Dynamic and innovative practices bring leaders together

BY MARY JO MARTIN
Editorial director

Thirty years ago, after observing the inequalities that some of his large independent lighting fixture distributors were experiencing, David Weisberg decided it was time to level the playing field. Weisberg, who had been president of a lighting fixture company, saw that some of his best customers — despite supporting the lines, introducing new products and adding value — weren’t getting the best programs, and realized it wasn’t a healthy situation for the channel as a whole.

So, armed with his own entrepreneurial spirit and a small group of electric distributors, Weisberg formed Affiliated Distributors. From the beginning, it was all about great independent distributors who saw value in a healthy competition, and together, they — and A-D — grew.

As CEO Bill Weisberg, the founder’s son, so appropriately noted, “From the start, in the DNA of A-D is the understanding that distributors need to be treated right, and suppliers need to be supported. It’s always been a two-way street here. Suppliers realize accelerated growth, and distributors get opportunities for growth and enhanced profitability.”

Bill Weisberg joined his father about 18 months after A-D began. He didn’t plan on making A-D his career; at the time he was unsure the direction he wanted to go in and thought that, at the very least, working at A-D would give him the opportunity to meet a lot of people. Nearly three decades later, Weisberg remains at the helm, dedicated to the mission of supporting members and suppliers, and to creating an atmosphere of service among his staff.

Today’s A-D operates across six divisions, is comprised of 550 suppliers and 3,000 branches, and tallies $20 billion in sales annually.

Recently, I was invited to visit A-D’s headquarters in Wayne, Pa., where I spoke with several of this prestigious organization’s key executives about its past, present and future. Following is my interview with CEO Bill Weisberg; Senior VP-Plumbing, PVF and HVAC Roy Weaks; VP-PVF Division Gary Jackson; and VP-HVAC and Plumbing Justin Dunscomb.

MJM: What do you feel were some of the major factors in A-D’s growth over the years?

Weisberg: Our growth has been pretty organic. We’re an organization of people who want to be better — and that’s contagious. The entrepreneurial drive of our members has rubbed off on our staff, and it inspires us to do great things. Everything we’ve done — whether it’s a new division or a marketing program — has been well-planned and driven by the needs of our members as well as encouragement from our suppliers.

One of the things that is unique about A-D is how collaborative we are. It is integrated into our systems, our boards, our committees and our advisory groups.

MJM: Over the last 30 years, your organization has survived and thrived during several difficult periods of economic struggles, some unfriendly political environments for business, and the unrest that these conditions have brought both at home and abroad. How have you managed to not only survive that but to continue to gain momentum?

Weisberg: What gets you through challenging times is strong leadership and faith. Strong leadership ultimately is the ability to look at a situation and say “We trust our people, our members, our capabilities and we’re going to do our best in spite of all the things going on around us.

When people see wild swings in the economy, it doesn’t have to change their strategy. For independent distributors, it’s a huge advantage. Our members have been growing at a rate 11/2 times more than the industry average. We’ve surrounded ourselves with great companies of all sizes and they are outperforming the market.

One of the challenges throughout the course of our 30 years has been consolidation. There has been speculation that the independents would disappear. But really, the number of wholesalers in this country hasn’t changed much. We’ve found that when one company is acquired, another pops up. And the new firms tend to grow at a greater rate because they are opening new locations, hiring people who don’t want to work for the large corporations anymore, and picking up customers who aren’t satisfied with the service of the national chains.

When we look at what makes A-D so special, there is, of course, the financial allure, but it really comes down to being surrounded by so many great peers. We wanted the best members and suppliers, and that is not a function of size. It’s whether a company wants to be better and has a management team that wants to grow the business — and not all do. If you gather those folks and share those ideas, everyone can benefit and see improved results.

There is a difference between buying and marketing groups — selling. We differentiated ourselves early on as a marketing group. We are focused on selling, not purchasing. At the end of the day you have to get out there and sell.”

MJM: As you mentioned, A-D has outpaced the industry year-over-year in providing significant ROI for your members. What, do you believe, has made this possible?

Weisberg: Probably the biggest driver for that growth is their chance to spend time together twice a year with other growth-oriented companies. Our meetings are focused on how we can help each other grow. We bring together entrepreneurs from all over the country and give them an opportunity to share their ideas together. We even train members how to be facilitators at these meetings.
Many of our members have shared with us their best practices, and we sometimes turn them into programs within A-D. For example, our Field Marketing Summits started out with a member idea, then grew to a few more trying out the idea, and now we have hundreds doing it. Our concept is that shared practices enable people to grow faster without the learning curve.

MJM: Tell me a little more about these Field Marketing Summits?

