John McNally 0000-00-00 00:00:00
A supply house meets challenges with a ‘Modern’ twist. email@example.com As Pace Robinson navigates his Chrysler back from Chattanooga, Tenn., to Knoxville on Interstate 75/40 in a heavy downpour, Dottie Ramsey, seated next to him in the passenger seat, is the definition of a right-hand woman. “We play off each other well,” Ramsey says. “I consider myself lucky to have Dottie,” Robinson adds. “She has a positive outlook with customers and employees. The last few years have been challenging, and being positive is the way you have to stay.” The duo provides a strong dynamic for Knoxville-based wholesaler Modern Supply. Robinson, the company’s chief executive officer, is the analytical thinker. Ramsey, the president and chief operating officer, is the quick-acting taskmaster. On tough days, the team heads to the local Waffle House for comfort food and to regain its focus. Together their camaraderie and a strong supporting cast of employees have helped the company successfully shift its business practices through the worst of the recession and into the current period of mounting momentum. Modern Supply’s willingness and ability to change along with its continued active involvement in the industry and community have made it Supply House Times’ 2011 Wholesaler of the Year. ENTERING A ‘MODERN’ WORLD In 2008, Modern Supply was flush. Robinson notes that was the year the company’s business peaked. Then came 2009. The volume dropped off and problems within the company’s operations became very apparent. “2009 hit us over the head,” Robinson says. Robinson and Ramsey led a full-fledged review of the company’s business practices and found some glaring problems, particularly in the accounts receivable department. “When you’re making a lot of money it covers up a lot of things,” Ramsey says. Modern Supply quickly tightened up its credit policies and went lean and mean, shedding about 20 of its underperforming employees. The scales leveled for the company in 2010 and 2011, but the effects of the recession are still being felt. Challenging is a word they use many times, but business has been “steady” of late. Robinson says the company is on pace to record $20 million in overall sales in 2011. Despite the roughest waters behind it, Modern Supply still isn’t popping any champagne bottles. It keeps plugging away at its problems and finds solutions in unlikely places. “In 2011, we figured out we had to change,” Ramsey says. “And we’re doing it.” Enter Modern’s Millie. The new face of Modern Supply is a sharply drawn and dressed cartoon character created by Modern Supply and two local freelance advertisers the company had worked with before and enjoyed collaborating with. As of late November, Millie had amassed more than 800 followers on Twitter and was the reason Modern Supply won a 2010 award from the WIT buying group for innovative marketing initiatives. “Millie put a face on Modern Supply,” Robinson says. “It’s really out-of-the-box thinking for this industry.” Millie wears a hard hat as she tweets about her stylish boots. Rolled up construction plans are tucked under Millie’s arm as she posts a story about American Standard toilets to her Facebook profile. Millie also blogs and writes a column for the local newspaper. Can Robinson and Ramsey directly link rising sales to Millie’s presence? No, but they can sense it. Modern Supply has hired a new showroom salesperson in the past month because of increased traffic. Joan Hatcher, Modern Supply’s director of marketing and communication, helped bring Millie along. Hatcher, along with Robinson and others, run Millie’s Twitter account. The goal is for Millie’s Twitter feed to have a balance between 80% information and 20% selling products. The idea is to “turn the megaphone around” and let customers, contractors and others engage in talks with Modern Supply while the company still gets its message out. “All we can do is plant the seed and bring Modern Supply to the forefront of your mind,” Hatcher says. A look at a sample of Modern Supply’s Web traffic from 2010 to November 2011 show’s the company’s strategy is working: • In 2010, www.modernsupplyshowroom.com had 7,291 visits (3,969 new visitors). Through early November, the number of visits has almost tripled to 20,233 (10,905 new visitors). • The website’s page views have spiked to 78,000 through the first 11 months of 2011. • Hatcher and Modern Supply have worked hard to improve the company’s SEOs (search engine optimizations). Traffic directly from Google searches has tripled over the last year. More traffic now comes from Google searches than it does from directly typing in the company’s Web address. The same can be said for Modern Supply’s Facebook page. • In 2010, the page had 198 “Likes,” but improved to 299 in 2011. • The amount of Modern Supply’s post views increased a whopping 2,582% from 6,419 in 2010 to 172,160 so far in 2011. • Feedback on posts (likes, comments, shares) improved 386% from 348 to 1,692. “We’re moving forward from being thought of as just a plumbing wholesaler,” Hatcher says. “We’re educating people that we are more than a big-box store.” SALES BREAKDOWN Traditionally, Modern Supply saw a revenue stream of 40% from plumbing, 40% from HVAC and 20% from other sources such as cabinets, appliances and lighting. In 2011, it has stayed close to that breakdown, but HVAC has increased to 45%, plumbing is now at 35% and the other sources remain at 20%. “It swung a lot in ’09 and ’10,” Robinson says. “It’s swinging back in 2011. ” With new construction down, the majority of money is coming in because of retrofit and remodeling of HVAC systems. “It’s still a bigdollar sale when you sell a heating and cooling unit,” Robinson states. Rheem heating and cooling systems top the sales list for Modern Supply, while a variety of electric, gas and tankless water heater brands, including American Water Heaters, A. O. Smith and Navien, also are popular. In the company’s 10,000-sq.-ft. bath and kitchen showroom in Knoxville, customers can select from such brands as American Standard, Barclay, JADO, Delta, Brizo, Basco, Elkay and Porcher. In the remodel and retrofit areas, Robinson and Ramsey see a big gap between what customers are buying. “It’s either cheap or it’s high-end products,” Ramsey says. “There is no in between.” Customer attitudes have shifted, too. Robinson says customers are less loyal than they used to be. Modern Supply fights that with improved customer service. A customer can call Ramsey or Robinson at home with a question or concern without hesitation. “We’ve made it personable,” Ramsey says. “You can’t do that with the big boys. We’re not sitting in an ivory tower.” Ramsey makes it a priority to not miss out on any opportunity to sell. The artwork and mirrors hanging on the showroom walls are ready to be handed over to a customer for the right price. “You might not sell many, but someone will remember Modern Supply has something I have never seen in Knoxville,” she states. Being based in Knoxville is a blessing for Modern Supply. Large organizations such as the University of Tennessee, the Tennessee Valley Authority, Alcoa and the Oak Ridge Laboratory are in constant need of products, and these “anchors” of the community will not be outsourced overseas and employ many people in the area at good wages. In turn, the people come to Modern Supply for their bath and kitchen needs. Modern Supply has worked the commercial industry with more vigor in recent years since the residential well has gone dry. It recently brokered a deal with a housing authority to redo and supply 374 new kitchens with heavy-duty cabinets. “We probably wouldn’t have done that a couple of years ago,” Robinson says. Ramsey adds: “We wouldn’t have even tried it a few years ago. We didn’t get the plumbing on the job, but we got the cabinets. If we were just plumbing would we have survived this (recession)? Probably not.” COMMUNITY, INDUSTRY INVOLVEMENT Robinson and Modern Supply make it a priority to be active within the Knoxville community. Robinson is chairman of the Knoxville Utility Board and takes his position very seriously. “It’s serious enough that when he’s supposed to go to industry shows, he misses out,” Ramsey says. Other community activities include the United Way, Habitat for Humanity and Knox Heritage, which restores historic buildings in the area. In October, Ramsey was the keynote speaker at the “Women Navigating Through Nontraditional Careers” event. She talked to more than 50 lower incomeearning women and encouraged them to think bigger than a fast-food job and to work in a “man’s” industry. Both Ramsey (1992-93) and Robinson (2008-09) are former presidents of the Southern Wholesalers Association. Ramsey is a former president of the American Supply Association and former head of ASA’s Educational Foundation. Being deeply connected and having access to the industry through these associations gives Modern Supply a big advantage. “We learn about products and we find products that we might not necessarily be able to find,” Robinson says. Adding American Standard to its product line was a big decision that Modern Supply made because of its involvement with ASA. “If we weren’t on the scene at ASA, I don’t think we’d have the ability to make a decision like that,” Robinson notes. “It was a tough decision, but it ended up being a good decision.” ADDED VALUE Since the mid-1970s Modern Supply has put together an incentive trip for valued customers. The scope of the trip has changed over the years — chartering a plane isn’t always in the cards — but the depth of work Modern Supply puts into it remains the same. At its height, Modern Supply would take nearly 600 customers (spread out over several trips) who reached certain levels of spending with the company. Now it’s down to 110 people, but Ramsey still sees significant gains. “We