Talking to Anthony Akin, Director Marketing and eCommerce at IBT Industrial Solutions, Kansas, USA.
IBT Industrial Solutions is one of the Top 50 Industrial Suppliers in the USA. With over 40 warehouses in the Mid-West of the USA and 70 years of successful history, IBT is one of the players in the area of conflict between the „800 Pound gorillas“ of the Industry and numerous small Shops. And an interesting counterpart in terms of differentiation strategies..
At a visit a couple of years ago I had the chance to get to know IBT a little bit closer. And learning during that visit, that they not only operate successfully in the market, but also follow some unusual paths, like their own HD-film Studio to produce training materials.
Talking to Anthony Akin, Director Marketing and eCommerce at IBT, I not only learn more about the background to this decision, but a lot about positioning issues in competition: e.g. customer-loyalty strategies via competitive factors like product consultancy and technological expertise. Proximity and emotional link up with clients. And as a direct result the needs and challenges for personnel development of the sales teams. Furthermore I was interested in his judgement re the Internet of Things and the role of distribution in this area.
And last but not least I gained insight into his experience regarding the process of EDI/OCI link-up of IBT clients.
Enjoy listening.
Transskript
Willkommen zu „Max und die SupplyChainHelden“, deinem Unternehmer-Podcast zum Thema Einkauf und Logistik im digitalen Wandel. Interviews und Erkenntnisse von und mit Profis aus dem Bereich Supply Chain Management, ganz ohne Beratermission. Ich bin Max Meister und Familienunternehmer in dritter Generation
MAX: Okay, great. We’re sitting here in Denver, Colorado and we attended the MDM Analytics Summit. And to be honest, we had a long day. But I’m happy that you’re here. And before I introduce you, maybe you can say a couple of sentences about you.
ANTHONY AKIN: Yes. Anthony Akin. I work for IBT Industrial Solutions. We are bearing and power transmission distributor in Kansas City, Kansas. We have 50 locations throughout the Midwest and roughly about 500 employees. My role there is Director of Marketing and E-commerce.
MAX: Okay. And if I understand right, IBT is still a family owned business?
ANTHONY AKIN: Yes. Yes. We’re celebrating our 70th anniversary next year. So, we’re super excited there, we’re somewhat like yourself into the third generation as well, the ownership and leadership. So, we’ve been similar growth patterns as you have been showing as well.
MAX: The thing why we two are sitting here is that I visited your company, I think in 2016 or 2015 the first time. And I’ve seen some interesting things. And maybe you can describe a little bit more in detail what the company is doing, which product lines and what are your main focus customers.
ANTHONY AKIN: Okay, yes. Definitely. From our side, my responsibility, is back into data, is really kind of the harder way. So, we have really gone through-. When I initially took over marketing, one of the big push for us was to have a solid return on investment. And to be able to get there I had to have data. And so, when we started opening up and looking at different parts of the business, really taking information from our CRM system, taking information in from our online analytic platforms, bringing all that different types of information into one place and try and use that to help us make better decisions. So, really, we started looking into customer segmentation, understanding what part of process they are in. For us, we are bearing and power transmission, so SKF, Baldor, Dodge are some of the key players there. And we represent just over 2.000 different manufacturers. And our customer base is roughly 6.000 to 7.000 annual. So, we’ve got a lot of volume, a lot of dispersity. Probably the biggest industry for us is that probably 60 percent of our business is end user into a manufacturing facility.
MAX: As MRO?
ANTHONY AKIN: Yes. MRO. Yes. Perfect. Exactly, MRO business. 20 percent is in a contract orientation, so we’re having a supply chain contract there. And then we have nearly 20 percent of our business that’s sits inside of an OEM business. So, we’re almost ??? from where you are. So, we’ve got heavy MRO. And really as a family owned business in a big market place, we’re kind of squeezed in the middle. We look at it as we have the Grangers, the Motion Industries, Applied Industrial on the one side, which is the big box players.
MAX: The 800-pound gorilla.
ANTHONY AKIN: Yes, they are. And then on the foot side you have the smaller local independence. And so, we’re really positioned in an odd place as where people will look at IBT as big enough or they should have all the offerings and solutions as the 800-pound gorilla.
MAX: If you look at the offers the customers today need from you to be successful, what is the general services they expect from a distributor like you?
