IBC (formerly Industrial Buyers Consortium) has come a long way in its brief three-year existence. Created in 1999 as a buyer's group, IBC has become perhaps the fastest growing distributor/manufacturer cooperative in the nation.

Formed to provide independent distributors with the tools necessary to compete in today's business climate, the management team combines the fresh ideas of its thirty-something founders with the experience of some long-time industry professionals.

The Hartford, Conn.-based group's goal is to complement the strengths of those distributors. As important as price and delivery are, in-depth knowledge about finding and using the right tools for the job remains the independent distributor's ace in the hole. It is knowledge only gained through experience; through years of walking the manufacturing floor, observing experts in cutting, grinding, measuring and forming; through years of answering emergencies with substitutes and faster deliveries, or better products to replace failures.

Dan Burnham, executive vice president in charge of business development at IBC, says that this value, combined with a national presence, strong marketing programs and loyal manufacturer relationships, is key to becoming a strong force in the supply channel.

According to Burnham, IBC stands in the gap for those distributors finding themselves priced out of many markets by the combination of segregated purchasing departments, reduced buying power and a general erosion of added-value relationships.

"In marketing today, you need an offensive and a defensive strategy," he says. "We offer an offensive strategy through national accounts and marketing. We offer a defensive strategy through increased buying power and better terms. And we offer group technology that helps both strategies."

The COO is Ron Nunez and the national sales manager is Bill Fitzpatrick, who joined IBC founders Burnham and president Ed Sullivan, with two main goals in mind.

"It was clear when we founded IBC that [independent distributors] needed much more than buying programs to survive and thrive in the coming years. [They] would need to make significant investments in marketing and technology to compete on an even playing field with nationally focused industrial distributors," Sullivan says.

IBC built several concepts into working business models to offer distributors concrete solutions to their problems. Preferred suppliers offer member discounts; IndustrialSupplyPlus^TM and IBC-brand products help guarantee member distributors can compete in all markets; advisory committees and forums are designed to ensure that all member ideas and concerns are addressed; BearingSupplyPlus^TM and FinancingPlus^TM are examples of comprehensive branding the company is pursuing.

"Our original goal was to set up buying programs then follow with our marketing," says Burnham. "When we began to look at this, we saw what had happened in the consolidation of the office supply business. There were originally thousands of distributors and now look: there are basically eight organizations holding over 70 percent of market share."

From the initial ideas in forming the company, to setting goals and deciding which companies to contact, the group has been able to discuss, decide and act at a moment's notice, according to Nunez.

"We realized that you don't need a space shuttle to go to the corner store. We take the problems and find solutions among ourselves easily and with the idea that distributor priorities have changed drastically. We each have a perspective that adds to the solution we need or the service we look to provide," he says. "This includes us here, internally, and our distributor and supplier partners."

According to Sullivan, one way the group makes its plans work for small and medium distributors is to "make our own information obsolete on a daily basis. That means that we can rethink an idea or add a valuable, new service quickly, when our members ask for it," he says.

IBC has 54 distributor members with a total of 108 locations at this writing, serving 47,000 customers in 38 states, Mexico and the Caribbean. IBC plans to have 100-percent coverage in the United States by the end of 2002.

"Also, we have finalized negotiations with IDI, one of the largest industrial, bearing and power transmission associations in Canada. Partnering with IDI gives us complete national coverage in Canada. Actually, we had a situation where a large national contract necessitated our being able to cover two locations in Canada," Burnham says, which led to the association with IDI.

Early on, the typical distributor joining IBC had about $12 million to $15 million in annual sales, but the demographic is changing to larger gross-revenue companies with several branches.

"The distributor that migrates to IBC today tends to be a multi-location, medium-sized distributor, with about $20 million to $50 million in sales," Burnham says.

The company's growth can be attributed to the team IBC has assembled, Burnham says. Led by Sullivan, Burnham and Nunez, IBC was able to hire Tony Scarpinato, formerly of IdOne, as vice president of member and supplier relations. Scarpinato joined IBC in September, 2000, and has brought it to a new, higher level.

"The relationships he built and his experience with buying and marketing groups have been invaluable," Burnham added.

The distributor-member advisory board for IBC consists of eight distributor partners, according to Chuck Gray, CEO of Machinery & Factory Industrial Supply of Racine, Wis., and chairman of the IBC advisory board.

Machinery & Factory joined in April, after talking for about four months with Fitzpatrick and others at IBC. Several factors weighed in the decision to join, Gray says, including the ability to communicate ideas and new concepts to IBC's top management team.