have retained customers from our competitors because of these trips,” Ramsey says. “We look at the trips as a relationship-building tool.” Modern Supply also brings a handful of employees to the destination. While the employees get to enjoy the perks of being in Cabo, Mexico or in Aruba, they are able to talk to customers and find out how they can better work together. Vendors have become part of the trip equation, seeing the value in working more one-on-one with customers. Typically, 10 to 12 vendors come on an excursion. “The vendors have been great,” Robinson says. “I hate to toot our own horn, but we’re so good at it. People realize that. Just show up at the airport and don’t worry about anything.” Robinson and Ramsey bring along their spouses, Karen Robinson and Mayford Ramsey, who provide valuable support both at home and abroad. Spouses of vendors and customers are also encouraged to attend. “Having the wife on these trips is important,” Ramsey says. “The female is going to have the final say in making the buying decision.” ADJUSTING THE CULTURE Pace Robinson took over as CEO from his father, Mitchell, in 1994. Since then, Robinson and Ramsey have transitioned the company to make employees more multidimensional and give them more control. Walk around the showroom floors at Modern Supply and you won’t be able to find a sticker price on any of the items for sale. The idea is to get the customers and salespeople talking about what will work best instead of quickly dismissing a product based on price. “We empower our employees to make decisions,” Ramsey says. The employees of Modern Supply currently average more than 15 years of experience, and many of the people around from the days of Robinson’s father are still going strong. “The old guard is still around,” Robinson says. “I love having them around because they’re dependable. We have a pretty good balance.” Modern Supply works diligently to cross-train its employees — another outgrowth from the recession. Ramsey tells a story of how one employee was out of the office for an extended period of time and it became obvious nobody knew how to cover the position. “We will never be in the position again where one person knows how to do one thing,” Ramsey says. Robinson adds: “We’re not settling for a mediocre employee at all.” CORE VALUES On a day in early November, Robinson and Ramsey work the counter area and talk with contractors who come in. Some of the contractors are in chatty moods, others frustrated by a difficult job. Whether it’s her or another employee, Ramsey believes a face has to be put on each sale. “You buy from people,” Ramsey says. In years past, Robinson and Ramsey would craft mission statements for Modern Supply. Now, in the new normal of the wholesaling business, the company’s leadership makes it simple and clear. “Take care of business and take care of people,” Robinson says. “I think we operate every day under that idea.” MODERN SUPPLY Branch locations: Two in Knoxville; Chattanooga, Johnson City, Crossville, Sevierville, Tenn.; Bristol, Va. Key management: Pace Robinson, chairman/CEO; Dottie Ramsey, president/COO; Joan Hatcher, director of marketing; Debbie Johnson, sales manager; Jack Brantley, plumbing product manager; Randy Williams, HVAC product manager; Kim Miller, building product manager; Greg Stephens, director of operations. Number of employees: 84 Number of outside sales reps: 9 generalists; 1 HVAC-dedicated Annual revenue: $20 million SPLITTING THE DIFFERENCE Just 90 miles away from Modern Supply headquarters in Knoxville, Tenn., Terry Savoy heads a distinct shift at the company’s Chattanooga branch. Savoy has been with Modern Supply since 1999 when he started as head of plumbing sales, but he quickly rose to branch manager five months later. The New Orleans native came to Modern Supply with an extensive background in commercial plumbing sales, but the Chattanooga branch was typically seeing around a 90%/10% split between residential and commercial sales. In 2005, Savoy and Modern Supply decided to hit the ground running and target the commercial market. “We had to be more aggressive. We had to knock on doors,” Savoy states. “I brought in a new perspective. I’m not a forecaster, but I just saw that as the quickest way to grow. I saw this as a way the branch could be more profitable.” Savoy notes that it can be a challenge for an outsider to make inroads in Tennessee — located deep in Southeastern Conference college sports country and very proud of its orange-and-white-clad Volunteers. But Savoy has gained the trust of local buyers by being a reputable seller who shows a steady hand with his orders. “Nobody likes the out-of-towner,” Savoy says. “As long as you’re consistent and treat every new order as your first order, things will work out well. If you handle customers the right way, they won’t go anywhere.” Modern Supply has made strides by supplying hotels, medical centers, schools, and