What does it mean to be innovative? The word is thrown around a lot in today's fast-paced, tech-savvy business world. Companies with the latest and greatest computer systems are said to be innovative, as are those who've purchased PDA's for their salespeople, use video-conferencing to conduct meetings, and harness the power of the Internet for everything from communication to training.

Innovation, however, goes far beyond the digital world. In a nutshell, to be innovative means to be creative. While using technology to improve business can certainly be deemed innovative, there are a world of other ways to achieve that goal. Seeking out non-traditional markets, mining an untapped labor force, and forming unconventional business alliances are just a few examples.

Many of the distributors we write about in INDUSTRIAL DISTRIBUTION use such innovative strategies to move their businesses forward. We've set out to identify some of the most notable of those companies in this special report titled Innovation in Distribution . The nine companies highlighted here were all featured in ID this year and represent some of the most creative thinking and hard work we've seen all year.

However, this is not meant as a definitive listing of the most successful or most interesting companies in the industry. Rather, it serves as an example of some of the things distributors can do to make a difference in their marketplaces. In the brief write-ups that follow, we describe each company's innovative characteristics and provide an update on how they are doing during these trying economic times.

Competition has always been fierce in distribution. There were times when you'd rarely see two competitors smile at each other, let alone work together toward a common goal. But changing times often necessitate the unimagined. Woodridge, Ill.-based Gooding Rubber Co., a hose and accessories distributorship featured in our April issue, found that out first-hand.

A major problem confronted the owners of Gooding Rubber several years ago: one of its largest customers, Bethlehem Steel, was consolidating vendors and it looked like Gooding was not to be one of the chosen few. As it turned out, several small distributors faced a similar fate with the same customer.

So they got creative and formed an alliance. There were seven distributors who serviced the same Bethlehem Steel locations as Gooding Rubber, but they had never done business as partners. Three, including Gooding, were competitors in the hose and accessories business. Despite these challenges, the firms worked together so that each company kept a piece of the business — and kept the customer happy.

"Before [the Bethlehem Steel crisis], it would have been unheard of to collaborate with them," said Gooding president John Mork.

Today, business with the steel company is slow but the alliance is strong and will continue to prosper when business picks up again, says Mork. "What made that alliance so different," he adds, "is that we made a formal contract between ourselves and Bethlehem Steel."

Creativity rose out of necessity for another company featured in our April issue: SJF Material Handling of Winsted, Minn. Like many distributors, SJF's hiring practices couldn't keep up with its fast rate of growth in the late 1990s.

SJF sells new, used and reconditioned materials handling equipment. By 2000, the company needed more people than it could find using conventional hiring methods. According to Stafford Sterner, vice president of marketing, a new hiring program that tapped the area's migrant Hispanic work force has paid off.

Sterner says SJF found that many of the migrant workers had been skilled construction workers in Mexico who could maintain and run industrial machinery — a boon to SJF's business. SJF even sent management teams to Mexico to interview candidates there for jobs.

Sterner says that while the economy has slowed, the program has been successful and SJF will continue to look for employees from Mexico.

"That program was a success and we still have core people from the campaign," he says. "We will definitely keep it going when things pick up again."

Sometimes being innovative is all about finding and developing a niche. General line distributor Turner Supply, headquartered in Mobile, Ala., did just that — and went so far as to invent a name to define its specialty: super-regional distribution.

Founded in Mobile in 1905, Turner Supply started to extend its geographic reach in the 1970s, primarily to achieve critical mass. The company grew steadily over the next 20 years, but picked up the pace two years ago, acquiring three companies in 18 months. The firm's territory includes Alabama, Mississippi, Northwest Florida, Central Tennessee and Southwest Georgia.

What stands out about Turner Supply is its ability to serve a large territory with big-company capabilities while still providing specialized service. The company has become an expert in integrated supply, for example, while still maintaining a technically trained sales force in areas like industrial belting.

The tough economy hasn't changed Turner's strategy, according to president Howard "Spud" Schramm and vice president of sales Tommy Thompson. The goal today is the same as it was when we profiled Turner in our May issue: to combine regional reach with technical, personal service.

"The economic climate has been tough," admits Thompson, noting that Turner is now consolidating some facilities and functions to become more efficient. "This consolidation process has allowed us to expand our traditional and integrated supply services to other areas within and outside of our region.

"We will come through the downturn and there will be an upswing," he says.

Similarly, Dick Hall, president of PRC Industrial Supply of Portland, Me., has used a niche strategy to keep his 120-year old business going strong. As we pointed out in our July issue, PRC has changed with the times, most recently "super specializing" by slashing its product lines. Since 1980, PRC has developed four times the sales on one-quarter of the products, says Hall. The firm cut the items to which it couldn't add value.

"It wasn't by choice," Hall told us in July. "We simply knew we couldn't compete, so we didn't. We are in a stronger position now than we were 20 years ago."

The strategy has worked. Despite the weak economy, Hall says PRC is having a good year.

"The economy causes customers to have [fewer] resources, so we have become a more integral part of their businesses," says Hall. "Customers are more dependent on us as they focus on their core competency and look to others to fulfill functions that were once internal."

Fulfilling key functions for other companies is the fuel that keeps Detroit-based Production Tool Supply going strong. PTS is a master distributor supporting small, local distributors nationwide. Over the last 50 years, PTS has expanded across North America and continually evolved to offer more and more services to participating distributors. Technology has played a large part in that evolution.