ANTHONY AKIN: We really, we hone in to product expertise. Really, we felt that we’ve been trying to reinforce our guide proposition. It’s a guide proposition that the founders built 70 years ago. And we’ve tried to constantly remind our customers and our own sales team, about that product expertise. Knowing the product, knowing the applications better than themselves and than our competitors. Our competitors keep to be very transactional and so gets to be, we’re looking for total cost of ownership. And so we’re looking at engineering, we’re looking at re-configuring an OEM piece of equipment, try and help them lower the cost, streamline the supply chain as much as possible.
MAX: And how can you as a marketing and e-commerce perspective support your sales teams in the area of technical expertise?
ANTHONY AKIN: We’ve got a large, kind of a presence right now in sales enablement. And that is one of the big things that we were talking through and looking at how to solve that problem. We’re really trying to get to where we can have product information, engineering information, calculators, tools for our sales team all at their fingertips. On an iPhone or on a smartphone and then on a tablet environment.
MAX: Can you also use these data directly at the customer or is it mainly for internal education?
ANTHONY AKIN: Right now, Max, it’s mostly internal. We’ve talked about opening that data ware up to our suppliers, customers as well. We haven’t really decided if that’s something, a service that we would be charging or if it’s something that we hope to use as give-away, being part of doing business with us. So, instant would be: Sign a contract in this product category and we’ll provide the knowledge and expertise and all this research information on the backside.
MAX: If you look at the customers, do you also make online courses or courses in your premises to teach the customers?
ANTHONY AKIN: We do both. We have a department within the organisation who does complete training. At this point in time we don’t have an online solution for them. But either it’s in person or in plan. And so, we host regional training seminars. And so, we bring in 30 to 40 customers into a market place. We’ll have a trainer that will be there for a day and a half to two days, working with them to understand really the application and really the product itself. And then we host the same kind of-. If the facility is large enough, we can actually host that same environment right there at their plant.
MAX: If I remember right, you have some kind of a television studio or a least a production studio.
ANTHONY AKIN: Yes.
MAX: Can you tell us more about it? Because, then we get the loop probably. This is a chance again.
ANTHONY AKIN: It’s really exciting and really interesting is that we were one of the first video production shops inside of Kansas City to be shooting in HD.
MAX: In HD means?
ANTHONY AKIN: High definition. So, we’re dating back many, many years ago. But as part of that, we initially set up a training department to do all internal training. And so, we started recording our trainings and sending it out to all of our branch locations throughout the Midwest of the United States. And quickly in to that we started doing production films and doing a lot of internal training documents for customers and our manufacturers. Manufacturers were coming to us, saying: Hey, we need to do a training program. Can you actually come in and record our course? Which has lead us into shooting for Oprah Winfrey, the History Channel, a lot of these big national publications. We’re actually doing the shooting when they came into the Midwest.
MAX: Okay, very interesting.
ANTHONY AKIN: Yes. We’re really that place that – we’re overhauling a whole piece of business right now. We’ve probably three years ago sun-setted that whole department. And with the rise of video and the interest in it we’re actually bringing it back. And so, we’re going be doing a lot of-. The mayor reason is to capture a lot of that knowledge from our existing internal sales people and to use it as a place to capture that knowledge. We’re like mini organisation. We have a very, very rich history and tenure. And so, we have people who have been working for the company for 20+ years. And we’re coming up to that retirement age. And we’ve got to figure out a way to try to capture that information.
MAX: Okay. Yes. So, actually, the ambulance is passing by. But I think they’ll be gone soon. So, this is one thing that you will improve in the future? What I think or when you look at the conference today and yesterday, the focus on video and education with video was a big focus. So, I think for the future, this is a chance to really make a closer connection to the customers also.
ANTHONY AKIN: Yes. I think that video is much more personal than reading a piece of paper or reading something online. And so, you can actually put a face to that and have some emotional connection back to video instead of just reading a piece of paper.
MAX: Okay. So, maybe I want to stay in the loop about the information what are you planning, because I think it’s interesting. We aren’t doing webinars today for our customers. But I think on the long run maybe it will be interesting. Because it’s easier to watch half an hour or 20 minutes, than travelling to a plant or to a branch for one day. So, this could be a chance.
ANTHONY AKIN: Do you see that translating to your audience of customers?
MAX: You mean translating language wise?
ANTHONY AKIN: Not translating. Just the online training instead of being in person, touching and feeling and interacting with the product itself there.