retirement homes and villages in Chattanooga. The Bradley County jail has been a particularly solid source of sales for the Chattanooga branch. Modern Supply CEO Pace Robinson and President and COO Dottie Ramsey like that Savoy brings a new way of thinking to the table. Savoy returned the favor by bringing the commercial market more into play for Modern Supply. “They knew I had a large commercial background. I brought in a new perspective,” Savoy says. “It’s not an overnight thing. It takes time.” Ricky Oaks works in Chattanooga’s warehouse and has been with Modern Supply for the last 19 years after a career in truck driving. He says Chattanooga has been selling so many American Water Heaters that “we can’t keep them (in stock)” and that Liberty Pumps’ products are “doing really well.” Oaks is impressed with Savoy’s leadership and how smooth operations have been on his watch. “He gets the orders and we push them out,” Oaks says. Additionally, Chattanooga has been Modern Supply’s best PEX tubing market with its Uponor offering for radiant heat and plumbing applications. Also, Robinson sees nothing on the horizon that will hurt the company’s heat pump sales. “As long as our electric rates stay low, the heat pump will have its place,” he states. The Chattanooga branch features a smaller bath and kitchen showroom than in Knoxville but it carries more American Standard, Matco-Norca and Delta Faucet products among others. Robinson and Ramsey look at how the recession has hit Modern Supply’s various branches and are pleased how Chattanooga has weathered the economic storm. “People buy from people,” Savoy says. “It’s about service and trust. No matter how bad things get. It’s not only about what you stock.” THE MODERN FUTURE A quick point right off the bat: Pace Robinson and Dottie Ramsey are not drafting their retirement speeches just yet. But, Modern Supply has been a family-owned and -operated company since Pace’s father, Mitchell, founded it in 1949. All that leads to questions about the future leaders of the company. Robinson has two sons, Eli and Asher. Eli graduated from Wharton School of Business. He currently works as a consultant for the Monitor Group and is based in New York City. Asher is a senior at the University of Florida (Pace’s alma mater) and is putting the finishing touches on a degree in finance and operation management. Both sons have worked for Modern Supply at some point in their careers — mostly during summer breaks in college — but Robinson doesn’t put pressure on them to commit to working at Modern Supply. “Eli knows he’s not going to be in New York his whole career. What happens between now and then and if he ends up here, I don’t know,” he says. “I would love to have him, but I haven’t said, ‘Oh, when are you coming?’ ” With Asher about to hit the job market once his time in Gainesville, Fla., is up, Robinson will be supportive and provide his guidance. “I will encourage him to go out and try something else first,” Robinson says. “But, I will welcome him with open arms into this business.” Ramsey would love to have him in the fold as soon as possible because of his knowledge of the newest technologies. “I, on the other hand, am encouraging him (to come to Modern Supply),” she declares. TALENT-RICH ROSTER There is also a lot of talent currently in-house at Modern Supply. Knoxville sales manager Debbie Johnson was the company’s credit manager for five years when she was about to resign and try something new. Ramsey and Robinson couldn’t let Johnson leave the company because they saw and believed in her talents. “She wanted to do something different,” Robinson says. “We said, ‘Oh, no you’re not.” Ramsey adds: “We told her, ‘We’ll find something for you.’ It was her attitude that we liked.” Johnson was happy to see just how much Robinson and Ramsey cared for her. “It certainly makes you feel wanted,” she says. Robinson and Ramsey also are bringing along their young leaders into wholesaling organizations such as ASA and SWA. Johnson has been involved with SWA’s Leadership Development Council. “It’s a little fired-up group that tries to bring new, fresh ideas,” Johnson says. Robinson and Ramsey want their young leaders to realize just how critical wholesaling organizations have been throughout the years. “It’s trying to get the next generation of people involved,” Robinson says. “Debbie can go and not sit at a table with Dottie and I. She can go and sit at a table with a peer or maybe someone on a different management level and you still get that networking that is invaluable.” Ramsey adds: “Older generations understand the importance of associations. The young generation doesn’t. We’re exposing them so they understand.” After attending some meetings and being involved with the Leadership Development Council, Johnson quickly saw the importance. “We’re there to help each other and grow,” Johnson says.
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