THE CORNFIELDS around Joliet, Illinois, have been shrinking in recent years, victims of the greater Chicago metropolitan area's endless appetite for commercial and industrial real estate.
Central Parts Warehouse is one of those businesses operating in what is at least today a mix of farm, retail, and commercial enterprises. To get there, customers drive down what used to be exclusively a farm road and look for a building that is not a farmhouse. Follow the sign that says that Central Parts Warehouse is in the back, and you are there.
Not exactly a prime location for parts operations that rely on a strong walk-in trade. But don't be fooled by geography. The little warehouse out back uses high tech to more than offset its low profile.
The marketing techniques the company has developed pay dividends. Central Parts Warehouse began as a distributor of snowplow parts and later began selling entire snowplows in its local area. The company now sells snowplow parts in 42 states. It also has shipped parts orders to Sweden, Japan, and South Korea. Parts for its new product line — lawn and garden equipment — have been sold to customers as far away as Guam.
The extended reach of the company's marketing efforts comes from the use of computer technology and the Internet. It's what happens when two friends pool their talents — one who knows computers and one who knows the parts business.
Bill Nero launched Central Parts Warehouse a decade ago. Dave Beckwith with Market Vision has supplied the computer expertise.
“I've always been a parts guy at heart,” Nero says. “But I've also known that computers can give you a tremendous advantage. Use them right, and you can drive a lot of cost out of your operation or make sales that you never would have gotten otherwise.”
Internet sales to countries half a world away are simply a bonus. Far more beneficial to the company has been its database management system and the way the parts operation has been able to use it to identify prospects, market to those prospects and customers, ship orders to them quickly, and to know exactly where those shipments are.
Central Parts Warehouse is in business because it does things that most companies in the channel of distribution do not.
“Most manufacturers are good at manufacturing, but they struggle with fulfillment,” Nero says. “They generally aren't set up to do the sort of things we do — sell parts quickly and efficiently.”
What does Nero mean by efficient? The company has refined its fulfillment operation to the point that it now routinely provides same-day shipping for orders that customers call in prior to 4 pm.
Help from MOM
An efficient layout of the parts warehouse helps personnel fill those last-minute orders quickly. But the company also gets a helping hand from MOM, the computer software that Central Parts Warehouse uses in managing the day-to-day operations.
MOM (Mail Order Manager) is a software package designed, as its name suggests, for companies that handle mail-order operations — which Nero says is the bulk of the company's business.
“What we are doing is not rocket science,” Nero says. “Anyone with a big checkbook can duplicate what we are doing overnight. The challenge, though, is the level of service. We provide excellent service.”
The beauty of MOM is its ability to elevate the level of service that Central Parts Warehouse is able to provide. The software, which the company uses to track sales and shipments, recently was upgraded to integrate with the UPS tracking system. Now when the company ships an order, MOM assigns the UPS tracking number.
“The benefits of this are huge,” Nero says. “With our live DSL Internet connection, we can tell customers within seconds exactly where their shipment is. The bottom line is better service and faster answers.”
Nero explains that under the old system, determining the status of shipped orders was a two-step process. An inside sales rep had to pull the invoice and then go online and check the tracking number. This process sometimes took as much as 15 minutes.
“That meant time that our sales reps were away from the telephone,” Nero says. “Now they are able to spend more time selling and less time telling the customer, ‘I will get back to you.’”
Taking calls, making calls
Maximizing phone time is critical for a company like Central Parts Warehouse. The company has received as many as 9,800 calls per month during its peak selling season, yet it is only able to field 6,780. The company has been working to narrow that gap.
“We have no way of knowing how many of those customers and prospects who did not get through on the first try called back,” Nero says. “That's why we have hired two additional people to staff our phones. Plus, as we mature as a company, we can do a better job of handling the calls we receive. Our customers are accustomed to doing business with us now, and we can handle their needs more efficiently.”
Nero says that even the customers who buy from Central Parts Warehouse for the first time are becoming easier to serve. The reason is referrals.
“We have a reputation now,” Nero says. “It used to take multiple phone calls before we made the first sale. Now we are getting calls from prospects who know who we are and what we do. They are placing orders with their first phone call to us.”
With the help of the data that its computer system generates, Central Parts Warehouse has been able to streamline its inventories, the layout of the warehouse, and its shipping department.
Each part is assigned a specific bin location, organized in numerical sequence by manufacturer. This helps those working the retail parts counter to be able to locate what the customer needs. However, the computer system can print pick tickets by bin sequence, speeding the collection of parts to be boxed and shipped.
“A lot of customers have mixed fleets,” Nero says. “Municipalities in particular, because they are always buying the lowest bid. That might be Meyer snowplows one year, Western the next. It's a challenge to be able to fill mixed fleet orders efficiently unless the pick ticket has been sorted properly.”
The computer also has enabled Central Parts Warehouse to streamline its inventory. At peak season, the company keeps about $2 million in stock, a figure that would be substantially higher were it not for a lot of analysis of purchasing patterns.
“We know the history of our sales,” Nero says. “We have analyzed what sells early in the season and what sells late. This has helped us tweak our inventories so that we don't carry higher quantities of parts than we need. At the same time, you don't want to be out of stock. Snow and ice control is a very seasonal business. If you spend a lot of time and money getting a customer to buy from you, you better have what he needs when he calls.”
Central Parts Warehouse also has streamlined its warehouse through the use of a forklift that enables the company to have narrower aisles between bins. By using 7½-ft aisles instead of 12-ft, the company has 450 pallet slots instead of 230 in the same amount of floor space.
