2014 Supply House of the Year: Consolidated Supply
Consolidated Supply builds relationships with its contractor customers through trust.
In 1928, four plumbing supply companies decided to band together to weather what turned out to be a decade of the Great Depression. As the nation started its recovery, E.A. Neupert, general manager of the group, negotiated a buyout deal with the four owners. Tigard, Ore.-based Consolidated Supply was born and it has been a family business since then. Today it is headed by two women: Chairman Karolyn Neupert Gordonand President Karla Neupert Hockley.
Their rise to the top of the company came after a family tragedy in 2002. Karl E. Neupert— Karolyn’s husband and Karla’s father — had been running the company since 1978. Well-known in the industry, he was president of the American Supply Association in 1999 and established that group’s “Pipeline to the Future” Endowment Fund — renamed the Karl E. Neupert Endowment Fund after his death in December 2002 from pancreatic cancer.
“He was a great steward of the industry,” Hockley says. “We had a name, a brand within the industry that was positive and had integrity.”
Neupert’s death came only 10 days after his diagnosis, a shock to the family as well as to Consolidated’s employees. Jeff Konen, a 20-year company veteran, took the reins of Consolidated Supply while the personal and professional families of Karl Neupert grieved.
Two and a half years later, Hockley and Gordon assumed their roles to pilot the company forward. Today, Consolidated Supply has 335 employees in 16 branches with locations in Oregon, Washington and Idaho. Annual sales of more than $100 million come from 70% plumbing and 30% waterworks. The company is listed at No. 37 on Supply House Times’ 2014 Premier 150 list.
“There’s an attractive thing about having female leadership in the persona that Karolyn put out into the universe and into our company,” Hockley notes. “But from a customer point of view, I think genuineness is what’s measured, not gender. We are high in genuine.”
Gordon adopted what is affectionally called a Mother Hen persona. Growing up on a farm, she loved chickens and their characteristics — clean, smart, proud and protective.
“My job is to keep the family company a family company, put my feathers around it and keep it safe and healthy while keeping our employees happy,” she says. “On the customer side, trust and relationship building — and keeping those relationships — is what we’re all about and why we’re still on the map. People like to do business with people. We’re very real. Our teams are very real. We have a reputation in the industry of being heartfelt, faithful and trustworthy.”
The fact that customers keep doing business with the company is an example of that trust, she adds; they can choose where to spend their hard-earned dollars and they choose to spend them at Consolidated Supply.
One big change made after Neupert’s death was putting together a strategic plan to run the business. Hockley, Gordon and the rest of the management team — Chief Financial Officer Bob Bruceand Vice President of Business Development Tom Bedell — hired a company to help them and eventually ended up with a five-year plan.
“We got involved with Oregon State’s Austin Family Business Program, which is about all the factors we’re talking about right now that led us in great directions, such as clear heart communication within the leadership team,” Gordon says. “We needed to collectively figure out solutions to our problems and no one independent person could do it. We needed to learn to work together as a team.”
The plan included a contingency portion that helped Consolidated Supply make it through the Great Recession — reductions in the workforce by closing a couple of locations and compensation adjustments. “Communication was a huge key in laying people off — letting them know how and why so they understood,” she adds. “For the health of the company, it had to happen. But it was not an easy decision to make. Fortunately, we were able to hire some of those people back, which was gratifying for the whole company.”
Another change was to plan for the fifth generation to join the company if they wished. Hockley, her brother, Kevin Neupert,and her sister, Kristin Neupert Press,have seven children between them. If the children decide to be a part of the larger Consolidated Supply family, they need to have a college degree and, if they want to be in a leadership or management position, they must work outside the company for two or three years.
Governance was another hurdle Consolidated had to overcome.
“We knew we didn’t have all the answers and were willing to get some help from the outside,” Hockley explains. “We put together an outside advisory board of three business people who are not our attorneys, accountants or closely held advisers. They are independent business people with experience in distribution, construction or marketing. We have three meetings a year where we show them our financial results. We cannot relax and be OK with what we’re doing because we’re accountable to these three people.”
Of course, another big change was naming Hockley as president.
“When I named Karla as our president, that was a big change,” Gordon notes. “There aren’t many women presidents sitting around the table in this industry. She’s been very involved in ASA and been very well-received. She has done a great job.”
Consolidated Supply had a strong 2012 and 2013, Hockley says, with high double-digit growth. Yet some uncertainty still exists.
“When there’s quantitative easing and things going on in the economy that aren’t natural, nobody knows how it will translate into the new normal,” Hockley states. “This has been a good year, not a great year, but everything is improving as homes start to get closer to a million starts. There still are highly competitive margin erosion situations — that were accentuated in the recession, in just making a sale and having it be all about price. So margin erosion is certainly the No. 1 issue today.”
Hockley and Gordon agree that Consolidated Supply’s biggest differentiator in the marketplace is its five customer service guarantees, headed up by Andrinna Leask:
1.The top 100 products are never out of stock.
2. Will-call orders are ready for pickup at the mutually agreed upon time.
3.When resellable stock products are returned, the contractor’s account will be credited by the close of the next business day.