"PTS leverages its investment in technology, logistics, marketing and inventory by partnering with more than 7,000 small and medium-sized distributors," says company president Mark Kahn.

He says distributors share in the benefits through continued cost savings and better service to their local customers. Orders are shipped direct to the local distributor's customer, eliminating additional handling and reducing transaction costs. He also says that PTS's e-commerce initiatives, ptsxpress and webXpress™ , have brought new capabilities to its distributor network. Distributors can order directly online from PTS's vast inventory through ptsxpress. The webXpress program allows orders to go directly from a member distributor's customer, through a customized Web site, directly to PTS's online ordering system. Orders are drop-shipped to the end user with only the local distributor's name appearing on the shipping documents.

When ID featured PTS in August, webXpress was in its rollout phase. "There are now many customers utilizing webXpress," Kahn says, "and we are seeing an increasing number of orders through this successful program."

For some, it's technology. For others, it's geography.

Industrial Rubber & Mechanics, headquartered just outside San Juan, Puerto Rico, has had to wrestle with the headache and expense of getting shipments from the U.S. mainland since its doors opened in 1963. The issue has forced the company to become an inventory expert — keeping on-hand stock levels and purchasing costs in check at all times. One slip can mean days of delays, angry customers, and huge freight bills.

Inrumec, as it's known, has solved the problem by automating purchasing and inventory functions with its Tribute software system. In addition, the company has an expeditor on staff to ensure that orders are placed, received, filled and shipped to customers on time. As a result, suppliers like Bill Eaton of Parker Hannifin look to Inrumec as an example of top-notch company management. In our August issue, Eaton had this to say of Inrumec: "They could almost be a prototype for what the distributor of the future would look like."

Inrumec thinks ahead of the curve in other ways, as well. A shift in Puerto Rico's economic base has caused the company to search for new customers — both at home and abroad. Primarily a hose & accessories business, Inrumec found a new niche selling materials handling products to the corrugated box industry in Central America. In October, the company filled its first large order to that region.

"We closed our best quarter ever just last month," despite the troubled economy, company president Thomas Von Hillebrandt said in mid-October. "We feel very confident, but we're apprehensive at the same time ... You make your own market. And I think now is the time when opportunities come up to either acquire or grow in other ways."

Pine Belt Industrial Supply operates under a similar philosophy. The Hattiesburg, Miss., distributor was founded in 1987 to serve the area's robust logging and sawmill industry. As with Inrumec, a recent economic shift away from manufacturing has caused Pine Belt to reach out to new markets, among them the commercial catfish industry. This small distributor of bearings and power transmission products now does considerable business supplying the region's many catfish farms. Pine Belt has also built business with an ancillary market — manufacturers of winches and deck machinery for the shrimp and fish boat industry.

"We went from one to three strong industries," says Pine Belt manager Ted Taylor, pointing to lumber, catfish and winches. "The other two are growing great, while lumber is currently down."

Since we featured Pine Belt in September, it has gone online with some of its vendors and is looking to bring some customers online, as well.

Windsor Factory Supply Ltd. of Windsor, Ontario, is no stranger to innovative thinking. Headquartered just across the border from Detroit, this $70 million company has built its success supplying the automotive industry. Windsor Factory Supply was featured in an October report on Canadian distribution.

Among the company's innovative moves, it's sped up delivery of products into Canada by opening a Detroit location. This allows the firm to move products from Detroit to its Canadian customers faster than if it had to wait for shipments to arrive in Windsor from its U.S. suppliers. In the wake of the terrorist attacks on the U.S., company president Wes Delnea says increased border security has complicated the issue. Since a one-day delay can disrupt JIT manufacturing for three days, he says Windsor Factory has had to take extra efforts to ensure products are delivered on time — including making border crossings late at night or in the early morning to account for extra-long lines at border checkpoints.

The company's hard work continues to pay off. Windsor Factory Supply was chosen as the Canadian experiment for Covisint, the Big 3 automakers' online exchange. So far, progress is steady. "GM is continually adding new items to the base it purchases through Covisint and the purchases remain steady," says Delnea. "Ford is also looking to come aboard now."

Moving boundary lines of another kind is Las Vegas-based Bearing Belt Chain, the last of our featured innovators. With just 40 employees and $12 million in sales, this power transmission distributor is known as one of the most technologically advanced in its industry.

That reputation is due largely to company president Steve Philpott. A computer expert, Philpott is sought out by distributors across the country for help in implementing new technologies. He was a keynote speaker at two workshops during the recent Power Transmission Distributors Assn. annual convention, showing how technology can be used to increase operating efficiencies and reduce errors. Philpott and his company were profiled in our October issue.

As for BBC's technological innovations, Web cameras allow customers to view products before they order, ensuring that they get exactly what they're looking for. Customers can order online through the company's Web site, salespeople use personal digital assistants to enter orders that are then synchronized with the firm's computer system, and BBC is working on implementing streaming video so that customers can talk over the Internet with front counter salespeople.

All this is in a day's work for Philpott and his staff, who report solid growth this year despite the downturn many companies are experiencing.

ID editors Jack Keough, Richard Trombly and Al Tuttle contributed to this report.