Telemetry triumphs at Central Welding Supply.
Publication: Gases & Welding Distributor
Publication Date: 01-MAR-03
Author: Lucas, Ron

Moving to expand gas sales and service, Central Welding Supply, Inc., Lynnwood, WA, recently added wireless solar powered telemetry systems to its menu of customer services, boosting customer satisfaction and curbing hidden costs.

Like many businesses the healthy years of the 1990s were good ones at Central Welding Supply, Lynnwood, WA. The firm experienced a growth spurt of up to 15 percent a year while adding stores and staff. Unlike many in today's sluggish economy, the firm still manages to rack up over $17 million in annual sales and a 5 percent annual growth rate.

The firm attributes its success to placing a strong emphasis on technical expertise, customer satisfaction, and cultivating a "can do" company culture of support for its customer base. "Now we aim to transfer the same enthusiasm and energy we developed over many years in our hardgoods business over to gas systems," says Dale Wilton vice president. "The move to add telemetry capability was part of this overall growth strategy."

Founded in 1975 by Dale's father Mickey Wilton and Dwight Sexton, the firm now has eight locations and 65 employees servicing an area that extends nearly 100 miles south from the Canadian border to Tacoma, WA. "It's a fairly vertical territory," explains Joel Sanders, sales manager, gas technologies. "We are bordered on the east by the Cascade mountain range and on the west by the Puget Sound."

Products That Sell

The firm averages 80 percent of its sales in hardgoods with lines that include welding equipment, safety supplies, gas and cryogenic equipment, and tools ranging from ironworkers, band saws, and drill presses down to nuts and bolts. "Most of the other distributors in our area chose to push gases and avoided spending the time, effort, and money developing an inventory of big ticket equipment," says Wilton. "We decided to develop hardgoods as our niche. Along with that decision we cultivated the technical knowledge to support those lines and found we were able to acquire a large customer base in the process. To expand and diversify further, in 1983 we a constructed a fill plant in Lynnwood and now provide a full line of industrial and specialty gases including oxygen, argon, nitrogen, helium, mixed gases, carbon dioxide, propane, other standard industrial gases."

The firm delivers those products with its own fleet. "We have 36 trucks, including a 3,300 gallon liquid nitrogen tanker, a 4,500 gallon liquid oxygen bulk delivery vehicle, tractor trailers and straight trucks, and 13 small pickup trucks that the sales reps drive," says Sanders.

Backing Products with Expertise

Central backs up its product lines with plenty of technical expertise. "We don't look at ourselves as a company with a product on the shelf trying to sell it like a commodity out of a catalog. We think a distributor should have individuals on its staff focused on those lines, ready to jump at a moment's notice to solve customer's problems.

"A lot of companies sell welding equipment, but not many spend sufficient time training their staff on the high end technology," notes Wilton. "We try to ensure that our staff remains up-to-date on the latest technologies and products so that they know how to sell them and match them to the right applications."

Sanders agrees: "Our entire outside sales staff came on board with a solid background on welding technology and we kept them up-to-date through continuous training supplied by manufacturers and our own staff to ensure that we maintain that advantage. As a result, we have become known in our area as the "equipment guys"--the people that really know customer needs when it comes to welding technology."

Culture of Expertise

According to Wilton, the emphasis on technical expertise goes back to the firm's origins. "In 1975 we couldn't compete on price with the established companies--we needed our own niche so we looked for ways to solve problems.

"We found that customers had a hard time finding reps to walk them through technical issues such as welding procedures and new equipment. In time we developed an entire culture around that concept. We sought out the latest equipment and training and emphasized knowledge and service in our daily operations. Even today our reps look for customers with problems and find ways to solve them. Fortunately, we have been able to grow to a point where we can take that approach and expertise and transfer it to bulk gases and gas systems."

Selling Response

When customers have a problem Central seeks to solve it immediately. "Response is really the only thing we as a distributor can sell that is completely unique," explains Wilton.

"We look for ways to enable that philosophy. "For example, each rep on our staff drives a small company-owned pickup truck to allow them to make emergency deliveries. We won't make a customer wait for the next available route truck if they are facing downtime."

In addition, each store has a delivery truck and a dedicated "panic" driver on permanent standby for quick response. "These drivers will run anywhere from the Canadian border to Tacoma, WA within two hours of a customer call," says Sanders. "Of course, like other distributors we try to schedule most deliveries as efficiently as possible, yet we believe a dedicated resource like gives us an valuable additional response capacity."

Dedication to rapid response can literally mean going that "extra mile." Wilton recalled a recent example in which one of their petroleum refinery customers called Marshall Judy, welding sales products manager, at 10 p.m. on a Friday night with an emergency request. "They had shut down a number of their production lines and brought in a contractor for scheduled maintenance and repairs," explains Wilton.

