A cut above
Chicago Hi-Speed Tool uses integrated supply and special cutting tool services to win customers in the Chicago market and beyond
By Victoria Fraza -- Industrial Distribution, 12/1/1999
One of the first things you notice when you step into Arnie Baron's office is a poster-size photograph of Baron running the Boston Marathon. The words "Boston '80" run across the top, with Baron, in mid-stride, pictured below. Baron has run Boston six times -- most recently in 1990. While he doesn't run as much as he used to, Baron channels much of that energy into running Chicago Hi-Speed Tool & Supply along with his partners, Stuart Bulmash and Morry Levin. The three purchased the cutting tool distributorship 13 and-a-half years ago.Chicago Hi-Speed Tool is a one-location firm situated on Chicago's north side. The distributorship sells cutting tools and MRO supplies to tool and die shops, machine shops and other small- to mid-sized end users in the Cook County area, a region that spans Chicago and its surrounding suburbs. Being in the Chicago market is key, says Baron, because it is still a focal point for distribution and industry. Being in the city proper is even more important, he says, noting that the company's 5480 N. Elston Avenue location is just minutes from the expressways and main routes that lead to the bulk of the firm's customers.
Of all the factors contributing to Chicago Hi-Speed's success, the motivation behind its three leaders and their ability to penetrate an important market stand out. When Baron, Bulmash and Levin bought Chicago Hi-Speed in June of 1986, the 34 year-old firm had annual sales of $1 million. Since then, sales have risen to nearly $12 million and the firm's capabilities have expanded to include integrated supply and special cutting tool services such as regrinding, re-conditioning and custom manufacturing. A focus on carbide tooling has emerged as well.
The partners credit the firm's progress to their continued effort to concentrate on the "gaps" that larger distributors often ignore -- specifically, providing technical knowledge and service to cutting tool customers. Among the fruits of their labor, the firm became ISO 9002 certified last summer, the same time it was named one of Industrial Distribution's 50 Outstanding Small Distributors.
Accolades and commendations aside, what's important, say Baron, Bulmash and Levin, is the work the Chicago Hi-Speed team -- which consists of 40 employees -- accomplishes on a daily basis. Chicago Hi-Speed uses its strength as a specialist to open up new opportunities within a customer's plant. That may mean providing them with specialized tools or with a wider range of products through integrated supply. Whatever the case, it means forging stronger partnerships that result in an increased bottom line for both parties. And that requires a strong effort from everyone at Chicago Hi-Speed Tool. As Baron says, "It's not the three of us, it's the 40 of us that make this company successful."
Finding a niche
When the general line industrial supply company they worked for went out of business in the mid-1980s, Baron, Bulmash and Levin searched the Chicago area for a distributorship they could purchase and run themselves. They found Chicago Hi-Speed Tool, whose owner was looking to sell. Accustomed to selling a range of MRO supplies, the trio welcomed the chance to become specialty distributors. They agreed that having a niche was the way to succeed in the changing business world.
Many would agree they were right. Competition has increased significantly for small general line houses since the mid-80s, with consolidators and catalog houses creating bigger and bigger distribution networks. On top of that is the threat of non-traditional competition -- like online sources, retailers and others. But having a niche doesn't mean Chicago Hi-Speed Tool can rest on its laurels. Even as a specialty distributor, the company has had to change with the times. About five years ago, the firm took two significant steps in the direction of change.
The first was to join the Industrial Network, a nationwide alliance of independent distributors designed to give smaller supply houses the buying power and national reach of larger companies. The Industrial Network is Chicago Hi-Speed's answer to integrated supply, allowing the company to service customers with multiple locations across the country. While Chicago Hi-Speed services the customer in the Chicago area, other distributors in the network provide services in their region -- all with one purchase order and one invoice marked "Industrial Network."
"As a smaller distributor in this economy, you have to be part of a bigger group," says Baron. "Those that think they can do it alone are in for a big surprise."
The firm's second step was to buy Quaker Tool, a grinding company that re-conditions, regrinds, and modifies tools, as well as manufactures special cutting tools. Quaker Tool represents 10 percent of Chicago Hi-Speed's sales. And much like its integrated supply program, the special service can be a door-opener for new business. It is also an attempt to further specialize in cutting tool technology. End users from across the country send their tools to Chicago Hi-Speed for regrinding and re-conditioning, as do other distributors.
