David Harvey, executive vice president, was instrumental in much of the remodeling/construction.

“David was a contractor for 12 years,” says brother Sid Harvey, president and CEO. “That really helped us see things from a customer's perspective. He really was on the other side of the counter.”

Says David: “For contractors, doing the job is the real pleasure. Shopping for parts and driving around in an overloaded truck, that's a real chore.”

About three-quarters of the branches have been refurbished. Beyond cosmetics, the company has also been busy behind the scenes. “For many years, we spent a lot of time dealing with acquisitions,” Rynecki adds. “But over the past five years, we've put our effort into building a better infrastructure for the branches that we have.”

As a result, Sid Harvey's has incorporated several new services recently and continues to refine others in order to make getting product less of a chore:

Equipment Central

Stocking equipment isn't entirely new to Sid Harvey's; the company expanded into HVAC back in the 1960s. Still, the company remained well known for parts to repair equipment and decided in the late 1990s to move to the core of the market rather than remaining on its fringe.

“We felt comfortable selling repair parts,” Rynecki adds. “We did sell equipment, but it wasn't significant. Today, it is.”

Equipment Central stocks 13 lines of heating, cooling and refrigeration equipment, including boilers, furnaces, ductless systems, water heaters, evaporator coils, refrigeration systems, freezers and ice machines, plus accessories, such as registers, air cleaners and controls.

Equipment Central also incorporates a special Dealer Program that features:

• Co-op advertising/trip fund.
  
• Consumer and commercial financing programs.
  
• Extended warranty programs.
  
• Technical training.
  
• In-house technical services and support.
  
• No-hassle warranties.
  
• Fast delivery.

Equipment Is Better Made Today: “Equipment lasts much longer than it used to,” Sid Harvey says. “And thanks to advances in efficiency, end-users are more likely to replace equipment outright without waiting for it to fail.”

If something does go wrong, there are fewer parts to change today - and the price of those parts costs consumers too much to justify repair. “For example, our company used to do a great business selling repair parts for window-unit air-conditioners,” Harvey says. “We could sell a motor and blade for $100. Now, you can buy a new unit for the same amount.”

Meeting Customer Demand For More Diversity: “First of all, we have a wide geographical range to deal with,” says Richard Carbonaro, vice president/purchasing. “Plus, we see more and more of our customers diversifying into other fields. HVAC contractors are selling refrigeration and the refrigeration contractor is selling HVAC. And it seems as though more and more of our customers are interested in radiant heat, instantaneous water heat and high velocity air conditioning. So we have to contend with a wide overlap in customer demands over a very large trading area.”

Central Distribution Center (CDC)

The CDC supports all the branches and is outfitted with the latest technologies, such as automated picking platforms, rack-and-reach trucks, bar coding and conveyer systems. The CDC re-supplies all branches at least once a week. (However, the company also provides other shipping options for its customer by phone, fax or e-mail, including same-day delivery of many products. See the article on Customer Service on page 12.)

It's the latest incarnation in the company's attempt to streamline product delivery to its far-flung empire of outlets. In the 1990s, the company used to use three distribution centers and then folded those into one center in Carlisle, Pa., in 1997. In 2004, the company signed a long term lease on a build-to-spec facility in Wilkes-Barre, Pa., and began a consolidation of inventory from the former distribution centers.

The elaborate CDC is connected by an equally complex computer system that provides real-time order processing and electronic customer support.

“Each store had its own separate system,” says Russell TumSuden, senior vice president/finance and MIS. “It used to take our headquarters staff more than eight hours a night to upload, process and download data to and from each branch just to get ready for the next business day. Thanks to the new system, all the branches are online with real-time information that provides access to the total company's inventory for all its customers in any location. Replenishment is automatic, but the system still relies on branch managers for input, too.”

TumSuden explains, “The managers have to stay close to their customers - focused and attuned to where the customer is going. Without that information, the computer will only 'suggest' what you had for last year's inventory levels and that's not good enough. So branch managers and product specialists have to make intelligent inventory decisions to insure that the branches don't become over- or under-inventoried.”

The company now has considerably better control of its inventory, and items that individual contractors need are more readily available. Branch managers can update inventory in a matter of minutes.

“We've been able to professionalize all aspects of our distribution process,” TumSuden says. “Before, something may have been picked that day, but the branches may not have received it for a couple of days. It's not so much that the CDC provides more products, it's that it provides a higher level of service.”

