Technically sound
Technology shapes Lake Erie Abrasive's approach to distribution
By Susan L Srikonda -- Industrial Distribution, 11/1/1998
salesman swaggers into a purchasing manager's office and says "what if I can show you a way to cut your costs by 80 percent?" ... If you're waiting for the punch line, there isn't one.Minus the swagger, Allen Howell, president and owner of Lake Erie Abrasive in Cleveland, Ohio, approaches each of his customers with complete confidence that he can find a way cut their costs, and yes, sometimes by as much as 80 percent.
There's no secret here, no magic potion. Howell and his associates, like sales manager Joe Gryzlo, simply dedicate themselves to finding the most effective ways to apply the latest in abrasives technology to their customers' applications. That method has allowed Lake Erie to increase sales from $4 million in 1991, the year Howell acquired full ownership, to an anticipated $8.5 million in 1998.
"I measure how we are doing by how much we've saved our customers," Howell says. "If we haven't done anything for our customers, what do they need us for? They can go out and get anyone else for less price. If we haven't done something for our customer this year, this month, then we're going to be out of business. Because someone else will walk in the minute we become just a supplier, the same as everybody else just passing out catalogs. We're different and we have to cover every angle of the technology; we have to cover [our customers'] technology as well as our own."
Technology in action
All you have to do is ask Howell for an example of the type of cost-cutting service he provides to his customers and he'll rattle off two, three, four examples. Like the customer in the investment casting business whose productivity he doubled simply by changing the surface footage and speed in which the customer was operating its contract wheels. Or the jet blade manufacturer whose jet blade grinding time Howell reduced from 45 minutes to six minutes by custom designing a machine. And the dynamic balancers for abrasive wheels he introduced to the Ford Motor Co. that eliminated a problem the company was having grinding camshafts and increased their production.
Howell's customers have come to rely on Lake Erie Abrasive to apply the latest in abrasive technology to their application problems, and to simultaneously save them production time and inventory costs.
"There's a real confidence level I have in dealing with [Howell]," says Al Hufschmidt, materials manager for American Spring Wire in Bedford Heights, Ohio. "If he saw a way for us to save 80 percent, he'd do it. He is 100 percent behind helping us to do the best job we can, whether it's from a cost standpoint or a product standpoint. He's the kind of guy you really want to have on your side."
American Spring Wire manufactures steel spring wire that is wound into springs for high fatigue applications such as automotive engine valve assemblies, punch press die sets, snow mobile suspensions, agricultural machinery and garage doors. The company counts on Howell to understand how abrasive products perform in its manufacturing processes and to manage its abrasives inventory on a weekly basis. Lake Erie has worked with American Spring Wire and 3M to develop products that last longer, allowing the company to save money by decreasing equipment downtime and increasing productivity, Hufschmidt says.
To buy from this small specialty distributor, customers have to be willing to look beyond price.
"Sure they can save one percent to even as much as four percent by buying abrasives from someone else," Howell says. "But the big savings are the savings they get on the shop floor. When we go out and show them a better way to do it, that four percent looks awfully small in comparison to that investment caster who we took from $100,000 in abrasives down to $20,000 or the jet blade manufacturer whose abrasive costs went from 22 belts to do one part, down to one belt."
Howell sprinkles cost-savings examples throughout his conversation about the company; it's a habit he says he can't afford not to do.
"We document our savings every time we do one," Howell says. "We'll write it up and we'll go in and pat ourselves on the back and say 'here's what we did for you. Here's this cost savings.' And they say 'great, keep going.' And that helps us keep our customers coming back....We're not shy about reminding our customers what we do for them. You can't be today. You have to pat yourself on the back." That message is not lost on his customers.
Mark Williams, engineering manager for Aviation Product Support in Mentor, Ohio, points directly to the bottom line as the primary reason for buying from Lake Erie for more than 10 years. Lake Erie also manages the abrasives inventory for the company, which overhauls jet engine components.
"Total lower costs is why [we buy from Lake Erie]," says Williams. "I'm sure I could shop around and keep individual product costs cheaper, but I couldn't keep the technology cheaper." Williams says the $30,000 Aviation typically spends on abrasives in a month is less than it used to be, due to the technology improvements introduced by Howell.