"The downtime, though necessary was costly and their crew was running 24/7 to bring production back up as quickly as possible. Their task, however, required a lot of compressed breathing air since the crew operated in confined areas exposed to hazardous fumes. The contractor had ordered a 160,000 cubic foot tube trailer of air from out of state. It should have been adequate, but the truck had developed leak en route and now they were short."

That night Central mobilized four vehicles and rounded up every cylinder of compressed breathing air it could locate. "Marshall searched throughout our company from the Canadian border to Oregon and called on other suppliers in the area as well. We shipped every size vessel we could find from a handful of cylinders up to 15-cylinder racks. We succeeded in keeping them running throughout the weekend. It was a frantic effort, but it's times like these that really solidify the bond with a customer. We prove to them that we will indeed respond when needed the most."

Service Packages

Central offers a number of services to its customers including same day delivery, cylinder management for select customers, and equipment repair. "We do a better job than anyone else in our area in managing repair problems," affirms Sanders. "The service includes pickup and a quick return."

The firm also conducts facility surveys using a solution-based approach. "We bring in manufacturers reps and together we look for ways to boost process efficiencies, supply gas, or improve safety," says Wilton. "However, we are fairly choosy about the type of rep we bring along. We don't want to expose our customers to individuals simply peddling products. On the other hand, those with a problem-solving approach become an extension of our own staff."

Central makes inventory problems vanish too. "Each company has its own method of dealing with inventory," explains Wilton. "Much of the time we smooth out the problems for customers in the supply chain before they even become aware of them. For example, for some customers our reps prowl their bin boxes and identify needed items, fill out purchase orders, or schedule special deliveries. We'll even inventory special high end gas mixtures for use on laser cutters for a customer's exclusive use. These types of mixes often require long lead times and must be ordered well in advance. Having enough extras on hand makes them instantly available on request."

Inventory Is not a Dirty Word

Central maintains a relatively large inventory for a firm its size.

"Ours ranges between $2.5 million and $3 million dollars including gases, cylinders, and hardgoods. We handle 40,000 individual products in all," says Wilton. "Inventory is often a dirty word in this business. In fact, most inventory consultants believe we carry almost twice what a company our size should have."

Central thinks maintaining a larger inventory is actually an investment in customer satisfaction. "It's part of our philosophy on response. We want a complete line of product in our stores, our systems, our warehouse, and out in our fill plant so that we can quickly react to customer needs.

"Our warehouse in Everett for example has $1 million inventory dedicated solely to hardgood items such as electrodes, wire, and welding equipment--anything we can't acquire within two days. In addition, we allow all branch managers to independently purchase inventory based solely on their local market."

Although the firm wanted a larger inventory, it did not want unnecessary items. "We installed a Dataweld inventory software system a year ago to help keep costs contained," notes Wilton.

"It made a big difference in our ability to manage day-to-day levels by providing a clear picture of slow moving items and generating a lot of data that enables us to make better decisions."

Marketing Matters

Central has nearly 7,000 accounts with a customer base that includes petrochemical refineries light manufacturing, aerospace subcontractors, environmental laboratories, and gases for stationary emissions such as stack-testers, agricultural, and aluminum boat manufacturing and repair.

In terms of size the firm treats each account like a large one. "There is no other way you can successfully run a business in this market unless you do that," affirms Sanders. "Today's two-man shop may be tomorrow's 100-man operation. We weren't anyone's idea of a target customer the day we opened for business. In fact, I think one reason we have been so successful is that we do not limit our customer targets based on potential sales dollars or type of industry as do many other distributors today."

Central's approach generates plenty of referrals from satisfied customers. "That's a prime source of leads," says Sanders. The firm creates fliers and brochures and uses direct mail to select customers. "We also like to hand deliver those materials to prospects during cold calls," says Sanders.

Reps also find leads from contacts in the field, staff reports, software programs that target SIC codes, and vendors. "However, our reps only spend 20 percent of their time on new prospects," says Sanders. "We spend most of our time focusing on servicing the accounts we already have acquired."

Seek the Unique

As the firm began to expand its gas business it began looking for ways to apply its philosophy of service and response to this market and launched its Xpress Cryogenics division in 2002 headed up by Sanders. The new division focused on gas delivery, specialty gases, and gas system installations. "We wanted to be more than just a bulk supplier, we wanted to offer something really unique," recalls Wilton. "That drive led us to acquire ExpressFill bulk vehicles to supply gas customers more quickly and efficiently. Then Taylor-Wharton told us about their KeepFull wireless telemetry system.

"We knew telemetry systems had been around for some time, but this version runs on a solar cell with a battery backup and communicates using a cellular technology eliminating the hassle and expense of installing traditional phone and power lines out to a remote location. It's also supported by a website that graphs the information so that its easy to use."

