San Francisco-based The Adam-Hill Co. is a small distributor flourishing in a tough economy against much larger firms. Founded in 1919 by Mr. Adam and Mr. Hill, the company started out as a hose distributor and now specializes in both fluid power and power transmission products. Its modest size and rustic feel belie large business volumes and a modernized distribution system. With only 9 employees, Adam-Hill generated $2.3 million in sales last year. The company has remained independent, even as formidable national and international competitors have set up camp in the Bay area, some even across the street. In fact, its volume far exceeds that of many of the large conglomerates' individual branches. Its strategy for success has been simply high-quality service.

"Everyone has hose, so it's the service that counts," says Mike Courts, Boston Weatherhead district sales manager. "If it establishes the right relationships, a small distributor can compete well against the large nationals." Adam-Hill is a distributor for Boston Weatherhead, Div. of Dana Corp.—a role it assumed in 1926 when it became the company's first distributor. Indeed, Adam-Hill's emphasis on service has nourished many such long-lasting relationships. "Due to long-term relationships, we get calls from companies as far away as Canada," says co-owner Rob Aveson. "Now, they could get the same products locally, but we give them a reason not to change." While some large conglomerates regard products as commodities, the company consistently provides high-level, personalized customer service. "Adam-Hill calls on us regularly, is interested in our needs and is in tune with our demands," says Robert C. Harper, president of California-based Harper Metal Products, Inc., which produces metal forming equipment for the HVAC industry.

With global companies as part of its long list of clients, Adam-Hill has combined its "mom and pop" quality with technological know-how—modernizing its distribution system and service. A few years ago, it adopted a modern Prophet 21 distribution system. Its upgraded service allows it to retain its longtime customers even as many corporations are implementing national or integrated supply contracts. "We have to stay current, especially to continue serving our larger customers," says the company's other co-owner Mike Kohl. Coupling service with technology is key for Adam-Hill, and this is apparent in the company's Web presence.

The company's unusual inventory also reflects its focus on service. "Another reason customers appreciate Adam-Hill is that it is willing to stock almost anything," says Courts from Boston Weatherhead. One competitor, a large company whose expertise is integrated supply, turns to Adam-Hill for items it doesn't inventory. Another bigger competitor could not find a source for an unusual type of chain and was surprised to discover that such a slow-moving item was in stock at Adam-Hill. Indeed, even as industry experts are touting inventory velocity, co-owner Aveson believes that marginal demand warrants stocking such uncommon products. Furthermore, he says they make sure that low-demand items in stock are not, in fact, dead inventory. In addition, the company carefully manages its fast-moving inventory. "Adam-Hill also has a floor stock program so that essential parts are replenished regularly or on call," says Barbara Garcia, contracts administrator at California-based Varian Medical Systems, Inc., which gets its plumbing supplies for water cooling processes from the distributor. "We have an open purchase order and don't have to monitor our stock." Instead of replacing individual products that are running low, Adam-Hill brings in a whole new rack that includes the high-demand items. "Even if there is a product Adam-Hill doesn't stock, they will get it," says Garcia. "Some other distributors wouldn't even try to stock it for us."

Another service hallmark is the complex technical assistance that Adam-Hill provides. According to Garcia, Adam-Hill has been working closely with Varian's engineering department, giving samples and technical support for the department's prototypes and new product development. Varian relies on Adam-Hill for the prefabricated hose assemblies in its clinical linear accelerators. As a global business, Varian's standards are exacting, and according to Garcia, the distributor has been up to the challenge. "Adam-Hill responds well to our unrealistically-high requirements," says Garcia. In meeting customer needs, co-owner Aveson stresses the importance of working with multiple departments. He says the company not only helps engineers with new product designs but also assists purchasing departments in finding the best-priced items required by those designs. "More than ever, it requires a relationship with purchasing departments and a higher level of selling," he says.

The small distributor is also remaining competitive by keeping prices down. Trimming overhead is a priority. For example, when rent skyrocketed as a result of the high-tech boom in the Bay area, Adam-Hill closed two SF branches. But they did so without inconveniencing their clients. The company kept the phone numbers from those former branches and now runs a truck around the Bay. In fact, years later, some clients still don't know that those branches are no longer open. For Adam-Hill, keeping competitive in an economy of big players with national contracts still boils down to customer service. "Often smaller purchases fall below the national program minimum or an integrated supply program cannot meet certain needs, and the stocker will still come to us," says Aveson. "The bottom line is that we still do what we can to help the customer."

Source: Both Sides of the Street
Richard Trombly, Associate Editor
Industrial Distribution, July 1, 2002
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