"[Howell] comes in and works with our people and trains them on the best way to work with the abrasives and he tells us about new technology that comes out," Williams says. "When he comes in and brings us ways and techniques of polishing faster, that goes right to the bottom line...He's always keeping us on the leading edge of abrasives technology."
Staking a claim in the market
Howell is looking forward to robust growth during the next two years, aiming to reach $10 million in annual sales by 2000. Helping Howell along that path will be 12, just twelve, employees. At $7.1 million in sales and 10 employees in 1997, Lake Erie Abrasive had the third highest sales-per-employee ratio of the companies represented in Industrial Distribution's annual list of 50 Outstanding Small Distributors, reported in the July issue. Howell recently hired two new employees and he doesn't anticipate further staff additions before 2000.
Using available technology well is, again, what Howell sees as the key to running his business successfully, inside and out.
"The technology ties our whole business together and it ties us to our customers," Howell says.
It's not that each of Howell's employees has a shiny new iMac sitting on their desks, or that all of his customers place orders via electronic data interchange. In fact, most of Lake Erie's customers prefer to fax their orders, although they could use EDI. But the company has Howell at the helm, an owner with ample desire to see how things work and, moreover, how they can work better. And the technology that works, Howell uses.
Inside the office, Lake Erie employees have every piece of technology that they need to do their jobs effectively. Each employee has a computer on his desk that is networked -- even the fax machine is networked so that incoming messages are recorded on the hard drive. And, just in case, there are three spare computers that are backed up nightly so that if someone's machine should break down, there's an immediate replacement. The employees receive the software training they need and tools they ask for. It's all part of Howell's plan to hire professional people and give them the tools necessary to do their jobs well.
"We make it easy for people to work," Howell says. "If you need something to work here, we'll get it for you. Whatever it is, if you can justify it in your mind, we'll buy it. Because that's how people feel responsible for themselves by being able to affect that which it is they want to do. And if you tell them 'No, I don't think you need that,' then you're telling them that you don't think they're worth it."
Howell enjoys finding ways to apply new technology within his own office and within his customers' operations. And it's this dedication to discovering and using technology that works that has won Howell kudos from both customers and suppliers.
Lake Erie is one of the largest distributors in the country for 3M Abrasives Systems Division and has been selling 3M products for 17 years.
"3M's abrasives are regarded as an engineered product. It's a highly technical form of selling and Lake Erie is extremely adept at this engineered selling," says Ed Tabor, regional sales manager for 3M. "For us to be successful, we have to prove the value of the quality of our product; the technical expertise of Lake Erie helps us to prove the value of our product."
Even Cut Abrasive Co., a converter of abrasive specialties based in Cleveland, sells to the Northeast Ohio region through Lake Erie.
"What [Howell] often does is sell the higher technology product which, while they're more expensive, they're a better value because the [end-user] gets longer life or more productivity out of them," says Bill Mitchell, chairman of Even Cut Abrasive. "I think that's good for the user and it's good for the manufacturer because he probably has a little better margin on those products."
This focus on ushering new technology inside the customer's door is what Howell sees as the key to his company's future. He's intent on filling the gap left by companies that once had abrasives engineers on staff, by integrated supply distributors who can't provide expertise in all of their product categories, and by manufacturers who staff fewer reps than they used to.
"Salesman are the art of getting the information in the hands of the end-users. If the integrated supplier is the only person having any input to these people, all of the sudden you're going to lose the technology and the industry will stagnate," Howell says. "There'll be a loss of technology; there'll be no moving forward. That guy that's in there working on all 300 products that he's supplying to a customer, he can't be focusing on abrasives and bringing him the best product.
"Today, we don't have a single customer that we call on that has somebody on staff whose sole responsibility is the abrasives that they consume. Where do they get their technology from?," Howell says. "They're not going to get it from the integrated supplier. The manufacturer's people can't give them enough time. They have to focus on someone with the capability that can do it. And they recognize these issues and they're buying from us."
COMPANY SNAPSHOT
Lake Erie Abrasive
Headquarters: Cleveland, Ohio
Founded: 1969
1997 Sales: $7.1 million
Primary products: specialty abrasives
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