manufacturer Ever-Tite urged Jolberg and Nygaard to join the National Assn. of Hose and Accessories Distributors, a U.S. trade association. Jolberg explains that he and Nygaard were eager to learn more about marketing and product development on a global scale, and thought involvement in a trade association would be a good way to do that.
"We saw that as a small, local company in Norway we had too little contact with what was happening in the world,'' Jolberg explains, adding that NAHAD membership seemed like the key to expanding their global horizons.
But at first, that goal was not to be. TESS's first NAHAD application was turned down, says Jolberg, because the association didn't accept international members. But Jolberg and Nygaard were not to be dissuaded -- they applied again in 1993 and were welcomed with open arms. That same year, TESS joined a European trade association -- European Distributors of Industrial Supplies. EDIS is a group of nine European companies -- all from different countries -- established in 1971. TESS's push into the global market didn't stop in 1993, however. Two years later the company joined another U.S. trade group, the Industrial Distribution Assn. Jolberg says membership in all three organizations has helped his company gain an even more competitive edge in his native land. But he stresses that ties to the United States have been the most advantageous.
"When the U.S. is introducing concepts about integration, partnering and in-plant stores, they are rather unknown things in the Norwegian market,'' he says. "And also in the European market.''
The benefits of American ties can be seen most clearly in the TESS Triangle -- a company model for sales education and training. The triangle is divided into seven steps, each representing a specific level of selling skills. Sellers who have mastered the first level can sell on consignment, use competitive discounts and offer a variety of terms to their customers. The second step involves the more skilled requirement of contract selling. The third step includes selling just-in-time and Kanban systems. The fourth step involves partnering and selling TESS's "Inplant Stores" concept. And the fifth step on the chart is labeled "Integration'' -- an enhanced form of Inplant stores. TESS educates salespeople on each level by using information taken from U.S. seminars and workshops, and resources purchased from the American trade groups.
While using American information can be difficult -- meticulous notes must be taken and everything must be translated from English to Norwegian -- Jolberg says the effort has paid off. What's more, he stresses that company-wide education is an ongoing process because it takes time to learn all the skills needed to be a successful seller.
"We, and I think most companies, are surprised to see how many [salespeople] can actually work on the upper levels,'' he says, adding that in his own firm, "Of 80 people on the street, only three to four can negotiate on the upper levels.''
Interestingly, the sixth and seventh levels of the TESS Triangle have been left blank. Jolberg says that's because no one has all the answers -- yet.
"We still have something open on the top of the triangle because we do not know what the future will be,'' he says. "But we do know it will [require] more training and education.''
Think globally, act locally
A major part of the challenge for TESS comes from being way out in front on many of the cutting edge issues in distribution -- in Norway, that is. Jolberg explains that U.S. distributors are three to five years ahead of their European counterparts when it comes to things like integrated supply, partnering, and inventory management concepts. While TESS enjoys the advantages of learning about new business practices through U.S. trade associations, implementing new programs can be tough when trading partners at home are unfamiliar with them.
Two examples of such programs are TESS's "Inplant'' stores and its "Integration'' concept -- both referred to in the TESS Triangle. In the early 1990s, TESS introduced the Inplant stores program to some of its largest customers. The concept works much like inventory management programs in the United States, with TESS taking over the warehousing of specific goods for the company -- stocking, checking and then re-stocking materials as needed. Jolberg says the concept is beginning to take off, adding that he knows of no other distributors in Norway who are doing it. The program was tough to initiate though, with customers resistant to try something they'd never even heard of. Today, TESS has three Inplant stores with customers across the country, including international companies ABB and the AKER RGI group.
TESS's "Integration'' program is an enhanced version of Inplant stores, with actual TESS employees working at the customer's site. The employees act, for all intents and purposes, as employees of the customer. The only difference, says Jolberg, is that TESS pays their salary.
"We introduced the concept based on ideas we got mainly from the United States,'' says Jolberg. "In recent years it has been easier [to implement] with [customers] who have international ties. It's not so easy with companies who only deal in Norway.''
Jolberg adds that customers must generate at least $1 million in business per year to be considered for either the Inplant or Integration programs, although salespeople can take parts of each concept and use them with smaller accounts.
"It's very advanced selling," he says. "It's big orders we're talking about.''
And TESS looks to continue growing its business and generating more of those big orders. Jolberg says he hopes to have 100 locations throughout Norway by 2010, along with some international locations as well. Some countries he's considering working in are the United States, Denmark, Holland, Scotland and England. In addition, Jolberg plans to follow many Norwegian and other European shipping companies to locations around the world -- to places like Florida where Norwegian cruise lines are anchored, and Seattle where the fishing industry is a good market for European equipment. Essentially, Jolberg hopes to provide, through American partners, the metric products those customers need and can't find in the United States.
"The best way to do that is to set up a joint venture with American [distributors] who know about hose and accessories, but do not know about metrics,'' says Jolberg. "If we tie up with some American companies, then [European shipowners and cruise lines] can buy their spare parts locally instead of buying very expensive original equipment from Europe. So that will be a savings and profit for everybody.''
Jolberg has tried to establish such a venture with distributors in Florida, but to no avail. He says he will continue to look for American partners, however, and is confident that he will eventually make that kind of global connection a reality.
AT-A-GLANCE
TESS
Headquarters: Drammen, Norway
Founded: 1968
Locations: 63
1997 sales: $95 million (U.S.)
Primary products: Hose and Accessories
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