5.Timeliness of delivery.
If the company fails to deliver on any of these promises, customers receive a $25 credit.
“What does a distributor need to do for its customers? Have what they want, when they want, where they want it,” Hockley states. “That’s what these guarantees speak to. It allows us not to make up for the mistakes. It’s an acknowledgment and a root-cause ticket to go back into the process of receiving, picking, order entry from the phone call — whatever the case is — and set up additional training so the mistake is not repeated. We do that for our customers to keep our service as on-point as possible.”
The distributor sends contractors a customer service survey each year; in 2013, Consolidated had its highest score. Branches and teams are given bonuses based on the customer service surveys.
“We know it’s a dynamic world out there and if we had great customer service marks in 2013, it doesn’t mean in Boise, in Eugene and in Seattle that we’d get those same marks today,” Hockley explains. “So every year we ask our customers how we’re doing. About 40% of the respondents say our customer service guarantees make a difference. The fact that we care about their business is a contributing factor for them to continue to shop and choose us.”
Connecting with its customers through social media is still something Consolidated Supply is working on. The company’s Gen X and Gen Y employees will help the distributor overcome that hurdle, Hockley says.
Another area where Consolidated helps its contractor customers is at its 10 Fixture Gallery showroom locations.
“We make sure the customer is satisfied and we hope to exceed their expectations, just as our company slogan says: ‘We take pride doing ordinary things extraordinarily well,’” says Sierra Lemieux, who works in the Tigard Fixture Gallery showroom. “The knowledge we have in the showroom makes us stand out. We have about 55 years of knowledge in the plumbing industry. A plumber who called recently said he did so because he knew we would be able to help him find a product.”
Gordon adds: “A computer really can’t necessarily help you on your widget to this widget or what you need to put it together with. Yeah, a lot of Youtube videos out there try to help, but face-to-face conversation in solving a problem is huge. And our people are known for being able to help.”
Having highly trained employees requires a willingness to invest in that knowledge. Consolidated created its Operations University with about 14 modules so employees companywide could learn the same things the same way. Additional training comes from ASA education programs. The company also started a Waterworks University for people choosing that specialty or in a branch that does both plumbing and waterworks.
Hockley acknowledges Consolidated Supply does sell directly to consumers through its showrooms but that it’s a small percentage of the business. The majority of the showroom business comes from contractors sending their clients to the showroom to look at fixtures.
“We’ve made the selection process easy here,” Lemieux explains. “Customers come in and they leave feeling as if they have a direction in what they want to do. We don’t care if it’s a two-hour process or a 10-hour process spread over several visits. Our customers leave here knowing what their space in their home will look like. They leave here feeling empowered.”
For customers looking for water-saving fixtures, energy-conserving equipment or products made from recycled materials, Consolidated Supply’s showrooms highlight those products with green leaves. The Pacific Northwest is a very eco-conscious area, Hockley says. “Recycling and conservation are very important to us and we’re providing those kinds of products to our customers,” she notes.
Hydronics in Seattle
The green theme also is prevalent in the company’s hydronics business, which centers mostly in the Seattle area.
“A lot of people in this area are green-minded and want a heating system in their home reflecting that attitude,” explains Michael Smith, the company’s heating sales manager. “Hydronics can be done with high-efficiency equipment through a variety of energy sources and can easily be zoned, allowing you to heat specific areas to varying degrees at different times of the day, which saves energy.”
The city’s residents are very tech-savvy and want the latest and greatest technology, he adds. They do a lot of research when building or remodeling their homes and become very educated on the benefits of hydronics.
Solar thermal is somewhat popular in the area, despite its rainy reputation. “We were doing quite a few systems a couple years back when state or local tax incentives were available; unfortunately, when the incentives went away so did most of our business,” he says.
The company isn’t directly involved in selling geothermal equipment, but it is involved in several projects where it is providing boilers, controls and piping that are tied in with geothermal, Smith says. The company also sells air-to-water heat pumps, which work great in the area because of its mild temperatures.
“Consolidated works very closely with many area contractors,” he states. “We offer a full variety of services to the contractor, including plan take-offs with heat-loss calculations, radiant tubing drawings, boiler room drawings, and equipment selection consultations and site visits.”
Training its customers in hydronic applications is just as important as other product training. Consolidated provides some in-house training and works with area rep firms for specific product training.
“Some classes are general hydronics design or concepts while others could be for a specific new boiler or control,” Smith explains. “We also encourage our contractor customers to attend manufacturer training schools held at their locations.”
For an 87-year-old company, the modern Consolidated Supply has changed how it runs its business without changing the spirit of the business. And for women — and men — entering the plumbing industry, Hockley has some words of advice.
“Know your stuff and stick to your guns,” she says. “Be really conversant in technology and the integration of technology and traditional wholesaling. And find a mentor.”
Gordon adds: “It’s really about believing in yourself and trusting what you know and can deliver, and be a great listener. I always say there’s a difference between listening and hearing. You’ve got to do both.”