From Index Cards to PDFs

Two companies have increased their success by listening to the next generation's technology advice

By Joe Nowlan, Associate Editor -- Industrial Distribution, 12/1/2005

It's part of human nature, perhaps, to resist change—especially if a change seems contrary to what has been working well all along.

Successful business owners who might frequently change their model of car or favorite flavor of Ben & Jerry's can, in a professional context, hear alarms go off when someone suggests a change from, "the way we've always done it."

Two family-founded and family-run distributorships have both gone through periods like this.

Matis, Inc. is headquartered in Chicago. Founded 50 years ago by Joseph Matis, it is a specialty tool and die supply company.

Century Tools and Machinery, Ltd. is a specialized distributor of tooling components, drill jig bushings, toggle clamps and hoists, located in Mississauga, Ontario. It was founded in 1981 by Mark and Caroline Watson.

While the companies' founders may not have crossed paths, you get the feeling they'd have a lot in common.

Joseph Matis was a tool and die maker. He worked in various sales positions before going into tool and die sales for a Chicago-based company.

Fifty years ago, that company decided to move out of Chicago, leaving several of its customers without a tool and die source. Matis and his wife, Dorothy, decided "we would try it on our own," she recalls. "[Initially], we ran things out of our own home. One of his favorite sayings was that he had a car, a catalogue and high hopes."

"He basically became a distributor, as opposed to a direct salesman," explains his son, Dan. Currently the company president, he has worked at Matis "since about the eighth grade!" he says.

Working hard and helping your customers was what passed for the "cutting edge" approach nearly 50 years ago—and it worked for Matis, which continued to grow and prosper through the years.

But as the company grew, adding more customers annually, paperwork began to pile up. In addition, proper filing and simply keeping up with inventory levels and purchasing became more of a challenge than ever.

You could call it a younger generation's perspective, but as Dan Matis began working full-time at the company, he started to pick up on certain industry tendencies in his business travels. He would attend the various trade shows and meet and compare notes with distributor attendees. The ones who were succeeding, he found, were computerized (or in the process of becoming computerized). They were developing definite advantages through the technology, Matis says.

"To be successful as a supply company, you need to do a large volume with small transactions—essentially, to be a good traffic cop and be very well organized," he says. "The old way, prior to computerization, was to just add personnel to handle multiple tasks. But you needed high margins to carry those payrolls. So as the computer came into play, and became affordable for a smaller player, it obviously became the way to go."

Dorothy Matis also knew a good idea when she saw one—even if she herself did not immediately become a full fledged "techie."

"I was all for it. I certainly saw how important it is," says Dorothy.

Another technological innovation that Matis has come to rely on in recent years has been CAD—Computer Assisted Design. A graphics software program, CAD can create blueprints faster and more accurately than ever before, Matis says. Many in the Matis customer base are involved with tooling and work from blueprints, he explains. Others are manufacturers involved in metal stamping or a plastic-injecting molding process where precision is essential and the margin for error can be non-existent.

When Joseph Matis founded his company, blueprints were designed and drawn on flat boards, using rulers and slide rules. Those days have long since passed. CAD introduced an entirely new tool, a "design language" all its own, as Matis describes it.

"CAD is the Rosetta Stone that unlocks the hieroglyphics," he says. "And it is incumbent on me to know that language. I need to know how to read the CAD files in order to know what the customer will want," he says.

In turn, Matis adds, "our customers can use this design language to automate their own people as well."

Blueprint drawings can be sent anywhere with the speed of an e-mail attachment, enabling Matis and its customers to keep one another updated on changes and the resulting need for new or additional parts.

Given its success in minimizing errors in intricate designs, CAD has also become vital as companies such as Matis look to do more business in foreign countries, making it more feasible to "deal with a lesser skilled labor base overseas," Matis explains.

North of the border, Mark Watson and his wife Caroline started Century Tools in 1981. They, too, benefited from hard work and customer loyalty and saw the business grow—as did Century's paper work, filing, purchasing and inventory demands.

Their son, Steve, spent much of his spare time around the company while growing up, and worked there for a number of years while attending school. He started working full-time at Century in 1995. Today, he and his two sisters (Shannon Watson Fotheringham, inside sales, and Sheri Watson Arnold, receptionist) have joined Caroline and Mark at Century.

