Value-Added Award: Materials Handling Equipment Company

Before 1952, material handling in Colorado involved mostly hand trucks and casters. Fifty years later it's a different story with Materials Handling Equipment Company (MHECO) as one of its primary authors.

Each year the editors of Material Handling Management solicit names of Material Handling Equipment Distributors Association (MHEDA) members who demonstrate exceptional skill in adding value to clients’ businesses. We review the list of candidates and select one company we feel best exemplifies the term value-added. This year we've expanded that definition to honor a company and its president who has added value beyond its clients to the material handling industry in general. This year's winner is Materials Handling Equipment Company, Denver, Colorado.

The external appearance of the former truck terminal housing this company belies the forward thinking going on inside. Located near the heart of downtown Denver, almost in the shadow of the city’s new professional football stadium, MHECO has been serving the material handling needs of Colorado and beyond for more than 50 years. Since 1991, Gary Moore, then a 15-year veteran of the company, has been its president. In 1997, he purchased the company from brothers Jack and Bob Patten.

The Pattens started the company following World War II. They became pioneers in material handling with equipment like the industry’s first automated, storage and retrieval system. Typical of businesses in the West, MHECO has survived boom and bust years to become a robust distributorship offering more than 100 lines of equipment, with more than 120 employees, housed in more than 60,000 square feet of warehouse, office and shop space. It also has sales and service operations throughout the state of Colorado including a fleet of service technicians on call to maintain lift trucks, loading docks, overhead doors, hoists and conveyors.

Moore, who met the Patten brothers when he was calling on them as a representative of a line of lift trucks, had no idea in 1976 when he accepted a job as sales manager, that he’d one day own the company. With his typical humorous style, Moore says, "I told the Pattens I’d give the job three years. I figured the first year I'd screw everything up. In the second I'd get it back to normal, and by the third I should know if we could make a go of it."

Admitting that he was partially right in that prediction, Moore says some of the management decisions they made in those early days were good ones. "We opted to stay a full-line distributor of material handling industry, not offer just a part of it." They foresaw the material handling business as something more than lift trucks and conveyors.

Another good choice they made was to create specialization within the sales force rather than have all the salesmen sell everything.

While 10 years ago the term "value added" was not used as commonly as it is today, Moore says the thing the company really focused on then (as now) was the customer. This resulted in their Customer Service Commitment. Along the way Moore also created a customer-focused sales model he calls Objective-Based Selling. While this program is designed to ultimately bring more sales to the distributorship it does this by garnering benefits for the customer.

Moore says Objective-Based Selling evolved from his desire to take to the customer a common sales approach by the sales people from his various divisions. "I wanted everyone in the company to have a common voice," he says. This first required defining the sales characteristics of the material handling industry. These characteristics include multiple decision influencers and purchase decisions often made when the salesperson is not in the room.

Although it might seem like a blinding flash of the obvious, Moore says the primary focus of the sales process has to be the customer. That’s who is spending the money! "You have to let the customers tell you how to sell them, is my basic concept," says Moore. "And you have to learn how to deal with the customer, which means you deal the way the customer wants to deal!"

Adding value — and Moore

The sales program Moore created has added value to companies beyond MHECO and its customers. He has been asked to present how-to-do-it programs numerous times at MHEDA conferences, to equipment manufacturers and to other distributorships around the country. This spring he made marketing and sales presentations at the University of Industrial Distribution associated with the University of Alabama at Birmingham.

Moore says, "I teach some aspect of the sales program every month to our sales staff." Moore takes a light-hearted approach to the subject, but he is dead serious about the importance of the process. "Last month at our meeting I gave the staff a quiz with $5 for every correct answer," he says. "Then we focused on the weaker points."

Moore says part of the value his staff adds to the customer is in the "why" as well as the "what" in the overall sales process. "We go beyond simply making quotes on equipment," he says. "I don't think that approach [quoting just what the customer asks for] is in the customer's best interest. Our program adds value because it forces our customers — those who allow us — to help bring order to their buying processes."