MAX: I think it has to be personal with person really doing it, mounting, demounting bearings, just showings the technical skills. Because as you said, it’s personal. And if I want the customers to really take an advantage out of it, it probably has to be personal. One other topic, if you look at all the Internet of Things applications, do you see any important developments in matter of supply chain management at the moment?
ANTHONY AKIN: I think the whole industry is really excited about Internet of Things and what it means. And I think that we’re really at the ground floor, that we have a growing number of manufacturers who are producing and building equipment who have sensors on them. And so, if you’re walking into a manufacturing facility in a year you’ll have sensors everywhere and none of them hardly talking (to each other). And you have all these different despaired systems.
MAX: Do you have suppliers where you already are in discussions about trying an approach together?
ANTHONY AKIN: We have relationships, we’ve talked, as the SKFs and Schaeffler and Dodge, Rexnord, that we have worked with. And actually, we implement their programs for them. But what we find is that with some of these facilities you’re going to have multiple different platforms out there. And trying to centralize all that information actually be talking to each other. And then there is the big question: Who owns that data now? Does the manufacture who is broadcasting or is it the customer? And who were that information design.
MAX: I think this is the biggest structural problem, that you have certain different islands and nobody is able to really connect it. And until today I haven’t really seen a good solution. But to be honest, I’m not a professional in that area but I’m interested in what`s on, reading, watching.
ANTHONY AKIN: There’s not a common language there. Every manufacturer has their own program. And there is no common API between them at this point in time what governs how they’re talking. And so, somebody is going to be out there, then there has to be other people thinking the same thing of how do they centralize that. Because what that leads to for us, I mean as a distributor or as a manufacturer, we can be seen that first hand information where bearings are about to (be) fail. And then you triggering your supply chain. Okay, I need to make sure I have a part ready for them.
MAX: And you don’t have to have a condition monitoring in a very high sophisticated way. Sometimes it’s only the temperature. And you have a couple of things. You have to watch the development, if it’s getting higher, lower, pressure, temperature, things like this. I think on the long run it’s interesting for many production facilities. Probably there will be a central system. But until today I didn’t find a good solution.
ANTHONY AKIN: We’ve investigated and we have even talked from the perspective that trying to find somebody who is out there and developing something. But at this point in time, it’s going to be an arms race who can get it first. So, we’re really intrigued, seeing all the different platforms which are coming out there and how they´ll all talk to each other.
MAX: Interesting topic. It’s important I think to stay on track and be always updated until today. I didn’t find a big or a good solution. But probably in six month from now, there is an interesting opportunity. I have one last topic. You were mentioning that you have about 50 branches. In which area?
ANTHONY AKIN: Our cooperate headquarter is in Kansas City. And so, it’s Kansas. And then we have Missouri. We have Oklahoma. We have Arkansas. We have Texas. We have Arizona. We have Tennessee. We have Illinois. Who am I missing? We have Nebraska and Iowa.
MAX: So, that’s a big local spread.
ANTHONY AKIN: Yes. It’s the heart of the United States.
MAX: Do you see any differences in the needs of the customers in different areas?
ANTHONY AKIN: I’m not going to say different needs. What I’ve seen for us is, our branches that are highly successful are in smaller to midsized market places. Our more profitable and more successful locations are in those smaller communities where relationships still matter.
MAX: So, the personal relationship.
ANTHONY AKIN: And so, our sales team and our people are just a part of the community. And so, it’s still a big relationship and pricing is part of it, but it’s not the only thing. And when we walk into some of the big cities, it becomes very heavily commoditized.
MAX: So, you take this into consideration when you think about value proposition? So, saying that in smaller markets, you have teams with people that connect, that are happy to invest the time. Even sometimes Friday evening.
ANTHONY AKIN: That’s a great observation. I mean, I’m not sure how much of that goes into our hiring process. But it definitely could be something that we’re thinking through as we go through that. We’ve stayed pretty standard with our value proposition. Because we’ve been very diligent and trying to stay true to that. We feel that we’ve becoming a heavily commoditized market place with more and more competitors everywhere. Online and offline as within that we feel that’s one of the things that we have in our favour, to make these connections and they’ll help people walk through problems. And a lot of our competitors are not willing to spend the time. So, we have a higher touch sales process than most of our competitors.