Any interested party could now see information such as volume consumed and usage patterns. "It meant we could now present an entire package to our customer that was totally unique for our area. One that tied in with our problem-solving approach," says Wilton.

Easy Installation

Installation is quick and easy. Central tells Taylor Wharton the make and model of the tank in advance and the units arrive ready for a custom fit. "The unit arrives mounted to a plate that custom fits the tank. All the installer needs is a drill, a wrench, and a screwdriver. The installer bolts it on and connects it to a couple of gas lines used by standard differential pressure gauges.

"Then we contact the equipment manufacturer, DataQwest, Berkeley Heights, NJ. They initialize the unit and create the uplink to the webpage. The entire procedure only takes an hour."

The firm has a separate web page for monitoring linked to its homepage. "The customer can log in and check their own current information by using a password," notes Wilton.

The unit calculates the liquid level in the tank by comparing the difference in pressure levels at the top and bottom of the inner vessel. That calculation provides a moment by moment indication of the liquid level in the tank making it easy to spot trends of usage.

The information is graphed on the website. "One line shows the tank's liquid level and two horizontal lines on the chart indicate the reorder point and a critical point. We establish those during installation to schedule delivery.

"We routinely monitor the site. We can click on "all users" and see all of our customers on a single page. It updates the information hourly so its fairly real time for our purposes.

"When the tank level reaches the reorder setpoint the system emails several people--one of our sales managers, our delivery driver, and a customer representative. The key feature is that the message instantly goes to the one person that needs to know it the most--the delivery driver. He receives it on his cell phone while still out on the road allowing him the option to service the account on his return to the fill plant or decide to do it tomorrow."

Telemetry Customers

Central discovered that telemetry systems were ideal for laser cutting customers. "Job shops performing laser cutting can run through large volumes of nitrogen assist gas within a short period of time," says Sanders. "The only true restriction for telemetry applications is tank size. It usually doesn't make sense to install one on a nitrogen tank smaller than 160 liters since customers typically won't pay to monitor it. However, the system can benefit customers with remote facilities."

In fact, Central installed its first systems on small bulk tanks for remote customers near the Canadian border--fully 75 miles away. It made servicing them far more profitable," concedes Sanders.

"Basically we present the system whenever talk to customers about a new bulk system or a changeover from high pressure to liquid cylinders because it eliminates common concerns such as knowing how much was used, how much is left, and when its time to reorder."

Affordable Benefits

According to Sanders, most customers seem to find the system affordable. "We bill them $40 a month for a single tank system and $50 a month for multi-channel type service but do not charge them for installation or equipment. The monthly usage fee is a trade off with the old phone line charges. Customers save on labor--they don't have to have somebody on staff maintaining or monitoring tank levels."

For Central, telemetry installation does represent a modest investment. "It costs us $1,600 for each installation and we can monitor up to four tanks with one unit. After that it costs $500 for the equipment to monitor each additional tank. We pay a monthly per-unit monitoring fee to DataQwest for maintaining the website," says Wilton.

The benefits for both customers and the distributors are huge.

Distributors know that some busy customers simply don't check gauges as often as they should especially in bad weather. "This system completely frees them from this `nuisance task,' preventing downtime while providing vital information," says Sanders.

Customers can also track consumption by the hour to determine exactly how much gas a specific job requires. "Job shops routinely make estimates to bid on work," notes Sanders. "They base their numbers on factors such as type and thickness of material and anticipated gas consumption rates--especially for jobs like laser cutting. They cull the gas consumption information from charts, manufacturer's data, and past experience with similar tasks. Telemetry systems allow them to see the actual gas consumption rate at their own facility so they can make far more accurate estimates on similar jobs in the future. In competitive marketplace that kind of detailed knowledge can make a big difference."

Distributors benefit by streamlining the logistics of moving liquid.

"We can even avoid some of those panic calls on weekends since customers know what they have and can call us in advance of a big job sure to rapidly consume gas.

Phase Two

Central next plans to install telemetry systems on oxygen tanks for oxy-fuel cutting applications found in light manufacturing, fab shops, and at boat manufacturers. "One of our first installations will be on a small bulk oxygen tank at a manufacturer that produces equipment for the logging industry," notes Sanders.

Central believes distributors seeking to hone their competitive edge must continuously expand their services by adding new technologies like telemetry. "Without telemetry technology all you are is a guy with a bulk tank and a truck," affirms Wilton.

Sanders agrees: "In time everyone will expect this type of service. We now include it in every proposal and may eventually decide to simply include it as part of our service package for any vessel over 450 liters."

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Telemetry Triumphs at Central Welding Supply