With inventory management humming quietly in the background, branch managers are freed up to concentrate on their customers' demands, generally in two ways:

Product Diversity: “The beauty of the CDC is that most of our product is in there,” says Jack DeCotiis, senior vice president/operations and business development. “That lets branch managers grow their individual stores by taking into account their individual markets.”

With a company this size, what makes sense, say, in Denver, might not make much sense in Lombard, Ill. To be sure, there are a certain group of products that headquarters expects that all branches will sell. For example, in the propane business, branches have to stock the 300 SKUs related to propane service and installation.

Those sales plans are overlaid on the branches, but Sid Harvey's wants its branch managers to play a part, and there's plenty of flexibility to help each branch often add new products or try different brands. Once thought of exclusively as an oil heating supplier, today Sid Harvey's has diversified to the point that any number of branches are primarily focused on refrigeration and mechanical service. The company has a particularly close relationship with Emerson Climate Technologies and the umbrella of products that Emerson's various divisions provide, including ventilation products, motors, flow controls, White-Rodgers controls, Browning belts and pulleys, and Copeland compressors. Fully a third of all Sid Harvey branches are authorized Copeland Wholesalers. Now, several branches have recently been designated as Emerson Full Line Distributors.

“We've also had stores that wanted to pioneer radiant heat,” DeCotiis explains. “There's always been a strong dynamic at this company between purchasing, operations and the branches. Now all 74 branches are in the radiant heat business.”

If it can be justified, headquarters can work out arrangements to have certain products shipped to the branches directly from the vendors.

“It's one way we've been able to keep growing without necessarily expanding our CDC,” DeCotiis says.

The company even goes so far as to set up a Product Development Committee that listens to proposals and essentially votes on whether the product in question gets a chance to be added to the mix.

One example is ice machines, which weren't sold prior to 1991. Now, 55 branches stock the equipment. In addition, half of the stores sell PEX, fittings and other materials needed for radiant heat.

While the CDC provides excellent availability of all products to the network of branches, the company has strong controls limiting product, where necessary, to certain geographic areas, if specified by contract with the manufacturer.

“We have several lines that we've agreed to limit where we will sell the product, such as Copeland, Manitowoc and other HVAC equipment lines. Our computer software can block the movement of these products in restricted branches,” Rynecki explains.

“The Product Development Committee listens to our customers, our manufacturers and our sales team,” Carbonaro says. “I remember that originally we were hesitant about adding a new line of CO detection monitors because the technology was fairly new and priced higher than the old technology. But after reviewing additional input from a few branch managers, and further investigation, the decision was made to add the line. We followed up with some training and, now, I don't think that there's a branch in the company that doesn't sell this product.”

With all this talk about new products and increasing focus on equipment, we don't want to give the impression that the company has lost sight of its heritage either.

“We don't forget that we started out as an oil-heating parts distributor, so we'll continue to inventory the parts to fix a 35-year-old boiler or furnace, too,” Carbonaro says.

Product Knowledge: As Carbonaro notes, providing new products also means providing education so contractors can capitalize on the new material.

Equipment Central, for example, not only provides the equipment, the sheet metal, the black pipe, but the required knowledge to install the products.

“We wanted to be as proactive about the new 13 SEER rule as we were in the 1990s about refrigerant reclamation,” Carbonaro says. “The equipment is bigger and it costs about 30 percent more.”

Like the transition to 13 SEER-rated equipment, refrigerant reclamation was a big change that everyone knew was coming. Still, it was a big shock to go into your supply house one morning and find that you had to be licensed to buy refrigerant.

“Retrofits are going to be interesting since you can't just walk into a supply house and say you just need a new condensing unit,” Carbonaro says. “If you have a 10-SEER air handler in the attic, you won't be able to do a retrofit as easily as in the past.”

To support their contractors, all the branches hold various training seminars and instruction throughout the year. But help like this isn't reserved to just a 60-minute class at the end of a long working day. Sid Harvey's branches have always acted as a technical resource for contractors.

“The growth that we have experienced in the last five years has been from our ability to sell a vastly wider selection of products,” Rynecki says. That ability, however, hinges entirely on having properly trained and motivated people behind the counter. “We can talk about who we are or who we think we are,” he explains, “but who we really are comes down to that one employee facing one customer each day and consistently offering the right answers at the right time.”

It could be as simple as picking up the phone providing the right help or providing after-hours emergency services.

“We can have all the inventory our customers need at the right prices and at the right locations,” Rynecki adds, “but they aren't going to be compelled to come in if we don't have the right people.”