Objective Based Selling helps the person making a buy identify key objectives and parameters for the purchase. Part of the program includes written sales proposals the person making the buying decision can take to others within the company to fortify the needs for the expenditure. "It's a document that adds value to their business," explains, Moore, "because it's more than just a quote on a new piece of equipment."

He says that his sales people add value to the customer because they know enough about the customer’s business to make meaningful recommendations. "And by proposing an alternative to the customer in most situations, we force them to really think about what’s right for them."

Customer service commitment

Working with an outside consultant, MHECO's management team developed a program to determine key customer expectations of material handling equipment distributors. "We've gone on to build our customer service commitment around these key customer expectations," he says. "The real meaning of these expectations go beyond the obvious." One example is the expectation of customers for our people to be knowledgeable.

He explains that "customers expect MHECO people to not only be knowledgeable about our equipment and service, but more importantly be knowledgeable about the customer’s business." Moore says one of his favorite key customer expectations is integrity. “If integrity means 'doing what you said you were going to do,' that's not a high enough standard. Our standard is doing not only what we say we’re going to do, but also what our customer understands we said we were going to do."

The most recent addition to the list of customer expectations, says Moore, is the word friendly. "We learned that our customers wanted us to be friendly. And friendly means more than having fun. It means the customer wants easy access to key people within our organization."

MHECO's customer service commitment, based on findings from customers' feedback cards, focus groups and interviews is integrated with Objective-Based Selling, says Moore to offer real "value added" for its customer.

Adding value from the inside, out

Obviously, Moore bases much of how he runs his business on what his customers want. "We determine what the customer expects," says Moore, "and if we all want to keep our jobs and do well, we better do what the customer expects. We [company management] know what we're trying to accomplish and we try to communicate that to our employees. Then we let people do their jobs." "We run the business by the customer," says Moore. "That's different than saying, 'We have this policy manual and it's how we run the business.'"

He adds that past business is no guarantee of even another day of success. "We’re in a low-profile industry, yet it takes highly skilled people to really do a good job."

Moore is well aware of the distributor's role as a middleman. "Relationships [with equipment manufacturers] don't just happen," he says. "You have to manage and nurture those relationships. First, you have to know who your customers are and which suppliers are going serve them best. It's customer-focus, first."

He adds that while he has to do business the way his customers want to do business, a challenge is finding suppliers willing do business the way customers want to do business.

As an example of the way suppliers add value to his business, Moore cites on-time delivery. "On-time delivery is one of the key things our customers want and expect," he says. "So, we might have to pay a little more to work with a supplier who is consistently on time."

He also looks for suppliers who are good at problem solving because, in the real world, new equipment does not always work, right out of the box. He does not use a formal supplier rating system. Each year he and his managers talk about MHECO's key suppliers and how those suppliers do in areas such as problem responsiveness, delivery, initial quality of the product, how they help the distributorship in marketing, and other factors.

Moore, who has served as president of MHEDA, has long advocated closer ties with other, related industry associations as a way of adding value to not only individual companies, but to the industry in general. Of major concern is where future technicians and skilled salespeople will come from.

He says effective action should be taken jointly by the three key industry associations — MHEDA, Material Handling Industry of America (MHIA) and the Industrial Truck Association (ITA). "This should include a concerted effort or program to create visibility for the material handling industry. It must also include the preparation of educational and recruitment material that can be used at local distributor levels, along with the preparation of material handling sales and technician training curriculums."

He adds that by joining together, the associations could create contacts and affiliations with colleges and industrial distribution programs and technical schools. "While each of these associations have sporadically developed 'industry awareness' programs, no coordinated industry-wide initiative exists. These associations should get together and create a national task force," he says.

Moore says one thing we can all do is learn how to articulate (with enthusiasm and professionalism) the exciting opportunities and work environments that attracted us to the material handling industry.

