Do the right things right
Accurate Fasteners' decision to keep re-investing in the business is paying off in sales growth
By Joe Nowlan, Associate Editor -- Industrial Distribution, 4/1/2006
Perhaps no industry has had to place more emphasis on value-added services in recent years than the fastener industry. The potential for products to fall irreversibly into commoditization is an ongoing source of worry. But for some companies, that has proven to be a source of innovation and constant adjustments.
Accurate Fasteners, Inc., headquartered in South Boston, Mass., has been aware of this since its opening in 1940. It finished 2005 with double-digit growth in sales, says its president Peter Sullivan. A consistent philosophy of re-investing into the company has been paying off, he explains.
"[Sales success] didn't just happen by chance," Sullivan says. "It happened because of some things we're doing right.... We're proud of the fact that we've invested in this business on an ongoing basis."
When some companies cut spending, that can carry over to their payrolls, resulting in cuts or hiring freezes. This can save money in the short run, perhaps, but can prove to be shortsighted and counterproductive in the longer run.
By contrast, among the steps that Sullivan and AFI took that paid off last year was to expand its sales force, adding staff to both its inside and outside sales forces. AFI also plans to continue investing heavily in inventory, Sullivan says.
"We're very pleased that initiatives we put in place in 2005 bore fruit," he says. "We have existing customers who are asking us to do more and provide new products and services. Likewise, we have others who are asking us to do more of the same for them. And we have new customers who recognize we can do a lot for them, and they're coming to us."
AFI has a number of value adds it can offer its customers. One example is its vendor managed inventory programs. Many of these programs find AFI, in effect, managing its customer's inventory on an as-needed basis. It's an approach that has proven to be helpful and profitable regardless of the size of the customer, Sullivan explains.
"We're very comfortable putting into place vendor-managed inventory programs with Fortune 500 companies who come to us with sophisticated systems in place... and we provide them with a better set of services," he says. "And we're also comfortable going to [smaller] people who have heard about the concept and want to know if it can help them."
The company's catalogue can be viewed online. Like many such companies, though, AFI sells only a small percentage via the Web. Sullivan says he is comfortable with this reality.
"Our target market prefers to have a solutions approach rather than a pure price and delivery approach," Sullivan says. "The business here is not built on online inquiries. It's really built on a personal approach and on a systems approach."
He describes AFI's approach as a "do the right things" philosophy.
"You've got to do the right things, the critical things that keep a production line going," Sullivan says. "And then do the right things right. That comes down to excellence and execution. And we pride ourselves on our ability to execute well."
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