Sometimes less is more. In the case of the AD buying group, less means a lot more.
As part of its 2015 brand positioning, the buying and marketing group, which spans seven divisions throughout North America, shortened its name from Affiliated Distributors to the two-letter AD acronym.
More importantly, AD introduced its “Together, we win.” positioning statement, the essence of the group’s purpose of bringing its members and suppliers together to best help each other’s businesses, while supplementing that process with innovative marketing and technology support from AD’s experience-rich leadership team.
Among AD’s seven divisions is the PHCP group that features member distributors involved in the plumbing, HVAC and industrial PVF segments of the industry. PHCP membership in AD throughout the U.S. and Canada totals more than 140 distributors (many of which take advantage of the AD multi-divisional model advantage) and 200 supplier partners. Through the first quarter of 2016, the PHCP Division’s contributions helped AD register a 9% increase in sales (over all seven divisions).
“AD truly cares and helps its members and supplier partners,” says Glenn Fuller, president and owner of Houston-based Texas Plumbing Supply and an AD Plumbing Division board member. “‘Together, we win.’ is more than a slogan. It is the AD culture in which a truly representative form of governance looks at every decision. All new programs and strategies are voted on by the member-led boards. All networks are represented on the board so you know your interests are considered before a decision is made. The bigger you get, the harder this is to accomplish, but AD does it well.”
AD PHCP President Jeffrey Beall says the suburban Philadelphia-based buying group is in existence for one reason, thus the creation of the tagline. “The winning strategy is to bring members and suppliers together to grow their businesses and take market share,” he says. “Investing in relationships is the key to our 35 years of success. The relationships we actively facilitate between our members and supplier partners, and those we build with them, help us understand each other’s unique needs so together we can grow our businesses.”
Winning strategies
AD brings its members and supplier partners together through the continuous development of marketing, networking and technology initiatives. “Being a strategic part of a distributor and supplier channel market plan is what we strive for as a team,” Beall says. “As each company builds a strategic plan, we want them to think of our AD team as a complement to their internal resources. We listen and we are creative to help them find innovative solutions.”
La Crosse, Wis.-based First Supply Director of Sales and Marketing Mike Meiresonne adds: “AD helps us realize where our purchasing strategy and sales strategy should intersect. They have provided us with the right vendor promotions, which allow us not only to buy better, but also sell better toward profitable market-share growth.”
One of AD’s most successful programs is the AD Field Marketing Summit tool. This program brings members and key supplier partners together to create simple and actionable plans for a 12-month period. At the event, suppliers meet with member associates to train, plan and address opportunities in those local markets, notes Stephanie Ewing, AD’s vice president of marketing programs and strategy, PHCP divisions.
Those field marketing summits have been a major positive for Wilkes Barre, Pa.-based Eastern Penn Supply. “Our field marketing summit came from an AD initiative,” EPSCO Marketing Manager Gary Jones says. “It provides a focused concentration on our vendors and customer partners. Through the leadership of AD and its members, it continually transforms into areas that impact our business today.”
Randy Wool, CEO and president of Miami-based Wool Plumbing Supply (and another AD Plumbing Division board member), takes advantage of the robust networking opportunities the group provides throughout the year. “The best practices sessions are valuable to our company,” he says. “The rebates in the group obviously are important, but equally important are the discussions that arise when we find out we have common problems in our businesses. It helps to find out how members address those programs.”
AD also has ramped up its efforts on the education front through its AD Education Center where training is centered on a more product-focused track. “Our goal is to complement the work ASA and HARDI does in our industry, and not duplicate efforts,” Plumbing and PHCP Division Vice President Jeff Konen says. “We can layer the various industry training tools with AD’s focused product training as a way to enhance sales, marketing and warehouse management.”
Additionally, AD is active in advancing its divisional programs. For example, within the PVF division a special networking group was created for companies involved in the oil and gas sector. “This gives our members an opportunity to share best practices, talk about their market and the unique supplier partners,” PVF Division Vice President Gary Jackson says. “It allows them to see other opportunities.”
Ewing notes the buying group seized an opportunity to provide increased support to the plumbing showroom business segment, which consists of more than 300 showroom branch locations among PHCP members.
“Everything is changing in our world,” Konen adds. “The consumer is changing how they do business, suppliers are changing how they go to market, products constantly are changing, and the relationship between designers, contractors and distributors is changing. We’ve taken the top showroom leaders within our membership and brought them together to share best practices and create additional opportunities for our suppliers and the growth of this channel.”
On the HVAC side, the group’s HVAC division, celebrating its 10th anniversary this year, is experiencing record-breaking growth, notes Justin Dunscomb, vice president of AD’s HVAC Division. “We are in the third year of a five-year strategic growth plan to double the business and I’m excited to report we continue to exceed our plan,” he says. “Our plan has goals for both new members and suppliers, but also is heavily weighted on our existing members and suppliers accelerating their growth together.”
