Standard bearer

Training and a strategic focus on key customers sets Bearing ServiceTM, Inc. apart from other power transmission and bearing distributorships

By -- Industrial Distribution, 10/1/2000

Removing scrap metal is critical in a 57-acre, three-shift automobile parts plant, and when the transition belt conveyor at DaimlerChrysler Corp.'s Sterling Stamping Plant started to fail, Jennifer Duthler turned to Bearing ServiceT, Inc.

"Within two days I had quotes on my desk and timing estimates of when different parts would be available," Duthler recalls. "They always present three different options for delivery and timing, and I make the decision."

Duthler, the first shift maintenance area manager at the factory, works closely with Scott Grubbs, a senior account manager for the Livonia, Mich.-based Bearing Service. The distributorship has a commodity management contract with the Sterling Heights, Mich., plant, which churns out parts like doors, hoods and fenders. As one of two Bearing Service employees working full-time with the DaimlerChrysler facility, Grubbs and his partner Jeff King source parts from a variety of tier one and tier two suppliers and provide round-the-clock service on demand.

With input from Duthler and other DaimlerChrysler employees, Grubbs and King created a spreadsheet of the parts necessary to replace the conveyor system that moves scrap to a separate building in preparation for baling and resale. In the end, DaimlerChrysler only needed components, so Grubbs cancelled the belt order without incurring a restocking fee for DaimlerChrysler because it placed an order for replacement parts.

Despite the value of the relationship with DaimlerChrysler, sales to automobile manufacturing-related businesses account for only about ten percent of Bearing Service's sales. Sales to smaller MRO companies comprise about 65 percent of the business and the OEM market represents another 25 percent. Other key industries include the machine tool industry, municipalities and steel processing companies.

Powered for success

In the past few years, Bearing Service has made a strategic shift to grow the business by emphasizing training, offering a better benefits package to retain employees and providing more value to its best customers. So far, the plan appears to be paying off; last year, revenues grew by $2 million.

The strategic plan developed in the late 1990s emphasizes technical expertise and strong relationships with targeted customers. A strategic team holds monthly meetings and follows economic indicators.

"We were always a reactive company, chasing this and that," Savage says. "We have a reactive business. If something breaks, customers call. Now we've changed the way we run the company from the reactive to the proactive mode."

Part of the change involved becoming ISO 9002 compliant in 1998, after false starts in both 1997 and 1996. Operations manager Keith Jones encouraged employee commitment to the quality program, Savage says, which was instrumental in the program's success. Savage says compliance is a vital part of doing business with automobile manufacturers, but other customers also value the corrective action process and continuous improvement philosophy.

"On the customer side it's a calling card, a minimum requirement," Savage says. "It's like a college degree. It opens doors, especially in this area of the country."

The ISO 9002 certification trademark painted on the company's front door exhibitsthe firm's dedication to the quality principles, but Savage's lifetime of experience in the business is another type of door-opener. After his father's unexpected death in 1978, Savage left college to take over the business his grandfather started in 1943.

Although Savage was only 20 years old when he purchased the company from his father's estate, he had been putting away stock and mopping floors in the company warehouse since the age of eight. At home, he listened in on executive discussions.

"I got an idea of who the customers were at the dinner table," Savage says.

Throughout the company's growth years, a core group of executives helped Savage advance Bearing Service from a small to a mid-sized distributorship. Three of the company's top brass have more than 15 years of experience with the company, including Anna Riveros, the vice president of operations and marketing, John Masek, the vice president of sales and human resources, and LeRoy Burcroff, the director of sales.

Committed to the core

Implementation of the strategic plan involved narrowing the company focus to bearings and power transmission products. Total inventory is approximately $2.5 million with about 14,000 SKUs and five turns a year.

"We go to great lengths to get anything in those two product groups, rather than just the popular stuff off the top," Savage says.

Dale Merwin, the purchasing supervisor for Roush Industries, Inc. in Livonia, says Bearing Service finds the exact part Roush needs. The race car manufacturer relies on quality parts to build safe engines. Recently, a Bearing Service representative helped Roush find the best substitute for a discontinued product.

"I've dealt with a lot of vendors that will try to sell us something that is 'just good enough," Merwin says. "In our industry, 'just good enough' isn't always acceptable."

