Rusty Felton and Chip Wernig have spent the last nine years building on the partnerships they've formed with their suppliers and customers. As a small specialty distributor, that process is vital to their company's success.

Felton is CEO and Wernig is president of Lane Supply Co., a Denver-based distributor of abrasives, tape and adhesives. Felton and Wernig were longtime employees of the company, which was founded in 1955, before purchasing it in 1993. The linchpin in their strategy is not so much that Lane Supply specializes in specific products and focuses on the more technical of those items. Instead, they use overall product knowledge and a close relationship with suppliers as a way of selling expertise to customers in Colorado's manufacturing industry.

"In my 20 years in this business, I've found that knowledge is what makes a company successful," says Felton, who joined Lane Supply in 1982. "Knowledge is paramount in the success of a specialty distributor."

Felton and Wernig gain that knowledge by learning everthing there is to know about their manufacturers' entire product mix. That way, they can recommend a variety of solutions to customers' application problems.

That kind of product knowledge doesn't come easily, however. Lane Supply's 10 employees have over 125 years' experience distributing abrasives, adhesives and related products. In addition to Felton's 20 years, Wernig has been with Lane Supply for 25 years — that's above and beyond the experience the two gained elsewhere. Wernig, for example, is a former employee of 3M, one of Lane Supply's premier vendors today. Felton worked in manufacturing, then briefly in the insurance industry on the East Coast before moving West and joining Lane Supply.

Neither Felton nor Wernig are native to Colorado; each moved here in large part because of the state's active, outdoor lifestyle. And they approach their work with the same sense of adventure and commitment they have to mountain biking and skiing in Colorado's great outdoors. In similar fashion, they welcome the challenges involved in solving customers' problems.

To see how the company's product knowledge makes a difference for Lane Supply and its customers, just talk to Bruce Norman, owner of Desert Glass Works in Colorado Springs. A Lane Supply customer for over eight years, Norman relies on the distributor for continuous improvements to his manufacturing process.

Desert Glass Works supplies quartzware to the semi-conductor, fiber optics and aerospace industries, among others. Felton, who still calls on Desert Glass Works today, paid an initial visit to Norman eight years ago, just as the company was developing a new product line. Felton wanted to know if Lane Supply could help with that task.

As Norman tells it, Felton offered assistance on the spot with an abrasive product Norman and his employees knew little about. The help was invaluable, and to this day Norman credits Lane Supply with having the products he needs and the expertise to make them work for his company.

"They continue to provide that extra bit of technical help," says Norman. "We go to Rusty with a problem and he comes back with a solution. That is ideal — and not often found at a distributorship."

On top of expertise is service. Norman says Lane Supply's availability is another reason he continues to work with the company. Lane Supply's offices are just an hour or so from Desert Glass Works, which allows Felton, as well as other members of the Lane Supply team, to visit the customer regularly.

"Many times, Rusty's walked in the door when we're having a problem, so he's right there to help," says Norman. "The reason we continue to work with them is because of their availability and the expertise they bring. That has been a big, big plus for Desert Glass Works and it keeps the relationship strong."

A major part of the relationship-building process for Lane Supply is selling the concept of "value-added" distribution. This means that distributors, particularly specialty companies like Lane Supply, sell more than just products. They provide knowledge and service that help customers do three key things: save time, money and build a better product.

Selling value is not new for Lane Supply. As a specialty distributor, the company has always positioned itself as a provider of service and knowledge to the local marketplace. What is new is that Lane Supply now puts a name to its market strategy and is proving to customers that it delivers on its promises.

"We've been talking value added for years," explains Wernig. "But only in the last year and a half have we been trying to enhance value added."

Lane Supply does that by documenting for customers the improvements and cost-savings it's helped them achieve. This industry trend is catching on, especially as distributors try to build business in response to the economic slowdown of the last two years.

Documenting value-added services is not as daunting a task as some small companies might think, says Wernig. Lane Supply's outside salespeople produce a simple report for customers describing how a new product or application has saved time, money and/or labor costs. In addition to Wernig and Felton, Lane Supply has two other outside salespeople, each of whom has developed his own value-added reporting system. A simple spreadsheet detailing the price, costs and benefits of one product versus another is often enough to do the trick.

Of course, getting sellers to buy into the reporting system can be a challenge. The last thing most salespeople want to deal with is another piece of paper, says Wernig. Allowing them to come up with their own process can make a difference, he adds. The other difficulty is that some customers embrace value-added documentation and others simply aren't interested.

"It isn't something you're going to take out to every customer," says Felton. "What we're trying to do is, with key customers, show value add and talk value add ... We want to prove that we're going to do what we say we're going to do."