Back in 1981, and for several years thereafter, everything was done manually, Steve remembers—no surprise for a small business then, but he was able to bring a new technological element to the company.

Looking back, Century co-founder Mark Watson says that he had actually started talking informally about computers with his son "even before he began talking about it with me," he recalls.

As founder of the company, he was wise enough to know that changes (among them technology) were on the horizon for companies such as his. Not to say that he was exactly Bill Gates when it came to the technology itself, he admits—especially when the initial investment in technology amounted to an estimated $100,000, Mark recalls.

"I was from the old school, I guess, and I was a little nervous about it all," he says, laughing a little. "I still don't really use them [computers] on a regular basis."

"It took some convincing in the beginning to make the investment," Steve agrees. "But the cost benefit was certainly there. In the long run for the company, it was going to be beneficial."

Steve cites purchasing and inventory as two areas of Century's business where technology has made life easier and more profitable. In addition, customer relationship management has become more efficient.

"In the past, we really didn't know that much about our customers," Steve says. "Today, we really have the ability to know the frequency of their purchases, for example. There's a lot more we're able to know about them that helps us serve them better in the future."

Century has tripled its business in the past 10 years, Steve adds, due to having brought in the technology and keeping up on advancements and modifications.

"You really have to listen to the youth today," Mark now laughs. "All this technology—it's good stuff."

There's a consistent parallel for Century in that, as they have advanced technologically in their day-to-day running of the company, many of its products have become more sophisticated as well. It has presented another area in which Century has had to adapt technologically, especially in terms of training.

Many of Century's vendors will come in to assist with training, Steve explains, and the company also hosts "lunch and learn" sessions to introduce customers to newer products.

Steve himself has extended his own personal training curve as, in addition to his Century duties, he is pursuing his MBA degree at the Richard Ivey Business School.

"That [MBA] training wasn't always a focus for the people who pioneered this type of business, who were able to draw blood from a stone to get the businesses running way back when," he says.

Matis Inc.'s experience with technology has resulted in comparable success and a more efficient, streamlined business.

"A major factor for us is to be able to allow people to be more productive without leaving their seats," Matis explains.

However, as company president, Matis doesn't kid himself about the limits of technology, regardless of its sophistication. He refers to the Matis e-commerce site as an example.

Because of the specifications and precision required by most of its customers, the Matis Web site, "isn't a true business-to-business Web site, where you can pick and choose," he explains. "A lot of our products are, in fact, engineered, manufactured products. So it's difficult for someone to go down the line and just fill up a shopping cart."

And while technology has greatly helped his company, Matis knows it carries no guarantees for future success—for his company or the industry in general.

"The Tool & Manufacturing Assn. of Chicago is an affiliation of companies. Over the past five years, its membership has shrunk approximately 20 percent," Matis says. Enrollments in that association's apprentice programs has also diminished, he adds.

"In the old tool and die arena in which I grew up, you might be competing with Iowa or Michigan. Now you're competing with the world," he says.

The Matis customer base now includes companies in Mexico, Asia and even Australia. Most are small- to-mid-sized companies, as opposed to a handful of large ones.

"So we're not married to one or two large companies," Dorothy Matis says. "We sell to many, many smaller companies. They keep us going more than the big companies."

For all that technology has replaced and significantly upgraded and improved, there are still some techniques that succeeded when Matis was founded that still work today, she points out.

"Service," she says. "Being here all the time and being friendly with customers. We have a relationship with all our customers through the company. It really works."

Mark Watson and Century agree. He still has customers with whom he has worked on a handshake basis for several years.

"I've still got a lot of handshake relationships," he says. "If you asked me to pull out an agreement with my suppliers, I could maybe pull out two or three. I've been dealing with a lot of suppliers where we don't get that agreement out every year to renew it, so it just rolls over every year. These are people I started with way back in the beginning in 1981."

Steve sums up his own company and its issues by stating a philosophy that might well ring true for most "next generation" distributors.

"We want to be strategic in our thinking for the future. We don't want to get caught by not investing appropriately in technology when it is needed," Watson says. "We want to invest in the right places so we continue to reduce our costs and become more competitive in the marketplace."