Top 40 - The 5 Habits of Highly Successful Suppliers
Fast-Growing Top 40 Suppliers Share The Secrets To Their Double-Digit Growth In 2011
While many of the fast-growing suppliers last year were apparel companies, the obvious question arises: How much impact did high cotton prices have on revenues for the industry? According to some in the industry, not as much as one might think.
"If anything last year, it affected some delivery costs," says Jeff Lederer, president of Prime Line (asi/79530; 17% growth from 2010-'11). "But the prices have stabilized for us and have not been impactful."
Glenn Oyoung, vice president of marketing for Tri-Mountain/Mountain Gear (asi/92125; 15% growth), says there were pros and cons to be found amid the cotton price spike – the con being that it temporarily priced Tri-Mountain out of the market on higher-end apparel. "We saw a lot of people, to be really frank, kind of walk away for a while and go down to a $4.99 polo with 4,000 stitches," he says. "I would say that, net-net, it's not something that helped us, and we're happy that it's behind us."
What did help many suppliers, though, were improvements in technology, product diversification, customer service and turnaround times. Indeed, many of the fast-growing Top 40 suppliers told Counselor that improved delivery times and enhanced service offerings were at the core of their success last year.
Here are five common denominators among Counselor Top 40 suppliers that saw double-digit growth in 2011.
1. Product is Job One
"I definitely think the biggest factor was just unleashing so many new products in the span of the last 18 months," Oyoung says. "Our 2012 collection included 200 products, including our spring collection, and we're not done yet. Just from a quantity standpoint, I think we're going to continue to put out just a huge amount of products."
Polyconcept North America (32% revenue growth in 2011) did something that's counterintuitive for many businesses during a down economy – it made major investments in new products during 2009 and 2010, according to President David Nicholson. It's those investments that benefited the company last year.
"Since coming out of the economic downturn, we've made some significant investments in expanding product lines and adding services, and I think we did it at a time when companies were not really making investments," he says. "As the economy's recovered, I think those investments have really paid off, and we've been able to generate nice growth as a result of those investments, both in 2010 and in 2011. In particular, our Bullet Line (asi/42424) division saw very, very rapid growth last year."
2. Product Diversification
Part of Polyconcept's investments included a successful attempt to gain market share in areas that it hadn't previously tapped. "I think one of the major factors is we made an acquisition early in 2011 that represented a new space for us," Nicholson says. "We're primarily a hard-goods company, so we acquired an apparel company, Trimark Sportswear (asi/92122), in April 2011. That represented a great growth opportunity for us in terms of getting into a new product segment. But I think also importantly for us is it really solidified our position in the market. It added a high-growth market for us, and that's Trimark's primary market."
Lederer says Prime Line's new alliances and acquisitions also helped to position itself to distributors as a one-stop shop. "The exclusive arrangement we have with Leeman New York has really helped with our sales," he says. "It's really helped people look at Prime in a much different way – it's not only high-to-medium-end products we sell, but it's also low-end commodity under $2 with a design aspect to it. We really like to consider ourselves as having a full breadth of different price points, designs and creativity.
The breadth of offerings and diversity of product line, Lederer says, is what has led to the company growing its revenue double digits each of the last two years.
"All those things seemed to gel right around the last couple years, and distributors have looked at us and sort of breathed a sigh of relief," he says. "The more distributors there are in the industry, the more they need to differentiate themselves, and those that have leveraged all of our services have benefited by differentiating themselves on a great price and knowing they're going to have a product delivered on time."
3. Leverage New Technology
Lederer says Prime Line spent well over a million dollars on a new interface that allows for quicker response times for its distributor partners and helps Prime to more efficiently manage its inventory.
"I think the major factor in the growth for us was the processes we put into place to be able to handle an increase in business with the technology we invested in," he says. "The technology allowed us to be really nimble with customers, to turn one-day or same-day orders around or one-day service orders around, and manage our inventory at much tighter levels. We have the highest inventory level we've ever had."
Lederer says the key to Prime Line's technology adoption was that it was able to implement the new interface with no service lapses. As he knows, technology upgrades can often come at the expense of customer service and communication levels. Those were things he knew Prime had to avoid.
"The bottom line, when a distributor is placing an order with us, they're our sales force, and we need to always be able to give them the highest levels of service," Lederer says. "From increasing the speed of answering the call, to the speed and accuracy of the answers that customer service can give, to the ability to get all the information they need from our website, to be able to get no minimums, and to be able to sort of have their cake and eat it too with us, it's all vital to be able to offer."
Bodek and Rhodes (asi/40788; 18% sales growth last year) also invested in its growth through technology by developing an apparel design studio for its customers, according to Mary Ellen Nichols, director of marketing communications. Capitalizing on the advancing virtual proof technology, the enhancements allowed Bodek's clients to provide services to clients that they couldn't previously provide.
"People said it was very profitable for them when they could add on embroidery and other decorating locations, and many people out there didn't have the ability to show that on their virtual proofs," she says. "So, we added images to our library of the backs and sides of both sleeves, left and right, so they could do virtual sampling of over 1,200 items and really up their profitability in their virtual samples."
4. Improved Turnaround Time
Speed is vital in today's ad specialty market. The suppliers that can fulfill orders quickly and deliver imprinted items next-day in many cases are the ones that are growing the fastest.
Being a family-owned and operated company, Hub Pen (asi/61966; 19% revenue growth in 2011) has a competitive advantage in its ability to turn around orders on a dime, says National Sales Manager Andy Arruda. Arruda remembers a recent last-minute pen order that he believes most companies wouldn't have been able to fulfill in time.
"We had the opportunity to help out one of our distributor partners that needed an event for a Saturday. The call came in at 4 p.m. the day before," he says. "It was rushed through order entry, proofing, graphics, and then sent down to our laser production department. The 500 laser-engraved metal pens were shipped at 5:30 by courier."
That hour-and-a-half turnaround on the order gained Hub a loyal client, and enhances its reputation as a supplier that can be counted on for rush orders. That is something that Hub has built its business on in recent years, and it's a strategy that led to the company's 70% revenue growth over the past five years.
Arruda says that kind of prompt service wouldn't have been possible if he had to run through a series of managers to get approval for the rush order with an hour to go before the weekend. "Being a family business allows versatility to get the job done," he says. "We're not going to be able to fulfill every request, but boy, if it's humanly possible and we're not bumping another order, we can definitely get it done."
5. Enhanced Customer Service
One of the secrets to Bodek and Rhodes' recent success, according to Nichols, is president Mike Rhodes' drive to get the company to be more customer-focused than ever before. "He wanted to be connected to them so we become indispensable," Nichols says. "So, he challenged everybody on the team with the question: What can we do to help our customers make more money?"
Nichols says Bodek and Rhodes took time to learn about what its clientele said were their biggest challenges – and reacted accordingly. It surveyed clients, met with them one-on-one, and took every opportunity possible to find out its customers pain points. The result was some actionable strategies that drove the company last year – a major one being a step to increase the company's inventory levels.
"The number-one thing is we focused on being the inventory and selection powerhouse for our customers," she says. "What we saw from our research is a lot of the major wholesalers had some inventory problems and continue to for some of the main brands, and we overbought to anticipate that. In most cases, we did 80% more inventory than we did the prior year. So, we had the goods when other people didn't, and that's how we're going to get the business."
Bodek and Rhodes also made sure that everyone who might come in contact with a customer would be fully equipped to meet his or her needs. "You've got to take care of your own house and make sure they're getting that quality experience," Nichols says, "so we added sales staff and internal trainers, and cross-trained our staff to provide a better level of customer experience."