Dunscomb adds one way to move that plan forward is through conversions, which is done through a formal supplier conversion program. “Our HVAC networks compete each year to see which group can have the most conversions and the winning network earns a large trophy cup,” says Dunscomb, who reveals the program has driven more than 200 supplier conversions the last three years.
Ewing says programs such as the conversion challenge are born from the buying group’s never-ending desire to improve. “A lot of these programs come from our desire to optimize the AD experience and that comes from listening to our members and suppliers,” she says.
AD members and supplier partners also benefit from the 150-some years of industry experience the PHCP Division leadership team brings to the table. Beall is a former shareholder and CEO of an AD member (16 years of experience prior to joining AD), while Konen spent 28 years in purchasing and senior leadership roles with a Supply House Times Premier 150 distributor.
Jackson spent 37 years in senior supplier leadership roles in the PVF industry, while Dunscomb brings 11 years of experience in executive management at a plumbing and heating buying group. Ewing joined AD in 2015 after a 15-year run in senior leadership roles at a plumbing, HVAC and PVF supplier. David Hons, the group’s newest team member and director of procurement, brought 24 years of experience from the industrial PVF segment of a national wholesale distributor.
“That 150 years of experience means people know us and know we can get things done,” Jackson explains. “It allows us to build trust, and a personal investment in our member and supplier relationships.”
Scott Weaver, president of Lebanon, Pa.-based APR Supply, says AD’s member initiatives have allowed his company to focus on other critical parts of the business. “Our confidence in the AD leadership team is such that APR, to a large degree, can sit back and entrust the pros to do their job of partnering with the premier manufacturers and negotiating the best programs,” he says.
Focus on the future
Beall sees three key components that will direct the future of the industry. “People, procurement and technologies are drivers changing the face of buying groups,” he says. “Distributors are expanding and consolidating and suppliers are constantly adding new products. We have to be able to address these issues.”
On the service and sales side, Beall explains AD’s HR Services offers strategic human-resource support and connects AD members with high-quality innovative and cost-effective service providers. The procurement side is bolstered through AD’s Power Buy program. “The addition of increased power-buy opportunities has been a welcome development,” says John Howe, CEO of Birmingham, Ala.-based American Pipe & Supply. “Pooling the members’ buying power enables us to leverage purchasing to compete with national players.”
From the technology side, AD is focusing on the e-commerce and e-content platforms through its AD eCommerce Solutions footprint. “From our perspective, we’re seeing growth across our membership in that regard,” Beall says. “If our members don’t have access to affordable e-content and e-commerce solutions, then business is going to start slipping away.
“E-commerce is the fastest-growing sales channel in today’s professional market, and AD has invested in the tools and resources to provide our members with access to rich product content and SKUs, fully integrated web-store options and the consultative support they need to make it happen. AD eCommerce Solutions leverages AD’s scale and community to enable members to achieve their e-commerce objectives and win in an evolving digital world. AD’s size and scale allows us to buy SKU-production capacity rather than a pay-per-SKU model.”
Todd Ford, president and CEO of Omaha, Neb.-based industrial PVF distributor Central States Group, notes the roll out of an e-commerce initiative on one’s own can prove to be a tremendous cost undertaking. “It’s not only a large financial investment, but it demands a lot of time from your internal resources that some of us do not have,” he says. “By tackling this project as a group, our members, no matter their size, will have the opportunity to have an online presence.”
Jackson calls the e-content initiative an investment in the group’s future. “This helps our members go after a new set of customers and geography,” he says.
Beall feels the e-commerce push will not diminish the brick-and-mortar presence that has been the backbone of the industry. “Brick-and-mortar locations still have to have a presence in cities and municipalities to do business,” he says. “At the same time you better be flexible enough to make the transactional part of it as easy as possible. Going forward it’s going to be a meeting in the middle of e-commerce and technology and leveraging the brick-and-mortar opportunities. We are leveraging this technology on top of our members’ business models to allow them to compete and stay independent for as long as they want.”
And AD executives are confident going forward that the buying group’s overall philosophy will help ensure its members and supplier partners continue to thrive.
“We have a sustainable model in place, but we must make sure we remember at the core of what we do is serve our members and suppliers,” Beall says. “We have averaged more than a 100% payout of member rebates and we remain committed to that. Our operational efficiencies help drive that. We will continue to use the diversity of our divisions and business mix to help adjust those priorities, take advantage of opportunities and weather any storms to come. The outlook for AD, our members and suppliers is very strong.”
This article was originally titled “Together we win” in the August 2016 print edition of Supply House Times.
