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Poised for Growth

Kimball Midwest, an MRO distributor in Columbus, Ohio, has nearly tripled in size since 1995, and is keeping up that momentum, with plans to double sales every five years

By Victoria Fraza Kickham, Managing Editor -- Industrial Distribution, 9/1/2005

In 1983, Kimball Midwest had sales of just $1 million. Twenty years later, annual sales are $67 million and climbing for this Columbus, Ohio-based distributor of MRO supplies. And plans are to double sales in the next five years, quite possibly making them one of INDUSTRIAL DISTRIBUTION'S Big 50 , a list of the largest companies in the industry.

Kimball Midwest reached this milestone through a combination of acquisitions and organic sales growth that began in the early 1980s. The family-owned firm is managed by the McCurdy brothers—Pat, president and CEO; David, vice president and COO; and Chas, vice president of sales. A fourth brother, Ed, is an outside sales rep.

At the heart of this growing company is the brothers' desire to take their father's legacy—a company committed to the idea that a strong sales force and excellent customer service form the foundation of a successful business—and turn it into a powerful force in the distribution industry.

Using their father's sales-focused philosophy, they've built a company that is 100 times larger than when they took over in the late 1970s, and serves customers well beyond its original Ohio borders.

''Our Dad was a salesman with the company, so we saw that if you support [salespeople] and treat them well...good results will follow,'' says David McCurdy, adding that each of the four owners worked in outside sales for Kimball Midwest at some point in their careers.

''We have a great respect for salespeople,'' adds his brother, Chas. ''Our organization is driven around allowing them to become successful with customers.''

The McCurdys' focus on sales is part of what they call their ''two-customer philosophy.'' Quite simply, their first customer is the end user, and their second is the field sales rep.

They carry out this philosophy by motivating salespeople with unlimited earning potential, giving them the tools they need to perform well in the field, and forming a company-wide support network, in which every employee's goal is to support the selling function.

''If it wasn't for [the salespeople], we wouldn't have anything to do,'' explains Curt Campagna, the company's director of marketing. ''That philosophy has been true from the beginning, and it's from the top down. It's something [management] always talks about.''

All new employees are schooled in this two-customer philosophy by one of the four owners during an orientation meeting. And because the focus on sales is made clear from the beginning, everyone understands it, and understands their role in it, Campagna adds.

''It's second nature to us, because it's always been that way,'' he says.

From humble beginnings

The McCurdy brothers took the reins at Midwest Motor Supply, the company their father joined in 1954 as a partner and ultimately purchased, in 1978.

Founded in 1923, Midwest Motor Supply had established itself as a supplier of hardware and other MRO items to the automotive industry. By 1984, the McCurdy brothers had made their first acquisition—The Kimball Co. of Cleveland. The new company became known as Kimball Midwest, and sales hit the $7 million mark by the end of the decade.

In 1992, they purchased Performance Engineered Products of Michigan City, Ind., and sales soon hit $18 million. Sales were at $46 million when they purchased Satellite Industries of Ft. Lauderdale, Fla., in 2002, followed by the purchase of OEC Corp., of Medina, Ohio, in 2003.

Acquisitions account for approximately 12 percent of the company's growth to date, and are a key part of its growth strategy going forward. The brothers plan to finish 2005 with nearly $80 million in sales.

Hand in hand with the sales growth came product line expansion. Shop supplies—cutting tools, abrasives, chemicals and the like— make up the largest portion of Kimball Midwest's inventory at 20 percent, and represent its fastest-growing product segment. Next in line are fasteners, at 18 percent, and fluid flow products, at 17 percent.

Today, Kimball Midwest supplies just about anything a maintenance department needs to keep itself up and running. The company serves customers in the 48 contiguous states from distribution centers in Columbus, Dallas, and Reno, Nev.

That's a far cry from its humble beginnings as a supplier of fasteners and other small consumables to the Ohio automotive industry. To support its growth, Kimball Midwest made two big moves this year. In January, the company moved to a new headquarters building in Columbus, which houses 29,000 square feet of office space and a 200,000-square-foot distribution center. And in May, the firm's Reno distribution center moved to larger quarters—a 40,000-square-foot warehouse that is double the size of its previous space.

Dick Ripley, vice president of sales and marketing for Lake Erie Products, is watching Kimball Midwest's growth with great interest. Lake Erie supplies Kimball Midwest with fasteners, specifically, Grade 5 and Grade 8 cap screws.

''It appears to us that Kimball Midwest is doing something right, because their growth has been a little more profound than their competition's as of late,'' says Ripley, who has worked with the distributor for the last two-and-a-half of its more than 40-year partnership with Lake Erie Products. ''We consider them one of our key customers—a key growth account.''

The two companies work together to support that growth, with Kimball Midwest marketing Lake Erie's products as a premium domestic brand.