MAX: I think in the modern world, this is one approach that is still successful. It’s the same with us. What we see is, if you look at a total portfolio of probably 2,5 million SKUs, you have the problem that it’s difficult to be a product specialist for big parts. And our customers want to have people that are technical experts, that really can help them to improve the machine or construction. So, I think this is a stretch. But for all the distributors that can offer that service, I think it’s a chance also in future.
ANTHONY AKIN: I think it goes back to one of your questions earlier: Have you enabled your sales person to know that breadth of product? I mean, when we are talking about two millions SKUs, how many different product categories?
MAX: Actually, I think it’s a couple of hundreds. But it goes on to probably 100 main product groups. But this is crazy. You cannot be a specialist in 100 product groups, doesn’t work.
ANTHONY AKIN: Not at all.
MAX: Okay. Maybe one last thing to wrap up. What trends do you see in the partnership with the customers? If you look five years into the future, what pictures do you see?
ANTHONY AKIN: I think that we, the IBTs of the world and your smart players, that we have to become more integrated to our customers, to get working to try to make a common professional transaction. And so, it’s making that purchase, making that transaction as seamless as possible all the way through. And for me that means getting all way up into their planning, their design and working with their management team to see what you can do to eliminate boundaries we mean out the process and become a value-added partner there as part of their supply chain, almost an extension of their supply chain. So, I see integrations can be a big part of that, can be with technologies, can be with people.
MAX: When you talk about integration into the supply chain, you serve OCI?
ANTHONY AKIN: We do. OCI, we have got Ariba, this is a big one in our market place. We have punchout systems for, who is it, SAP, PeopleSoft, eRequester, so all the mayor players in the market place.
MAX: What is important or what is the size of the business? Can you tell in total?
ANTHONY AKIN: Right now, that is roughly 15 percent of our total buyer. So it’s a sizeable portion.
MAX: It’s important.
ANTHONY AKIN: It is very important. And to extend that, you have EDI in there as well. And that’s interesting as trying to… – that EDI transaction, that Punchout transaction really becomes around how technology advanced your customers (are).
MAX: One question is, EDI, OCI or Punchout, is it more a pull from the customer or is it a push from you?
ANTHONY AKIN: All pull.
MAX: All pull. Okay. Mainly pull.
ANTHONY AKIN: Mainly pull. We use Punchout in an interesting vehicle, as we have multiple storerooms that we mange. And because of the multiple storerooms we manage, our storerooms clerks will walk through and build out a request. And inside of that request, they will put it inside a recarnage platform. And so our Punchout environment, they will actually access it through their buying portal, like the real procurement portal, to make a request. And they will actually go fetch all that information from our system and then have it around … in the right order. Essentially is that our team is building out the line items. So it may be a 100 line item quote. And taking basically the order entry, the key stroking away from the attendant.
MAX: Okay. Yes, maybe it’s too long for today. But when we meet the next time I want to discuss with you about the advantages and disadvantages of EDI and Punchout. What it means for you, what it means for the quality of data at the customer and at the distributor. And I think this could be an interesting discussion.
ANTHONY AKIN: In EDI conversations in between the two different organisations you have a higher level of OEM business than we do.
MAX: Right.
ANTHONY AKIN: And I would tend to suspect OEMs have capabilities and Kanban schedules to build the release from.
MAX: We have this also with MRO customers. But the process is very long because you have to get all the pricing right. An EDI order with a more rounded price is not a real EDI order, because you have to touch manually, you have to look, you have to call. So, there is a lot of master data homework to do. So, sometimes I think that’s the advantage of OCI catalogue, because you have the leading system there looking and then they put it into their system. But on the other hand with EDI you can also have a very frictionless fast process with only working in your system. But maybe we should keep this for the next conversation.
ANTHONY AKIN: Sounds great.
MAX: I don’t know where it will happen.
ANTHONY AKIN: Maybe your place?
MAX: Yes, actually, you are invited. And give my greetings to Jeff.
ANTHONY AKIN: I will do.
MAX: Whenever you plan a trip to Europe or Germany, please stop over.
ANTHONY AKIN: I will.
MAX: We would appreciate you. Okay. Great having you. Thank you for your time. And I think now we can enjoy at least one beer at the bar.
ANTHONY AKIN: I appreciate the invite and enjoy the conversations always. They have always been very stimulating. Just a lot of new ideas and thoughts as we sit and talk through, what can help lead our business to accelerate itself? I appreciate it.
MAX: Okay. Perfect.