"They are a relatively new company, of course, and are very open to members' questions and suggestions about what suppliers and services to invest in, including how to work better with customers," Gray says. "The advisory board was created for just that purpose — to bring ideas from our experience and get other members involved in the idea-sharing process."

The ownership at IBC is very available, he notes, and he expects that kind of relationship to last at IBC. His company makes 10 to 12 percent of its purchases from IBC preferred suppliers, he says, and expects that to grow significantly in the coming years.

"In the next year, it's the plan to help IBC members take costs out of their business systems, help vendors streamline their delivery of goods and help distributor members with technology issues. Currently, the advisory board is working on a project to help with an e-commerce solution for national accounts," Gray says.

"Unfortunately, we are all struggling with the economy, but with the help of IBC we see a much brighter future," he says.

IBC works with preferred suppliers. Through these relationships, distributors buy from a few key manufacturers in each product category.

Stanley-Proto Tools is a preferred supplier. According to Tom Hudak, vice president of U.S. industrial sales at Stanley-Proto, IBC is trying hard to meet the challenges of distributor/manufacturer relationships.

"With the challenges like consolidation, we found IBC listened to distributors and communicated well back and forth. They are trying hard to meet distributor needs. They made the choice to take on Stanley-Proto as a preferred supplier, and look to us as an industry leader," Hudak says.

Negotiations went on for about six months and Stanley-Proto became a supplier last summer.

"We authorize distributors location by location, and the Proto brand is sold only through distribution," Hudak says. "If they have a distributor in an area and we need one, we put a member on. The relationship has worked out fine."

Another preferred supplier, Standard Abrasives of Simi Valley, Calif., has been on board with IBC since December of 2000.

"We knew Tony Scarpinato when he was with IdOne and had a very good relationship. When we found their key focus was cutting tools and abrasives, we were interested," says national sales manager Gary Weaver. "IBC is working hard to no longer be a consortium but a marketing group. To me, a consortium asks, 'give me your best price less 10 percent, and that's it.' We don't give any distributors price advantage like that."

IBC, he adds, had signed some of his distributors by the time Standard joined. The fit was natural, since the specialty coated and non-woven abrasives maker needed distributors in key areas that IBC had entered.

"We really appreciate that when they add members, the door is open for us to sell there. We are not an open line, so in some strategic markets we can sell with quality distribution," Weaver says.

His overall plan with IBC includes integrated supply contracts, a specialty of Standard.

"We've hired a director of integration who will work with IBC in the future," he says.

Tools and Metals, a Ft. Worth, Texas-based distributor with three locations joined IBC last July. The cutting tools and integrated supply distributor has branches in El Cajon, Calif. and Stone Mountain, Ga.

"IBC approached me in part because we have had an integrated supply contract with Lockheed-Martin, supplying three of their locations. We've had it for 10 years," says Tools and Metals president Todd Loftis. "We supply their cutting tools, and Dan and Ed wanted to know how we were able to keep it going and renew the contract."

At first, Loftis acknowledges, IBC did not seem to have a lot to offer Tools and Metals, but after several meetings, he decided they were on the right track with national contract integration. He is now an advisory board member for IBC.

"Here are a couple of dynamic guys willing to change their plans if it means long-term benefits for the organization," Loftis adds. "In integration, you have to coordinate adding value for the customer. The number one word in integration is 'entanglement' with the customer, becoming a part of the customer's organization. IBC understands that, for the long haul, the model must be extremely flexible. They continue to ask what works and implement that even if it means taking a step back."

Distributors' plans to buy Internet technology and equipment slowed during the economic downturn, and introduction of e-business at IBC has slowed along with it. According to Burnham, the company will keep pace with the industry while not overburdening itself financially.

Nunez referred back to his comment about the space shuttle and the corner store.

"We spread the cost out over so many people, but most distributors still take small steps toward e-commerce, not big ones," he says.

According to Fitzpatrick, few companies that he recruits are concerned about the e-business capabilities of IBC, at present.

IBC has a Web-based services extranet available to the entire distributor/supplier network, and long-term plans include enhanced Web tools. They include long-distance training programs, a growth and incentive program for suppliers, master product catalogs and an e-catalog for distributors.

"By mid-2003, we'll have an online purchasing system and, as the tech end becomes necessary, we'll add more e-commerce enhancements. We will eventually have a best-in-breed technology when our distributors can achieve a positive ROI," Burnham says.

Obviously, IBC is in their business to make a profit and they do so by charging an annual fee for distributor membership, rebates from manufacturers and transaction fees from national accounts.

"[When we] look back at the two years that have gone by since we started, I think we're further along than we had even hoped. We're in this, at a steady pace, for the long haul," Burnham says.