WIT & Co.

Adding value to owners and vendors

BY MARY JO MARTIN

Editorial director

However unlikely it may seem, an errant invoice actually led to the formation of the WIT & Co. buying and marketing group back in 1974. One of the five future founders -- Peck Johnston of Johnston Supply in Marion, Ohio -- received a vendor invoice that was meant for a larger competitor. He discovered that while both wholesalers were ordering truckload quantities, they were paying different prices. As a result, Johnston, who passed away in 2005, pulled together a group of four industry peers and suggested they join together to increase their purchasing power.

These five plumbing and heating wholesalers -- Johnston Supply of Ohio, May Company and Field & Shorb from Illinois, Iowa Pipe & Supply in Iowa, and Ross Supply of Indiana -- became WIT’s founding fathers. They chose the acronym WIT that stood for:

• Wholesale -- because they were all in the wholesaling business
• Investment -- because each distributor within WIT would be an owner and invest in the group
• Trust -- because each founder needed to trust the other owners in this new venture they were pursuing.

From a headquarters in Palatine, Ill., outside of Chicago, WIT quickly grew to include 15 distributor members in its first year. Fewer than 10 vendor partners were on board at the beginning. Shortly after its inception in 1974, Howard Babbs was named the first executive vice president.

Less than 10 years later, in 1985, WIT held its first Purchasing Meeting -- now called the Distributor/Vendor Conference. Under the direction of its new executive vice president Jim Grady -- who succeeded Babbs in 1984 -- its headquarters moved to Decatur in central Illinois, and the group invested in a computer and fax machine, which were much more rare in small office environments at that time. Wit also rolled out a distributor newsletter, now called the Insider, to facilitate the sharing of news and information.

While WIT’s original owners were traditional plumbing distributors, many of them went on to add heating and air conditioning lines to their product offering. This led to WIT’s decision in 1990 to separate their Manufacturers’ Committee into two distinct parts -- one focusing on plumbing manufacturers and the other on HVAC. This diversity has had a very positive impact on WIT’s business model.

Because of the importance of marketing to its members, in 1996 WIT created a full marketing department and brought on board a marketing director and coordinator to help distributors become involved in promoting WIT vendors’ products.

In another move designed to offer greater value to distributors and vendors, WIT streamlined its billing and aggregate pay services in 2000. This significantly cut expenses. “Wit & Co. developed and implemented the WIT Information Exchange -- a hub and spoke electronic document automation platform,” said Matt Braden, WIT network and systems manager. “With WIT in the middle, WIT owners and vendors maintain only one trading partner relationship, thereby reducing the level of effort to maintain the trading partner relationships individually as well as reducing the van costs traditionally associated with a one-to-one model. The electronic delivery of documents also saves WIT owners numerous hours of data entry as documents can now flow directly into each business system.”

Justin Dunscomb took over as executive vice president in 2002, serving for five years. Newly appointed executive vice president Charlie Moorhead -- who came on board this year -- now leads a full-time staff of 11 at WIT’s headquarters. They are divided among departments including purchasing relations, marketing, MIS and accounting. Leaders of each department sit on respective committees that are chaired by WIT distributor principals. The 11 standing committees include areas such as vendor relations, recruitment, marketing, technology, finance, insurance and education. These committees help keep the WIT board and office staff aware of distributor perspectives from various markets. The staff prides itself on its efficiency, open communications and hands-on work with members. They support the group’s 89 distributor members and more than 160 plumbing and hvac vendor partners.

“Wit has a dedicated and talented headquarters staff that is focused on service,” said WIT director of business development Jeff Smalley. “Even though we rely on the involvement of distributors in terms of direction and leadership, we try to make sure their involvement does not take away from their business.”

Moorhead, who has 35 years of experience in the distribution industry, had previously served as president of Milstead Supply, a major independent plumbing and air conditioning distributor. He had also spent three years as director of purchasing for American Plumbing & Mechanical, and also as director of purchasing with RCR Companies, a major plumbing contractor based in Riverside, Calif., with 12 locations in California, Arizona and Nevada. Upon his appointment, WIT president Chris Perry of vamac Supply commented, “Charlie brings us energy, experience and skill sets to take WIT to the next level.”

Wit is guided by a seven-member board of directors that are selected based on geographic locations and demographics profile to ensure an effective representation of the group as a whole.

Membership benefits

With purchases in excess of $1 billion annually and aggregate sales of more than $3 billion per year, WIT prides itself on providing key benefits to its members. The top-ranked benefits are competitive programs and networking. Through organized networking groups called WIT Works, distributors are encouraged to be open and share best practices with each other to elevate group members around the country. During these sessions, WIT distributor principals are placed in different groups based on specific criteria. This format provides them the ability to open up and speak freely among other owners and learn from them.

“Initially, everybody goes into the group evaluating programs,” noted WIT vice president Colin Perry of Rampart Supply. “But once you get in and start establishing relationships with fellow distributors, the dollars remain important but the networking opportunities are huge.”

Chris Perry added, “Networking opportunities within WIT are abundant. Beyond the monetary benefits, ownership in WIT has brought networking and business sharing opportunities that are of even greater value. I’ve gained lifetime friends and mentors through WIT.”

Among the other benefits offered by WIT include:

• The opportunity to work with senior management of WIT manufacturers
• Marketing programs
• Educational opportunities
• Industry trend information
• Importing opportunities
• Updates and encouragement on new technology
• Ancillary programs such as insurance, truck leasing and other service products.

