In an area an hour north of Chicago, an architecturally impressive building has a view that takes in a forest preserve. On a good day, locals say, a hawk or two flies overhead and the occasional deer can be seen.

The kitchen area includes a long conference-dining table which, when uncovered, turns out to be a snooker table. A couple of pinball machines are nearby, while the patio area is ideal for warm weather dining and relaxing.

Michael Jordan's old house? The latest spa to open in the Great Lakes area? Actually, it's where retaining rings are found.

Prospect Fastener Corp., started in 1982, has been in this Wauconda, Ill., location since 1998. Prospect is a distributor of fasteners and related products, with retaining rings a special point of emphasis.

Company president Richard Pratt calls 2004 "our best year overall." Pratt's wife, Marie (with whom he founded the company) is Prospect's operations manager. Their son Ryan is vice president of operations, and Richard, Jr., is vice president of quality assurance.

Part of the reason for the successful 2004 is that much of their customer base deals in heavy equipment. Caterpillar, for instance, is among their bigger customers. In addition to benefiting from the housing boom and construction market in the United States, Caterpillar has been doing more and more business in China. By extension, so has Prospect.

"The Caterpillars are very strong now, internationally. China, in particular, is a remarkable market," Pratt says. "What we're seeing is a company like a Caterpillar going in there [China] and building roads. They have a lot of infrastructure to do over there. Then other companies come in as construction continues."

Another large company with which Prospect deals is Joy Global Mining. They are thriving, Pratt explains, because of the untapped natural resources to be found in China.

"China's the big player," he says, but emphasizes that "everything we supply and sell is made in the U.S. We don't import product."

Prospect made its first direct shipment to China in 2004, Pratt explains, and expects to make several more. Pratt describes the process as "quite an education."

"Your pallets have to be treated with pesticides before they're allowed into their country," he says. "They have a lot of strict rules, which...was an interesting experience. It used to be you didn't want to deal with China, because of [their] quality issues," he says. "But that's changing.... And, of course, they are consuming a tremendous amount."

Rings, rings and more rings. Retaining rings. Bevel rings. Wedding rings. (Well, maybe not quite yet.) They are parts without which the Caterpillars and Joys of the world could not function, let alone profit. And many of Prospect's best-selling items are made of steel—in many cases, top-quality steel which is harder to get and certainly more expensive to buy these days.

While that may seem like a potential corner to cut, Prospect and many of its customers have not taken that step, Pratt explains. Certain types of parts—retaining rings, for example—need to be made from "a better grade of material. It cannot be the lowest grade [steel], because those rings need to be heat treated," Pratt says.

He adds that Prospect has cut ties in the past to some manufacturers who substitute a lesser quality steel. Still, steel price increases get handed down from manufacturer to distributor to customer.

"But our larger customers have been very realistic" about the steel situation and impact, Pratt says. He thinks another round of price increases is inevitable, though, explaining that "the [steel] surcharge is too hard to manage. So we'll see more increases."

Like many distributors, Prospect knows that at least some of its products are viewed as commodities by customers. Along with staying the course in terms of steel-quality, it is an issue that Prospect has faced head on in other ways. One of them is the series of customized assortment kits that Prospect customers, as well as manufacturers, can take advantage of.

From a customer's perspective, the assortment kit can help them economically as well as make life easier for their repair staff, for example.

Each Prospect assortment kit—which at first glance might resemble a fisherman's tackle box—has 18 compartments with a different part in each. The repairman will typically have a few frequently used favorites, with the others being needed only occasionally. When the more frequently used items run low, customers can buy a new kit or purchase only those most commonly used items to refill the individual compartments. Won't repairmen get "stuck" with too many items to buy? Not necessarily, says Pratt.

"A repairman working a motor, for example, often won't know what he'll need until he gets that motor apart," Pratt explains, "and to have that assortment handy is invaluable to them."

But if, for example, two or three specific ring sizes are the more frequently used, a company's re-order can consist of mostly those. Replacement packs typically have anywhere from 25 to 100 rings in a pack, depending on the size. It's not unusual that a customer will need those replacement rings quickly, so when an order comes in to Prospect, they have to move fast to keep their pledge of shipping within 24 hours.

"The busier we get, the more of a challenge that gets to be," says Pratt, "but that's a nice problem to have."

And when those rings are delivered, they often feature the manufacturer's label more prominently displayed on the package than Prospect's, the distributor giving "top billing" to the manufacturer.

