The year was 1986, and the management team at Atlantic Fasteners had mustered up a revolutionary idea: Create the first, of what would later become six, service guarantees, each backed by a $50 credit. Why $50? According to industry surveys, that was the approximate cost to correct an error at the time. In 1998, the amount was increased to $100 to more accurately reflect increased costs, but since the program went into effect, the company has issued only 564 credits on a total of 513,000 orders. “Internally we take care of the basics extremely well,” says Patrick O’Toole, company president and majority owner. “We ship on time, have a 99.96 percent accuracy rate, and a 97 percent fill rate.” In 1998, errors occurred in a paltry 15 of the 189,000 line items shipped by West Springfield, Mass.-based Atlantic Fasteners, meaning that few customers got to see any of those $100 credits. For Tom Marino, purchasing manager at Waters Corp., a manufacturer of analytical instruments in Milford, Mass., that perfection can be frustrating. “I know they offer a $100 gift certificate if they miss a delivery and it’s great, except that we haven’t had a chance to take advantage of it!” he exclaims. “We’ve done business with other fastener distributors, and there’s really no comparison. Atlantic Fasteners has allowed us to really drive our inventories down, reduce our level of transactions, and decrease human involvement in terms of managing our hardware materials.” According to O’Toole, near flawless service backed by cash-based guarantees, set his company apart. “Customers tell us that competitors say they’ll give a cash-based guarantee, but so far, to our knowledge, no one has put it in writing,” he says. “Our customers are overwhelmed by the guarantee, but our service is so good that people entitled to it often tell us not to even bother with the credit.” In the beginning In January 1981, O’Toole and his brother, Larry, purchased Atlantic Fasteners, a company that was bankrupt at the time. It was the second time that the company, originally known as Springfield Fasteners, had gone bankrupt within 18 months. When the brothers purchased the firm, it was a small industrial distributor of nuts and bolts, operating with no computer out of 5,000-square-foot space with five employees, posting $250,000 in annual sales. But this didn’t faze the brothers, who had already turned around two other area industrial distribution companies — Collins Plumbing, then located in Holyoke (1971); and Vadnais Lumber Supply of Springfield, (1979). With a diverse blend of business backgrounds, the brothers were well-suited to perform a turnaround. Larry O’Toole had previously worked in insurance and chemical sales, and Pat O’Toole was group president of a division — which included six separate manufacturing companies — of Standex International. Today, Pat O’Toole is majority owner and president of Atlantic Fasteners. Initial revitalization plans for Atlantic Fasteners didn’t go as O’Toole would have liked. “A president and vice-president were hired and given minority shares in the business, but, soon the president proved ill-suited and was let go,” he explains. Even worse, current customers were reluctant to deal with Atlantic because of the firm’s shaky reputation. “This poor reputation also undermined Atlantic Fasteners’ attempts to gain new customers and solicit exclusive distributorship rights for high quality fastener lines,” recalls O’Toole. “It was classic ‘Catch-22’ — without name brands, prospective customers were hard to snare, and without a solid customer base, the name brands necessary for luring customers were equally difficult to obtain.” But with hard work and innovation it all came together. Today, Atlantic Fasteners employs 47 people and expects 1999 sales to reach $8 million. The company grew at a compounded rate of 19.4 percent from 1981 to 1998 by selling commercial nuts, bolts, screws, washers and anchors to machine builders, utilities and process industries in the Northeast. To date, Atlantic Fasteners has nine times more customers and seven times more inventory, totaling 24,429,000 pieces — 19,018 varieties — of nuts, bolts, screws, and washers. “Our staff has increased 12 percent in the last six months, including three new outside sales people,” says O’Toole. “Our goal is to grow at a double digit compounded rate, and we’re geared for it. We have to balance inside operations as growth occurs in terms of purchasing, warehouse personnel and other issues, but we’ve managed to overcome these problems and post phenomenal growth since 1981.” To ensure that every employee benefits from growth, Atlantic has a company-wide profit-sharing plan. “Most of the