Every industrial distributor emphasizes their commitment to customer service. They essentially have to. With so many distributors selling the same products, service tends to be the modern differentiator.
But it’s one thing to talk service, and another to live by it. For the folks at B&F Fastener Supply, that commitment to the customer was put in place when it was founded in 1988, offering free delivery starting on day one, and has only grown stronger with the company’s array of services and expertise.
Headquartered roughly 25 miles north of Minneapolis in Ramsey, MN, privately-owned B&F Fastener Supply has evolved from sales of $4 million to $5 million in the early 1990’s to more than $34 million in 2016, with an equally expanding Midwestern presence. Along the way, it certainly hasn’t lost sight of what has made it a success in the first place. The company’s message, “Take care of the customer and the rest will take care of itself,” has been the same since B&F’s inception.
“That’s the attitude of everyone on our management team and the model that’s rolled out to our branches,” says B&F Fastener Supply CEO Loren O’Brien. “To this day that’s what we live by.”
O’Brien and Steve Johnson — both formerly Fastenal employees — founded B&F in 1988. Johnson unexpectedly passed away a few years later at the age of 36, leaving a 31-year-old O’Brien suddenly in complete control of the company. With about a dozen employees at the time, including three current executives — B&F rallied from the experience behind that service message and soon began the company’s longstanding growth and expansion.
B&F opened its second branch in Duluth, MN in 1994 and a machine shop in Ramsey a year later. It opened four branches during the economic downturn of 2008-2009. In the 22-year stretch from 1994-2016, B&F opened 14 branches and expanded to the six-state area of Minnesota, Iowa, Wisconsin, North Dakota, South Dakota and most recently to Nebraska last June.
With so many distributors emphasizing service, what sets B&F apart? In a word: customization. The company’s customized packaging and kitting division greatly reduces the process of packaging hardware. In addition, B&F’s years of expertise helps customers drive down costs with a tailored operations plan, while the company’s machining and manufacturing facility can produce a wide range of custom components.
B&F recently re-marketed its vendor-managed-inventory program as BFIRST, which stands for B&F Inventory Replenishment Service Team. Customized to fit individual customer needs, VMI is an area the company has increased its focus on, while also researching additional areas to expand its capabilities.
“We continue to expand all three (custom services) all the time and make significant investments into each,” says B&F Executive Vice President Todd Boone. “We go to market aggressively with all three and pretty equally, just to give the customer a one-stop-shop. We’re always looking for ways to improve them.”
B&F’s most well-known service is also its simplest and first — free delivery. While many distributors outsource their delivery with third-party-logistics (3PLs), B&F customers receive their orders from a B&F employee in one of the company’s 92 logo emblazoned vehicles. Those vehicles traverse about 9,000 miles per day. Having its own delivery fleet — which has grown by 30 trucks since 2012 — gives B&F complete control of the process and a considerable flexibility advantage over its 3PL-using competitors.
“Countless times over the year we’ll hear success stories of our branches where a driver will come up to Ramsey to pick up parts for a customer down in Sioux Falls over a weekend. You’re not going to get a delivery service that’s able to do that,” O’Brien says. “Our executive employees will jump in a truck if they have to.”
Each truck also serves as a moving billboard for the company across its six states.
“We feel it’s a key component to our success. Our fleet is a huge part of our advertising,” Boone says.
B&F has opened 10 branches in the last eight years and made an acquisition, and has no plans to slow down. Vice President of Procurement Nicole Baltes — one of O’Brien’s two daughters in the company — says B&F hopes to open one or two more branches in 2017 and looks to expand its market further into Nebraska and Wisconsin.
“Branch expansion is definitely a focal point for us,” Baltes says. “One of the benefits of being privately owned is that we can be more flexible. If opportunities arise, we’re not afraid to jump on them.
“Service will always be our No. 1 priority. We ensure that by empowering our branch managers to make decisions on a daily basis to make sure customers are taken care of.”