Central Parts Warehouse sells entire snowplows and spreaders in addition to parts. The company has begun listing all of its parts as components. Its computer system automatically tracks sales of each. A “whole good” is considered a series of components that are made up of individual parts. The system makes the proper deduction from inventory, regardless of whether the sale is an individual part, a component, or an entire plow or spreader.
Each part number is coded in the system by manufacturer, by application, and by customer.
“We know that if a customer buys a Western part, he has a Western plow. If he buys a Meyer part, he has a Meyer plow,” Nero says. “We are using that information to build up a user profile and to identify geographic hot spots. That allows us to really segment our marketing efforts. If we decide to run a special on Meyer parts, we can send out e-mails only to the customers we know that have Meyer snowplows. We make sure that we have the permission of the customer to send e-mails to him, but segmenting our customers this way allows us to keep our correspondence fresh and relevant. We aren't sending information to people who aren't interested. The reaction from customers has been really good. People want the information we are sending them.”
Central Parts Warehouse has had a presence on the Internet since the “early days” of Dot.com.
“During the last four years, the Web really has begun to generate leads for us,” Nero says.
The company completed a redesign of its site (http://www.centralparts.com) in September, giving customers far more flexibility to shop for parts. The new version, developed through an outside service, is particularly useful for e-commerce. Through it, customers can buy whole goods or parts, adding each selection to an electronic shopping cart.
The site is especially effective for parts customers because it allows visitors to view exploded drawings of the parts for the product in question. Click on the number of the part shown on the drawing, and the site provides a description of the part, its OEM part number, the list price, and the customer's cost. If that is the part needed, click on a link to add it to the shopping cart.
The site, the product of an outside supplier, goes a long way toward automating the sales process. However, even the most automated sales system requires human supervision. Typically the company calls and e-mails the customer to verify that the order is legitimate and not the work of some prankster. Small orders received from customers listed in the MOM database are filled right away.
“Our new website is built on Microsoft's .NET Framework and Web Services,” Nero says. “This technology claims to eliminate the infamous “404 Page not found” errors and produces faster page results.”
Catalog the key
Despite these electronic advancements, the company's printed catalog has been the key to the company's growth.
“That's how we started,” Nero says. “The idea was to list the best-selling replacement parts for Meyer and Western snowplows in a single catalog.”
Nero put the idea into action in 1979, publishing a 10-page catalog. The latest version of the annual publication is 94 pages and includes a full-color cover. The bigger catalog reflects the added depth to the company's product line. Over the years, Central Parts Warehouse has added a wide range of snowplow manufacturers to its catalog, along with multiple manufacturers of tailgate and hopper spreaders. The catalog has grown an average of four pages each year, Nero says.
Central Parts Warehouse distributes the catalog to anyone who has bought parts from the company within the past four years. It is also available by request through the website. Catalog requests go directly to Market Vision for fulfillment. New names are automatically added to the company's database. The Market Vision database routinely is synchronized with the names Central Parts Warehouse maintains in MOM to make sure that both companies have a list that is fresh and up to date.
Central Parts Warehouse will introduce a CD version of the catalog this year.
“We mail our catalog in September,” Nero says. “This year we included a notice in the catalog and on the Web that the CD version will be available. It's an experiment. We will see how it goes. Some in our industry have been quick to embrace technology, while others have not. My guess, though, is that it will go over well. Customers will be able to find stuff a lot easier, and it will all be four color.”
Fighting the cycle
One of the challenges facing anyone in the snow and ice control business is seasonality. The web, catalog, and other marketing efforts Central Parts Warehouse has made over the years have enabled the company to sell parts all year long.
Even so, the majority of its parts business follows traditional buying patterns for the industry — autumn and winter. To level out the peaks and valleys, Central Parts Warehouse entered the commercial outdoor power equipment and parts business in March 2002.
To sell its new product line, the company will employ the same marketing strategy that has proved successful with snow and ice control customers. A new catalog for these products is being produced now so that it will be ready in time for the spring season.
“Getting into the commercial lawn and garden business is a great fit for us,” Nero says. “A large percentage of our snowplow customers are commercial landscapers or municipalities. And their business gets going in February, about the time that our snowplow business is winding down. By adding these products, we can serve some of our customers all year long.”
The company's research indicated that approximately 1,900 landscapers were within a 30-mile radius of Central Parts Warehouse. Of those, 500 were already snowplow customers.
The products include commercial lawn mowers, sod cutters, thatchers, lawn combers, aerators, and post-hole diggers.
“There is a lot of variety, too, within individual product lines,” Nero says. “We sell post-hole diggers that can produce a 12-inch hole or one that digs two-inch holes for planting tulips.”
Central Parts Warehouse initially will serve as a local retailer for its lawn and garden products. However, the company's new website also includes the lawn and garden side, which means that the same distant customers currently buying snowplow parts will be buying parts for lawn and garden equipment.
“It's a two-tier distribution system,” Nero explains. “As a retailer of whole goods, we demo these products. Parts are different. We are not required to demo parts.”
A staff of five handles inside sales. They represent the entire Central Parts Warehouse product line, including the new commercial outdoor power equipment. A separate outside staff of three people call directly on customers throughout the northern third of Illinois.
The marketing effort has paid dividends. The company began with a 600-sq-ft facility and a limited product line. It now operates out of a 15,000-sq-ft warehouse, not counting office space. In addition, Central Parts Warehouse has 20,000 square feet outside where it can store spreaders, snowplows, and other weather-resistant inventory. But the inventory doesn't stay there long. The little warehouse out back has orders to fill around the world, all year long.