distributors we compete with don’t have profit sharing for their employees,” O’Toole says. “Because of our plan, we not only have a high employee retention rate, but we also get terrific buy-in for change. All employees have growth and profits on their minds because they participate in and benefit from them, so they’re very receptive to change and introduction of new technology, as well as other shifts within the firm.” Key players at Atlantic Fasteners include Carol Peters, vice president, minority owner; Tony Peterson, vice president marketing, minority owner; Doug Swain, vice president operations; Dick Mayoh, vice president sales; and Mark Bovino, president of Atlantic Inventory Management Service, an integrated supply management division. Fastener superstars For Frank Miazga, purchasing agent at Zygo Corp., a manufacturer of laser optic measuring systems in Middlefield, Conn., Atlantic Fasteners’ VMI set-up in his firm is so seamless that he “doesn’t even know they’re here anymore. They just come in and do their job and that’s it,” he explains. “They provide fasteners, hardware and kits, on consignment and we don’t have to stock, order or put away that inventory anymore. Someone comes in once a week, brings the hardware in and manages the whole system.” According to Miazga, his firm is “very selective” when choosing suppliers, and takes the time to monitor onsite delivery, quality and performance on a monthly basis. “Atlantic Fasteners is right up on top, no question about it,” he adds. “They have no qualms about using a courier to run something down to us from Massachusetts if they have to. We can’t ship a $100,000 instrument without the proper hardware, so they definitely play a very significant role in our business.” Since Atlantic Fasteners carries the same or similar lines as do its competitors, Peterson says his firm concentrates on determining the unique services its customers want and how to provide them — even if it means creating new companies or divisions. For example, Atlantic Fasteners developed its own bar-coded warehouse operating system in 1991, which helped boost productivity by 45 percent and reduced errors by 87 percent. Area companies learned about the results and were impressed. One large international manufacturer approached Atlantic about automating its 14,000-item tool room and 43 satellite cribs. Instead of risking losing its focus on fasteners, Atlantic created SumTotal, a developer and installer of bar-code-operated tool crib management and work order/preventive maintenance systems. SumTotal is now a separate, fast growing company marketing software for managing distributorships and stockrooms. Then, in 1997, Atlantic Fasteners created Atlantic Inventory Management Service (AIMS), an integrated supply management division. AIMS doesn’t stock or ship any product. Instead it offers everything from bar code inventory management to shelf restocking and consolidated monthly invoicing. Last year, realizing that it could broaden its appeal to customers by marketing all three firms — Atlantic, AIMS and SumTotal — together, Atlantic created and trademarked the name Outsourcit to represent their informal alliance. Peterson says, “The three improve their cost saving offerings by pooling ideas and products. But, Outsourcit is not a separate company.” Technophiles At Atlantic Fasteners, every employee uses a computer, and all outside salespeople have laptops. Most office workers have Internet access, and all outside sales reps use a contact management program that they synchronize with a master database at headquarters. Atlantic Fasteners has also created multiple Web sites for its core businesses. “No one knows exactly where the Web is going,” says O’Toole, adding that from a sales perspective, the Internet helps reduce overall cost as a substitute for literature. “It’s an excellent sales tool. Our Web site is multi-purposed. We take the electronic files that make up the site and copy them onto the hard drives of those laptops that are used for customer presentations. While we’re updating the Web site, we’re also updating presentations for our sales force. This gives us a chance to spread our Web site investment.” Atlantic Fasteners vendor Joel Roseman, president of Bell Fasteners in Pawtucket, R.I., is one fan of the distributor’s technology investments. “Atlantic Fasteners has a comprehensive Web site with a good amount of technical information. The company has a different approach to the distribution business,” says Roseman. “By combining service with technology – through their electronic ordering, bar coding, automatic reordering – they are ahead of many others who just aren’t there yet.”
|
|
||||||||||||