That sentiment of empowerment is echoed by B&F’s Vice President of Product Development Bob Bridgeman.
“Loren does a great job of pointing us in a direction and allowing us to man the oars and do the rowing,” Bridgeman says. “We make mistakes. We have wins and losses, but ultimately we feel we’re empowered enough to make those decisions and that’s crucial.”
On the digital front, B&F launched a revamped website in January and has begun analyzing web traffic to determine whether to pursue an e-commerce offering.
While many large distributors have seen a downturn in sales over the past two years due to weakened industrial product demand, O’Brien said B&F hasn’t felt the impact that its larger competitors have. B&F’s sales were $24.2 million in 2012, rose to an even $32 million in 2015 and gained nearly eight percent more in 2016. Meanwhile, headcount has grown from 150 in 2012 to more than 200 current employees.
“It’s really been phenomenal,” says B&F Vice President of Sales Ryan Shaw. “It’s been a great ride here over the last four years, for sure. We’ve found that our way, our B&F recipe, works. As a service-based company, we’re people-connected, and that’s not just cliché. We’ve added key personnel over the past four years who have been crucial to our growth.”
When hiring externally, the company looks for a cultural fit over experience — a common theme among the industry when searching for millennial talent — but the company is largely home-grown. Each of its executive members started in a different position than they currently hold. Along with O’Brien’s leadership since B&F’s founding, Bridgeman has been there for 27 years; Boone and Controller Michele Kruchten have each been there for 26 years, while Shaw and Baltes each are eight-year veterans. Just about half the entire B&F staff have been there for at least five years, a remarkable stat given the company’s rate of expansion.
“We develop internally first and foremost. That’s crucial,” Shaw says. “That’s really allowed us to know the business from the ground up. We’re able to relate with our people at every level.”
The biggest challenge B&F Fastener Supply faced was in its early days, when Johnson’s passing suddenly left O’Brien to take over sole control of the company at 31 years old.
“Business-wise, nothing really compares to what happened personally that day,” O’Brien recounts. “When I took on that responsibility after he passed it was like, ‘Wow, everyone is looking at me. I better get this right.’ We just kept moving forward. Since that day, we’ve all been along for the ride.”
O’Brien and B&F also learned from that experience and applied it to an eight-year succession plan that will result in Baltes eventually taking over as company president. Minneapolis Inside Sales Manager JJ O’Brien — Loren’s son — will move up into a corporate position at the Ramsey headquarters, while Marketing Director Aryn Young — another of Loren’s three daughters — is content with maintaining her position.
“I don’t think a lot of companies think about what’s going to happen when retirement comes around. I was fortunate enough to start thinking about it early enough to create a transition that’s going to be comfortable for everybody,” O’Brien says. “If the children wouldn’t have bought in to the idea when we started it, we would eventually be owned by an equity firm or competitor.”
O’Brien said the plan also wouldn’t have happened unless the rest of the executive team bought in as well, as they are training Nicole and JJ as much as O’Brien is. It was also important to let all the children make the choice for themselves.
“From the family perspective, we weren’t pressured to be active in the business,” Baltes says. “They were decisions we made. I want to do this, and I think that makes it more accepted by everybody. The upper management team has been stellar.”
O’Brien says that Baltes and JJ wouldn’t move up if he wasn’t confident they could take care of customers, and that their process of earning the respect of all B&F employees is ongoing.
“It’s important that the employees know nothing was handed to us,” JJ O’Brien says. “We’ve worked our way up. We all started in the warehouse and worked up through multiple positions to where we’re at today.”
Boone says that O’Brien’s transparency about the succession with the rest of the executive team and the company as a whole has made the process an easy one, and added that Baltes and JJ haven’t shown any sense of entitlement.
“The transparency creates a sense of stability. Our employees aren’t worried that we’re going to get bought or have major shakeups,” Baltes says. “They know we’re in this for the long run.”