Other customers say Bearing Service is willing to turn over every rock when an established customer needs a special item. Gordie Rowe, senior tool control coordinator at Williams International, says Bearing Service did all the legwork to find the right belt within 24 hours when one of the lathes shut down.

"If there's something that I need for a machine, they're willing to make a trip out right that day," Rowe says. "If there's a problem, they'll keep in contact with you. They don't leave you in the lurch."

Sales have increased on a steady upward trajectory since the 1978 figure of about $1.3 million, but the strategic team decided that changing the customer mix would also boost profits. Savage says the company began to increase prices to a handful of low-margin, non-targeted customers and offer better pricing and more services to target customers that generate acceptable returns for the company.

The company's technology strategy is also geared to serving key accounts. Bearing Service currently uses EDI, and Savage envisions an e-commerce system that helps take the costs out of transactions rather than a generic Web site.

"We want to use technology to help existing customers in our market rather than draw just anyone who happens to access our Web site," Savage says.

Prepared for any challenge

Specializing in a couple of product groups means a distributorship must develop an expertise in those areas, and that's where training comes into play. Bearing Service renewed its commitment to training during the strategic planning stage, and suppliers like NTN Bearings Corp. of America and Martin Sprocket & Gear, Inc., which is headquartered in Arlington, Texas, praise their efforts.

NTN sales manager Roger Lynn says Bearing Service has sent employees ranging from branch manager to purchasing personnel and administrative staff to its quarterly three-day training seminar. The full-line manufacturer of ball and roller bearings is headquartered in Farmington Hills, Mich., but the training retreat is held in Mount Prospect, Ill.

"They're more than receptive," Lynn says. "I wish more distributors were like them as far as training goes."

Product training at the branch level, computer instruction and Burcroff's use of the Power Transmission Distributors Assn.'s Customer Service course round out the offerings. Managers and sales staff learn leadership skills through Dale Carnegie and American Society of Employers courses.

"Training is a line item on our annual budget," Savage says. "It has a lot to do with employee retention. It improves their careers, and people who want to learn are better employees."

Bearing Service leverages this strength by offering different phases of training to each of its sales positions: inside sales; account managers; senior account managers who play a dual role; and full outside sales reps.

Employees can also become product specialists by signing up for additional training at a manufacturing plant. Other employees use these product specialists as a resource.

"We want to train them to ask the right question and train them to solve the problem so they can help the customer with the right product," Burcroff says.

Bearing Service provides extensive guidance to customers, but some clients need more than a walk-through of the vendor catalogs. The small manufacturers in particular look for training as a value-added service, so Bearing Service offers classes on topics like bearing installation, spindle repair and customized training at customer sites.

Doing well by DaimlerChrysler

About 10 percent of Bearing Service's business comes from commodity management contracts, and president Doug Savage describes the DaimlerChrysler account as the "granddaddy." For the past six-and-a-half years, Bearing Service has been challenged with saving DaimlerChrysler's Sterling Stamping Plant at least five percent of its annual purchases; Savage says last year's total savings amounted to 25 percent.

"It's important to have knowledge of their processes," Savage says. "It's not just lowering the price every year. We try to figure out how to use less of the products and use them smarter."

Kurt Barker, the tool store manager at the DaimlerChrysler Sterling Stamping plant, says Grubbs understands the sense of urgency at the stamping plant, which must supply the assembly plants with enough parts to keep production going. Simultaneously, Barker says, Grubbs appreciates his mandate to eliminate excess stock. Together, the two have reduced inventory to about a 30 days of supply on hand.

"They do a lot of legwork," Barker says. "They coordinate with the user and supplier and determine the use [of the product]."

To do the job, Grubbs stays in constant contact with Duthler, the supervisors who work under her and, in some cases, union employees on the lines. He's familiar with operations in the labyrinth of more than 40 press lines and presses, which are surrounded by safety cages and 5-foot rolls of steel. Whether he's at his desk or winding his way through aisles of car doors stacked on turntables like so many eggs in cartons, Grubbs is constantly in planning mode.

"I try to get very involved in knowing about the repairs," Grubbs says. "If a supervisor asked for sprockets and bearings ASAP and I knew shafts were a couple of days out, I would order the parts and save the plant money in expedite charges."

That kind of can-do spirit and forward thinking has propelled Bearing Service through a high-growth period, and Savage plans to continue the push. "We're on pace to do about $20 million in sales this year," he says.

COMPANY SNAPSHOT

Staff retention sharpens the competitive edge