Dunscomb: They are grass roots programs that gather local reps, branch managers and salespeople who are all focused on growing sales of their products in the marketplace. Distributors select at least a minimum number of suppliers, most of whom are our endorsed suppliers. They’ll set up a day and bring together teams from their branches to meet in a round-robin format with each of the selected suppliers. They discuss business plans and often set up a call schedule so they can go see contractors together. Companies that are doing these activities are performing better than those who aren’t. About 60% of our membership is now participating in this program.

Jackson: We chose to use the term Field Marketing because we wanted the people in the field, the salespeople at the wholesaler and the local rep or supplier to interact. That’s really where things get done. These aren’t typically the people who come to our national meetings, so we wanted to bring the value of our meetings to them.

MJM: Are there any other new programs that you’ve launched recently?

Jackson: Knowledge@Noon is a lunch and learn type of program with webinars from suppliers. We help them publicize it and give folks advance topics. It’s done in several time zones to maximize participation from various areas of country. Wholesaler staffs can gather in their conference room, watch on a TV monitor, and get 30 to 45 minutes of interactive training, including a Q&A with the presenters. We’ve had as many as 250 people from across the country tune in to a single event. It’s a very efficient way of getting in front of those groups for an hour. They are archived on our website so people can go back and review them later or be used as part of a new hire’s orientation and training.

MJM: You have a very unique structure compared with many other buying/marketing groups because of your diverse divisions and shared corporate staff. Talk about some of the benefits this brings?

Weisberg: We operate across six industries and in two countries. Big can have its challenges too; it’s not for the faint of heart. But at the end of the day, all the big ideas come from the local markets. We don’t make a decision here across all our industries; we’re actually very decentralized and have (member-led) divisional decision-making. It all comes down to sharing information among staff, wholesalers and suppliers.

However, we do observe what is working in one industry and look at whether it might be applicable in others. And there are times that, say, electrical and plumbing members in a local market will connect through A-D to share best practices or work together in other ways.

The team back at A-D headquarters allows the divisions to share non-customer-facing functions such as finance, accounting, IT and marketing. Benefits are really two fold: it’s very cost efficient and also allows us to provide more checks and balances and financial controls. We have very sophisticated buying controls — including certified audits, multiple check signers, etc., because we handle quite a large volume of dollars.

MJM: Over the years, I’ve observed the loyalty your members have toward their networks, councils and committees, and the close relationships they forge. How did that start and could you describe just how important these opportunities are?

Weaks: We’ve got a number of different ways for members and suppliers to come together and exchange ideas in small groups. In putting together these groups, we try to select key decision makers from different geographical areas.

These opportunities include:

• Board of Directors — There are nine members that include a representative from each of the divisions and Bill Weisberg who discuss high-level, group-wide issues that will affect all the divisions. Each quarter they go over financials and new initiatives, and discuss the metrics of how A-D is performing according to plan.

• Divisional Boards — Each division within A-D has its own Divisional Board. They deal with issues that are specific to their division and industry.

• Product committees — Each division has its own committee made up of roughly six to nine members who look for and review product categories and companies that are not currently within the group.

• Networking groups for both members and suppliers — Small groups of 10-15 non-competing members who talk about best practices. Often members form long-term relationships that go far beyond their service on these groups. They really build a foundation of respect and trust with each other.

• Supplier advisory councils: Six to nine suppliers in each division who bring forward ideas/direction for engagement between members and suppliers, and provide guidance on how A-D can better serve suppliers.

• CEO councils — These councils give CEOs a chance to talk about topics that are of primary interest to them, because they have a different level of concerns than those in sales and marketing functions.

Jackson: This structure keeps decisions from being made by a select group of members; rather it’s driven down through the committees. We believe strongly in our Networks. Our Spring Meeting is dedicated to our wholesaler members only. It’s a chance for the best minds in the business to connect through their networking groups and share best practices. There is a social aspect as well, but it’s really all about getting down to business discussions and best practice sharing.

People want to be part of the best. It’s all about learning from other people and trading ideas. Looking back at the last couple of years the macro economy has been horrible and many companies were looking at changing business models and reworking their businesses. Our networks were a great venue for them to exchange ideas to help them navigate that situation.

Dunscomb: We have a rotation so no one serves on a committee indefinitely. We have six to nine people on each committee, with several rotating off each year. Typically, they serve three- to five-year terms, which allows more people to participate. It takes a lot of talented and dynamic people to make it all happen; people who are constantly looking to improve and push for greatness.

Weaks: There is a high level of confidentiality among these groups that frees participants up to talk about very specific things about their business. They can feel free to trade metrics and send people to each other’s operations because there is such a level of trust and confidentiality.

Not only is A-D staff not in these meetings, but each group is led by one of their own members who serves as a facilitator. We want them to drive their own agenda; not what we tell them to. We actually provide training for these facilitators because they serve as group leaders for the year, reaching out to their members to get input, going through the list of issues and prioritizing. They compile an agenda and share it with the entire group. If there are topics they don’t get through, they’ll table them until the next meeting.