MHECO offers more than 100 lines of material handling equipment, with following considered its major lines: Hyster, Rite-Hite Corporation, Hytrol, Prest Rack, Borroughs Corporation, CM Hoists, Southworth Products, Jarvis Caster Group and Unarco Material Handling. MHM

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Strategies for Tough Times From the Distributor's Point of View

Doing business is never easy. The past couple years, however, have been tougher than most. What are distributors doing to weather the storm?

We asked this question, and others, to a selection of distributors around the country. The end of the story is, there is no single, correct way to survive these tough economic times. Some folks are hanging tough, doing what they do best. Others have launched entirely new ways of doing business. Here’s a sampling of success stories. The common thread: To make headway in business these days, you have to conceive it, believe it, then achieve it.

In this hardware-kind of business, there's always room for philosophers. Jim Bowes, president, Peach State Integrated Technologies, Norcross, Georgia, can be as philosophical as anyone. "My philosophy is that everything is first customized, then productized, and finally commoditized. That's the circle of life," he says, "whether it's a product, a company or way of doing business."

He recognized that for his company to survive (it's been in the material handling business since 1975) it had to offer more value-added services to solve the business challenges of its clients. It would not — could not — be business as usual in the new millennium.

"Material handling equipment is certainly a link in the supply chain," says Ed Reel, senior vice president, Peach State Integrated Technologies, "and what we've done in transforming our business is to ask ‘What can we provide the customer that other material handling equipment dealers cannot?'"

The solution that Reel, Bowes and other managers at Peach State sought was a way to bring together the strategic components and execution components of a material handling system. "Our differentiator," explains Reel, "would be to add the support component, a true value-added service that customers sought, given the disparate parts of a material handling system."

Reel is talking about more than one-stop-shopping. This approach is not for the weak of heart or financially challenged company. Reel admits offering total support to all your projects is not innate or inherent to a material handling equipment distributor.

"The people we’ve brought onto our staff have come from outside the industry," he says with a chuckle. "When you start getting into transportation management or network design, it gets rather intense."

Back to basics

John Cosgrove, vice president, Progressive Handling Systems, Rockaway, New Jersey, says his company focused on what it has always done best, provide good customer service for its existing clients. With a laugh, he says that in more than 25 years in the business, he's never worked harder than he has in the past 18 months.

"We have an extensive network of customers," says Cosgrove, "and doing more value-added things with that customer base has kept us going."

For Cosgrove, networking is the operative word. He says that he and his staff have joined every possible organization to spread the word about the business. "We're out there pressing the flesh," he says. "We're on chambers of commerce as well as business organizations."

"Our philosophy is simple," says Jack Phelan, president, Advanced Handling Systems, Lakeland, Florida. "Most of your problems go away if you have sales!"

So Phelan and his staff focused their efforts on sales rather than cost-cutting measures. "We sell productivity to our customers, so productivity's what we asked of ourselves," Phelan explains.

It's not rocket science and it's not necessarily doing more with less, says Phelan. "We all work longer hours and dig in. We’re a force of 30, but we work like a force of 40. It’s a matter of doing more with what you have."

Evolve and adapt

Gene Forte, president, Forte Industries, Mason, Ohio, says he started redirecting his business years ago. "We've expanded our consulting operations beyond just facility automation projects," he explains. "We now include supply chain execution software and operations improvement consulting, for example."

Forte says these consulting services were something they, as a company initiated. It was not necessarily something customers were asking for. "We recognized an opening, a need for this kind of service."

Forte says part of his success has come from the strategy of reworking the company's strategic business plan every three to five years.

Lessons learned

For distributors, the large, seven-figure jobs are not out there these days. That's the bad news. The good news is, many companies that said no last year are saying yes this year — only to smaller projects. Another thing distributors have noticed is that customers have about as much brand loyalty as professional athletes do fan loyalty. They're not buying for pride of ownership. They want productivity and reliability. The message here is that it's the distributor that makes the difference when it comes to repeat business. — Clyde Witt

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