Chicago Hi-Speed has invested considerably in the Quaker Tool division, a move that has turned out to be worthwhile. But when Bulmash approached his partners with the idea to spend $250,000 on a CNC grinding center a few years ago -- a special machine for manufacturing and re-grinding tools -- Baron admits he thought the idea was a little crazy. The partners agreed to go ahead with it, though, and have since purchased two additional CNC machines to accommodate the new business the initial purchase brought their way. The situation speaks to the trust the three partners have in each other.
"The three of us act as a trio," notes Baron. "I don't make a decision unless I talk with my two partners."
"In 13 years, we've had no major disagreements," adds Levin.
"We've had some disagreements, though," adds Bulmash.
"But it's always a question of what's best for the company," says Baron. "We agree about the direction in which our company is going."
The owners agree more often than not, as well, on the best way to take their company in the direction they want it to go. What it comes down to is a simple philosophy of helping customers control costs and become more efficient. That means providing them with products that save time and last longer. It can be a tough sell, the partners admit. Often, it means seeking out the right people in the customer's organization -- people with vision who understand cost savings, not just price.
"It all goes back to what our company is all about," says Baron. "We sell them products that are going to save them [money] in the long run."
While that means selling a higher quality, often higher-priced, item it also involves selling programs and services that help customers make the best use of their time. To that end, Chicago Hi-Speed developed a tool crib management program that can be tailored to fit the needs of any customer. Dubbed the CHS-Connection, the program can include several key elements: bar coding; EDI; automated inventory replenishment; integrated supply; consignment inventory; computerized tool dispensing machines; one purchase order to cover annual needs; price stabilization; and once-a-month billing.
One of the fastest-growing components of the CHS-Connection is its vending machine program. The company has about 20 tool vending machines set up at various customers' plants. The machines stock cutting tools and accessories, keeping track of how much gets used and who uses them. At the end of each month, Chicago Hi-Speed compiles that information and sends it to the customer. Chicago Hi-Speed salespeople have been selling the vending machine concept for five years. The bottom line, say the owners, is that the vending machines offer customers yet another way to control inventory, thus controlling their own costs.
"And that's where the savings is," Baron points out. "Not in the price of the drill."
The people element
Of course, Chicago Hi-Speed Tool's innovative programs and services would mean nothing without the right people to bring them to the customer. The partners say they've tried to create a knowledgeable team of inside and outside salespeople --employees who don't rely on catalogs and part numbers to help customers solve problems. And they feel they've done that. Most of the firm's eight inside salespeople have between 10 and 30 years' experience in the business. And of the seven employees who worked at Chicago Hi-Speed when the partners bought the firm in 1986, five are still with the company.
The real test of how well those employees perform, however, is in the customer's opinion of them. And Chicago Hi-Speed gets excellent marks in the customer service category from Jim Coulas, Jr. of Weldbend Corp., a local manufacturer of carbon steel pipe fittings and flanges. A Chicago Hi-Speed customer for over 20 years, Coulas didn't expect to stay with the distributor when it was sold back in 1986. The previous owners had the "personal touch," says Coulas, and he feared the new owners would not carry on that tradition. He was wrong.
"Nowadays, with the fax machine and e-mail and everything else, companies tend to lose the personal touch that started the business in the first place," notes Coulas. "But that's something that Arnie and his people haven't forgotten."
Coulas has been working for years with the same Chicago Hi-Speed salesperson, whose knowledge and responsiveness, he says, are second to none. What's more, Baron continues to call on Coulas, as well -- just to make sure everything is running smoothly. That customer-focused attitude carries over into all aspects of the business, adds Coulas, pointing to the helpfulness of the employees who run pick-ups and deliveries, too.
Baron, Bulmash and Levin attribute much of their high customer service levels to low employee turnover. A profit sharing program and 401K plan may be part of the reason employees choose to stay with Chicago Hi-Speed Tool. It could also be the close-knit, friendly atmosphere that characterizes the firm. The three partners stress that theirs is an informal company, where everyone is on a first-name basis and the doors are always open.
"We know our employees. We don't have to look at someone's name badge," says Baron. "We know their names, we know their families."
And sometimes, he adds, that makes all the difference.
COMPANY SNAPSHOT
Chicago Hi-Speed Tool & Supply
Principals: Arnold Baron, Stuart Bulmash, Morry Levin
Headquarters: Chicago, Ill.
Founded: 1952
Employees: 40
1998 Sales: $11.5 million
Products: Cutting tools and related products, general MRO supplies
Web site: www.chicagohispeed.com
There are no other articles related to this article.Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