Dunscomb: We also have 13 supplier networks in the PHCP Divisions, each of which has 10 to 11 members. Suppliers had told us they had heard such good feedback on the wholesaler networks that we decided to try it with them as well. That was four years ago, and they’re going strong. Notes are taken at the supplier networks and are fed back through A-D. These are then shared with the Divisional Board, and to complete the loop, the networks chairs receive actions plans for addressing any issues brought up at the network meetings.

Jackson: We sometimes perform a conduit function to assist an affiliate and supplier in sorting through an issue. We try to get to the root cause. Sometimes one party will not want to address it with the other party directly, so they will talk with us and we help them find a solution.

MJM: Many of your members serve in volunteer leadership roles with ASA. Talk about your relationship with ASA, and how your organizations work together?

Jackson: I’ve spent a lot of time working with ASA’s [executive vice president] Mike Adelizzi and [executive director] Chris Murin along with others on the staff. Certainly we support all their meetings and functions. We feel a true partnership with ASA and it lends itself across all our divisions. They share the same energy and passion for this industry that we have at A-D.

Our conversations with them have been to interact, but not necessarily overlap. We recognize what they are good at and we want to capitalize on each other’s strengths. Specifically, they do a very good job with training. We actually reward members who participate in an ASA training activity through the A-D marketing program. We encourage our members to get training.

Dunscomb: The type of people we’re looking for and that make us strong are quite often the same people participating in industry organizations. Every one of our members in the HVAC division are members of HARDI, including a number of past presidents. There are a lot of synergies, and it’s important for our groups to work together. We’re excited that industry leadership looks a lot like our membership.

MJM: You are getting ready to host your North American Meeting for the Plumbing, PVF and HVAC divisions in Las Vegas next month. What are some of the highlights of the meeting that you can give us an advance look at?

Weaks: We’ve got a lot going on to celebrate 30 years of A-D. The meeting will be an overall highlight of the last 30 years. We’ve created a special 30th anniversary commemorative plate. Spouses are invited to come and we have designed special events for them. But the highlight of the meeting, as it is every year, is the awards banquet when we recognize and honor our members and suppliers who are outperforming the best of the best. And even though our 30th anniversary is certainly a time of celebration for our members and suppliers, the hard-hitting networking meetings, strategy-setting one-on-one sessions between members and suppliers and access to industry trends provide a value that our community has come to expect.

MJM: In your opinion, why are buying groups so important to this industry?

Weaks: We bring value, including a financial value thanks to leveraging our buying power that wholesalers can’t get on their own. When you’re working with the best of the best, it elevates things from what you can accomplish in your own conference room.

Dunscomb: Group dynamics bring it together. One unified voice provides a strength that, individually, a wholesaler wouldn’t have.

Jackson: And the A-D team is very good at our piece, too. Our members have the whole group behind them if they’re trying to implement new practices or are struggling with an issue. That goes for A-D supplier opportunities and support too.

Weaks: Because we are in multiple industries across multiple divisions, we have ability to share best practices within our divisional areas but also across divisions. We can get electrical and plumbing distributors together to share thoughts. We actually have Philadelphia-based distributors in our Plumbing, PVF and Electrical divisions that are working together and sharing warehouse space to cut down on expenses.

Jackson: And we continue to look for good, quality wholesalers and suppliers. While we are very selective, we’re certainly open to talking with folks that are interested in joining us.

MJM: What are your biggest concerns today regarding the economy, the political climate in Washington, and its affect on our industry?

Weisberg: We take very seriously the responsibility to serve our members and suppliers. We know they want to have a business-friendly climate in Washington, and to have government stay out of their businesses and stop threatening their livelihoods. We have to speak up and let our voices be heard. The people who represent us today don’t seem to have our best interests in mind. So getting involved is more important than ever, and I’m confident that we can make a difference.

We support those associations and lobbying groups that represent the interests of our members, including NAW, ASA, HARDI and some of the manufacturing entities. We work through them nationally, and on a local level, we engage with congressmen and senators in key races and specific issues.

MJM: How will A-D continue to evolve and be even more relevant in the future?

Weisberg: We believe in being close to the market; we’re focused on HVAC, PVF and Plumbing, and are specifically looking at growth opportunities in those areas.

If there is anything that we want to be known for, it’s the ideas that are shared within our group that help our members and suppliers become better companies.

Along the way, there have been many special memories, and hopefully there will be many more. We believe we’re doing good things for good people, and fighting the good fight for the good guys. That’s really gratifying. And we’ve been joined every step along the way from the people who share ideas with us and give us encouragement.

I get excited seeing the next generation of people coming up in these businesses and starting to engage with each other. I was in my mid-20s when I came here, and there were so many people my dad’s age that mentored and encouraged me. I’m excited at the opportunity to do that for that for the next generation of our members and vendors.

For additional information, visit www.mya-d.net.