Wit encourages its members to take advantage of available electronic technology to lower purchasing and other costs. Matt Braden noted, “Wit has long been a believer and purveyor of electronic communication and business transactions.  This paradigm is founded in the WIT Information Exchange -- an any-to-any information translation and communication system centered at WIT headquarters. By proactively connecting independent wholesalers, vendors and service providers, WIT can continuously eliminate costs from the channel.”

Wit continues to be owned by its 89 distributor members. To be accepted as an owner of WIT, a wholesaler has to be a quality operation with a business plan; blend and contribute to the business family culture of WIT; and contribute to the growth of the buying group. The board of directors reviews for approval/disapproval all prospective distributors. Each WIT owner owns an equal part of the organization. Wit provides full disclosure of its finances to members and every member has a voice. Each year, 100% of its program income is passed back to the member/owners.

“Wit is a business family,” said Chris Perry. “We are strong-willed, determined, and care very much about our businesses. Wit puts us on a level playing field competing with large box stores and national organizations. We still compete regionally in our markets, but buying collectively puts us in a one-voice connection with our vendors.” Moorhead added, “We want to grow, but we will be selective in recruiting new distributors. It is important to WIT that we attract distributors who want to grow their businesses and help drive market share for our vendors. They should also fit our culture and be willing to support our business model.”

The ongoing consolidation among wholesalers has affected WIT to some degree both positively and negatively, as Colin Perry explained: “It affects us negatively when we lose an owner. However, it has a positive impact when other competitors within our markets are purchased by national firms. Independents can often find a niche in their markets and the fewer independents there are in a market, the greater the opportunities for those remaining.”

When it comes to vendors, WIT seeks plumbing and hvac manufacturers that are national companies with the ability to offer quality products, competitive programs and a full range of sales and support services to all WIT distributors. Prospective vendors are required to submit their proposals to either the Plumbing or hvac committee for discussion and approval/disapproval.

Wit currently monitors all vendor programs by each distributor on a monthly basis. Year-to-date results are continuously monitored and compared to the previous year’s performance. These numbers are also shared with WIT’s vendors so they can be compared for accuracy each month.

All WIT distributors participate in an annual purchasing survey that allows the group to monitor each member’s level of participation within the group as well as their purchases within a particular product category. This information is also shared with WIT’s vendor partners.

Annual events and honors

Wit hosts two major conferences each year. There is a Distributor/Vendor Conference each spring and a Networking Meeting held in the fall.

The Distributor/Vendor Conference includes a purchasing agent workshop, committee meetings, networking opportunities and individual distributor/vendor conferences. Each year, the top 20 purchasers are recognized with Affinity Awards at this event. Both plumbing and HVAC distributors are considered for this award, and those with the highest purchases through the group -- in either or both of the categories -- are recognized. Distributors with specified growth throughout the year are also recognized.

“Our communication and networking efforts reach their pinnacle at our annual meetings,” Smalley explained. “Our annual Distributor/Vendor Conference is rated as the industry’s best by our members and approved vendors.”

The Fall Networking meeting is a distributor-only event that includes a full-day Marketing Workshop, committee meetings and networking opportunities. During this meeting, marketing awards are the focus with the wham! Awards - which is an acronym for WIT Honors Achievements in Marketing. The wham! Awards recognize distributors for their efforts and achievements in six different categories: Marketing Research, Advertising, Public Relations, Showroom Marketing, Promotions & Events, and Marketing Participation, along with an overall wham! Award winner. Distributors complete applications and submit supporting documents to be judged in the categories listed above. The marketing idea with the most points receives the award in each respective category. The Marketing Participation Award honors the distributor who has recorded the most participation in WIT marketing programs and activities.

Also at this meeting, distributors who are stepping down from committees are recognized with a special token of appreciation for their valuable time and dedication.

In addition to promoting its own membership and vendor partners, WIT and its owners have been very involved in industry organizations such as ASA and HARDI. In fact, WIT was the first buying group to be a member of each. Throughout the years, WIT owners have held many volunteer leadership positions in these two organizations such as president, board members and chairmen, among others.

Wit & Co. is proud to announce the implementation of the following strategic initiatives. These initiatives are part of its strategic plan that is designed to position WIT to increase its value and performance to WIT owners and vendor partners. First, WIT will relocate its headquarters to a more centrally and accessible location. The new location and move will be announced later this year and completed by year end 2008.

Second, WIT has adopted a new organizational structure and enhanced its priority toward business development. Mike Gessner has agreed to join WIT to help lead the group in this initiative. Gessner has 24 years of experience in this industry. He previously worked with Kohler Company, Laufen International and, most recently, as a principal with Westmark Enterprises, a major plumbing manufacturers’ representative firm with offices in Los Angeles, San Diego, Phoenix and Las Vegas.

“We feel the next two to three years hold tremendous opportunities for buying groups of independent distributors,” said Moorhead. “The buying group that clearly performs and builds market share for its owners and vendor partners will be the group of choice. Wit aims to be that buying group.”

Wit will be hosting its annual Fall Networking meeting October 21-24, in Anaheim, Calif., just prior to the start of the ASA Convention/Network ‘07 event in the same city. To learn more about WIT & Co., call 217/423-0399 or visit www.WIT-co.com