Dave Meil, purchasing manager at Reynolds Polymer in Grand Junction, Colo., says Lane Supply is doing just that. He credits Lane with reinventing his company's manufacturing system by constantly introducing new products that can do the job better. Reynolds Polymer manufactures aquarium tanks — the kind you'd see at Sea World or other large aquariums in cities across the country. Meil says Wernig, his sales rep, presents on paper the projected cost savings a new product or application will bring based on current labor estimates.

"It makes my job a whole lot easier," says Meil, pointing to the savings Wernig's helped him achieve. "They really are the benchmarks. I try to take some of the elements they've presented for us and show it to other suppliers to try to get them to follow the same suit."

Felton and Wernig are quick to point out that the partnerships they've developed with customers don't exist in a vacuum. Without partnerships on the other side of the supply chain, their strategy simply wouldn't work. That's why the two work closely with their manufacturers to stay up-to-date on new products or product enhancements, marketing programs and logistics issues. The goal is to get the right product to the right customer at the right time.

"I would characterize Lane Supply as a very valuable, state-of-the-art, leading-edge, specialized 3M distributor," says Chris Makres, national sales manager for 3M's abrasives systems division.

Lane Supply gets behind 3M's marketing programs and works with the manufacturer to streamline logistics so that products get where they're going as efficiently and effectively as possible, says Makres. The latter effort is due in part to Lane Supply's technology prowess. From customer service to the warehouse, Lane Supply uses technology to streamline business. That's one reason the 10-employee company can generate $4.5 million in sales each year.

Makres also points to product knowledge, which he says is enhanced by Felton and Wernig's commitment to working in the field.

"I think the advantage of that is, they have a better handle on what their customers' needs are," says Makres. "Rather than reading about a product in a marketing bulletin, they're out there actually seeing how the product or system performs in the field, with the end user."

Bill Lehman, a retired regional manager for 3M, agrees. He says Lane Supply's ability to develop partnerships with customers helps enhance its relationships with suppliers.

"From my perspective, you want a highly effective organization that really listens to the customer and partners with them," says Lehman. "That way, they can really be an effective industrial partner for us ... because it's not only their customer, it's our customer, too."

While Felton and Wernig have always made a point of partnering with suppliers and customers, they haven't always applied the same principles internally. That all changed five years ago, when they implemented an open-book management policy and made other improvements to human resources and administrative practices at the company.

In the first few years following their purchase of Lane Supply, Felton and Wernig say things went along pretty well. Then they hit a wall, as Felton explains. While the company was doing well financially, many things could have been better — profitability, morale, employee retention. The two owners discovered that while they were good at sales and marketing, they weren't so well-versed in the intricacies of running a small business.

"Big changes occur when employees become owners," says Felton. "For some reason, we couldn't click and we just couldn't figure it out."

Personality conflicts weren't dealt with effectively and poor internal communication caused rifts and confusion among the staff. So, Felton and Wernig hired a consultant to improve the situation. The first step was an all-employee weekend retreat at a resort in the Rockies where grievances were aired and plans were put in place to make things better. The prime goals were to improve communication and employee retention, and share some of the company's financial information so that employees would have more of a stake in the business.

Five years later, Lane Supply is a different place. Employee retention has improved, for one thing. The average employee tenure at Lane Supply (excluding Wernig and Felton) is seven and-a-half years, much higher than it was in 1997, the owners say.

In addition, a profit-sharing plan is now in place. At the end of each year, a portion of the company's profits are divided equally among the staff. Employees are able to monitor the progress of their yearly bonus at weekly meetings where profitability is discussed. This open-book management policy has made a tremendous difference in both morale and company performance, says Wernig.

"What's happening is, employees look for better, more effective ways to do business," he explains, adding that each employee has come up with a way to help lower the company's expenses in the last few years in an effort to maximize profits. "This gives everybody ownership in the company."

The benefits of those changes haven't gone unnoticed by Lane Supply's trading partners. Lehman says he admires Wernig and Felton for, first, admitting that they needed improvement and, second, for acting on that realization. In the end, he adds, an informed employee is a better employee and that bodes well for the company and its trading partners.

"When [employees] understand what makes the organization tick ... it sets the stage for universal appeal in the marketplace," says Lehman. "From a supplier standpoint, it really provides you with quality distribution — distribution that's not just here today, gone tomorrow."

Felton and Wernig have no intention of being gone tomorrow. They want to continue Lane Supply Co.'s 47-year tradition well into the future.

"Twenty years from now, we still want to be in business," Felton says, adding that Lane Supply's ultimate goal can be stated quite simply: "We want to have the best single-location company in the Rocky Mountain area."