''We certainly appreciate any growth we get from Kimball Midwest, and we also appreciate the fact that they promote our product,'' says Ripley. ''We'll do whatever we can to support them. Obviously, as they grow, we do as well.''

Sales is the key

The McCurdys credit much of their recent growth to their outside sales reps, who account for 450 of the firm's 600 employees. The majority of those reps are 100 percent commission-based employees. The unlimited earning potential of that strategy serves as a motivational force, as does the freedom that comes from managing their own territory.

Kimball management does its part to support the field sales reps with good technology, training, and high-quality products, as well as value-added services such as inventory management programs and safety seminars. Kimball sales reps can customize bin-stocking programs—in which inventory is replenished for the customer on a regular basis—to meet virtually every customer's needs. The safety seminars are designed to teach customers about particular products; the goal is to help reduce accidents and injuries, and to ultimately save the customer money.

Having knowledgeable, well-trained sales reps that can provide those kinds of services is one of Kimball Midwest's keys to success, says Western Division sales manager Tom O'Malley.

''The demands on maintenance personnel have never been as great [as they are today],'' O'Malley said during a recent company interview. ''They are working with smaller staffs and increased workloads, and need a partner who is basically a well-informed, unpaid employee handling literally thousands of expendable items.''

O'Malley adds that the support Kimball Midwest provides allowed his team to grow sales by 29 percent in 2004, to the tune of $12 million for Team West, as its known.

That kind of commitment doesn't go unnoticed by upper management. Pat McCurdy says Kimball's reps can stand up to anyone in the industry from a knowledge standpoint. When hiring field sales reps, he says they look for service-minded professionals, preferably with established customer contacts. Product knowledge is a bonus, but if they don't have that, Kimball will train them. The idea is to offer up a well-rounded rep that can service customers' needs, from cost-cutting strategies, to inventory management, to product recommendations.

''We really do it to solve problems at the customers' locations,'' says Pat, referring to the value-added services the company offers. ''And we couple that with what are demonstrably superior products.''

All for one...

While the focus on sales permeates the company, it can best be seen in the distribution centers. Products are picked, placed in bins, and moved along conveyor belts to the shipping department in assembly-line fashion, with the goal of getting all orders out the same day they are received.

The McCurdys say 99.6 percent of orders are shipped same-day, and that their fill rate is 98.5 percent. Ninety percent of orders are shipped via UPS within one to two business days. The mentality in the distribution centers is to get those orders out accurately. In doing so, the employees serve both of their customers; the end users get their orders on time, and field salespeople get paid.

''It's not unusual for employees to stick around at night until every order is out,'' says Chas McCurdy. ''They do it because we want to get every order out. The behavior is, orders are shipped every day, 98.5 percent complete.''

The new Columbus and Reno distribution centers were designed with that in mind. Layout and technology were combined to maximize efficiency, with the goal of reducing warehouse costs by 10 percent to 20 percent. Logically, slow-moving items are at the far end of the warehouse, along with kitting and special services stations, while the most-picked items are located up front, close to the packaging and shipping departments.

The company also upgraded its homegrown computer system to coincide with the moves to the new facilities. RF scanners, hand-held computer order entry systems and wireless technology have all combined to increase accuracy and efficiency.

At the end of the day, everyone's in it together at Kimball Midwest.

Dave McCurdy recalls the December move to the new Columbus facility last year. Knowing how important it is to get each order out every day, employees gave 110 percent to make sure the company didn't miss a beat, he says.

As Dave explains, management wanted to be in the new facility, located just 10 miles from their old building, by the first of the year. The offices were moved ahead of time, but it would be difficult to move the warehouse and distribution center without causing delays in the shipping schedule. To solve the problem, they needed to move the warehouse and distribution center when the company was closed for Christmas—Dec. 24–26.

Employees pulled orders up until the close of business on Dec. 23rd at the old facility—during a snowstorm, no less—and on the 24th and 26th, volunteers worked to move the warehouse and distribution center to the new facility. Columbus orders were transferred to Reno and Dallas on the 27th and 28th, and the new facility was up and running on the 29th.

''We didn't miss a beat,'' Dave McCurdy says.

The McCurdys say that kind of dedication will go a long way toward helping them meet their goal of doubling sales every five years. And though they are proud of their success to date, they say there's still much work to be done.

''We're continuing to develop the team,'' says Chas McCurdy. ''We're pleased with where we are as a company, but we're more enthusiastic about where we can be. I think we've got a lot of work ahead of us.''

Adds his brother, Pat: ''When you have so many great people doing the right things, it really is that next horizon that you're looking at.''

 

Company Snapshot

Kimball Midwest

President: Pat McCurdy

Headquarters: Columbus, Ohio

Founded: 1923

Products: MRO supplies

Territory: Continental U.S.

Employees: 600

Web site: www.kimballmidwest.com

By Victoria Fraza Kickham, victoria.kickham@reedbusiness.com

 

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