"We'll package products with their part numbers and labels and that's a big advantage for them," Pratt explains. "We're promoting the product and that includes the manufacturer."

Manufacturers such as Rotor Clip appreciate this custom labeling and packaging of its products.

"They offer solutions," says Craig Slass, vice president of sales at Rotor Clip, based in Somerset, New Jersey. "Their approach is to never give the customer a difficult time. That's the beauty of those guys."

Slass is also impressed by the way Prospect puts customers and manufacturers ahead of themselves and counts Rotor Clip among those who benefit from the assortment kits and custom labeling features.

"[Prospect] is not at all worried about losing their branding," Slass says.

"We're glad to work with the manufacturers we have," Pratt explains. "They're the tops in their industry. So I'm happy to say I sell a Rotor Clip product, for instance, or a KMC product [among others]. People know those names and recognize them. So we promote the manufacturer as well as ourselves"

Pratt says he realizes that services such as the assortment kits and labeling—and being able to offer other "solutions"—are a marketplace necessity. Among the reasons for this is that many manufacturers and customers have fewer employees than even a few years ago. These companies have reduced the size of their in-house inspection teams, for example, an important responsibility that Prospect offers to handle for them.

"Well, it's part of our success that we do that. A buyer, who handles thousand of different part numbers, may not know the difference between a retaining ring and a bolt," Pratt points out. "Now he'd love to learn, but he doesn't have the time to learn. So he'll give us a list, tell us 'these are the products I need,' and it's pretty much up to us to give them the right product."

Purchasing departments, too, are smaller than ever, Pratt explains, consisting of "maybe a couple of guys with computers.... It's all part numbers, and once you have a contract, the computer usually does all the work."

Such service and, when needed, 24-hour delivery, require a fairly large, onsite warehouse inventory. Literally and figuratively, it results in a price that Prospect has to pay—but there are benefits to be reaped from doing so.

"We keep the inventory [large]," Pratt explains, taking a visitor around the facility. "Obviously, we'd love to go with no inventory, get the product in and just ship it. But we couldn't service our accounts like that. If we're going to tell someone we'll ship in 24 hours, we have to have that product here. We can't be having it flown in. So there are significant dollars sitting on those shelves."

Thus, a walk through Prospect's Wauconda warehouse finds dozens of shelves in dozens of rows of storage, all marked clearly and in an immaculately clean facility. The Prospect warehouse has three departments: shipping, receiving and packaging. Each department has a manager, but each of these managers can do the other's work. So if someone's on vacation, the other can step in and it's still business as usual.

"If one or two take a day off or a vacation, we don't miss a beat," Pratt says. "The idea is the cross training.... So everyone can seamlessly step in to another job. That's the real key."

Many of these warehouse employees have been with Prospect for several years, he points out.

"Well, the kind of work we do, it's not glamorous," Pratt laughs. "Yet it's important and needs to be done. So when everyone takes pride in what they do, it's a nice situation [to] find the right people who, today, aren't afraid to get their hands dirty. But we've had good success with that. Most of our employees are with us 10 years or more."

Tom Hubert, assistant buyer at Caterpillar, says he buys retaining rings from Prospect, rings that go into the heavy equipment that Caterpillar makes as well as "the injectors that go into the engines, the track roller assembly ... you name it."

Hubert, who is based in Mossville, Ill., estimates he has worked with Prospect for about five years, and the relationship "is going very well." He praises the "excellent delivery" service they provide Caterpillar, adding that "they are very responsive and customer conscientious."

Prospect is involved with the Rotor Express program as Rotor Clip's Midwest partner. The program partners Rotor Clip with select distributors who are familiar with their products and enables that distributor to provide customers with much the same service the customer would get when dealing directly with Rotor Clip.

"Each area has a specialty," Slass says, "with the Midwest having more agriculture [customers]. We'll cater specialties to each partner. And [they] have done an outstanding job. Prospect drives us and we drive them to the solution, and we come up with it together."

For all the technological innovations and modifications that a distributor has to deal with, though, Pratt knows that success still comes down to people and the relationships that result.

"We've limited our supplier base to the good relationships, so when we do need a favor, they're likely to do it if they can... We don't ask them to do the impossible—except maybe once in a while," he laughs.

"Great relationships [are] built over time. You don't just talk your way into that."