"For the last three years, customers have asked distributors to do three things to get and keep their business," said Chuck Connors, president of Worcester, Mass.-based Omni Services, Inc. "Do more with less, take liability out of the customers' hands in products like hoses, and manage inventory inside and out of the plant."

Omni answered the challenge by reinforcing its premier distributor status in the eyes of suppliers and customers alike. Premier status means being the hose and fittings distributor that comes to mind, for both customers and suppliers, when needs or problems arise, he said.

"We show the supplier we are progressive and can take over business segments like calibration, repair, stocking requirements and especially technical involvement," Connors said.

In order to fulfill those tasks, Omni has reinforced its front-counter sales support, MRO support and particularly its OEM support. Using sophisticated customer resource management programs, Omni has increased its OEM business substantially, Connors said.

"Our balanced diet – OEM, counter and repair, and MRO – has remained solid because every person in the sales chain works at the basics of the business," he said.

Joe Thompson, executive director of the National Assn. of Hose and Accessories Distributors, said that members told him they have to balance diversity with maintaining their core business activities.

"Our typical member is a small-to-medium business, so they cannot overextend," Thompson said. "They generally have niche markets with specific applications, and they need to start charging for services and functions that they perform, because they perform them better than anyone else."

Thompson says small distributors need big-market technology tools like the Internet. Associations are trying to provide sales tools to help them grow in OEM and MRO markets.

Will Stewart, president of Minnesota Flexible Corp. in St. Paul, Minn., sells MRO products in the upper Midwest, and OEM products throughout the country. By staying focused on its specialties, mainly OEM hose assemblies for machinery builders, and staying tightly to budget, MFC's sales are up about 10 percent over 2001.

"OEM sales are better as a whole, but does that mean customers are making more machines? That's hard to say," Stewart said. "We are making the most of every opportunity to sell an innovative product to our current customers."

According to Stewart, competitors are trying to take some of his business through price, and MFC has to prove it is the leading distributor through innovation, and a focus on product knowledge and customer service.