Westwater Supply Company:
Deep roots, bright future and a pricing process
By Frank Hurtte
Visualize 102,000 scarlet and gray clad souls crammed into the tight quarters of the historic horseshoe called Ohio Stadium cheering for the Buckeyes. Reflect back to TV election coverage, politicians "line up" to toss sound-bites off the steps Columbus, Ohio's historic Statehouse. Columbus is a proud historic city. And, Westwater Supply Company lays claim to a big chunk of that history.
The Westwater family started influencing Columbus' direction over 170 years ago. They formed multiple businesses, took part in the community and even operated the Ohio depot of the "Underground Railroad" in antebellum days. The Westwater Supply Company was founded in 1892 and acquired their first branch before New Mexico and Arizona were states. Those are some pretty deep roots and these roots are supporting a bright future.
Today the Westwater Supply Company serves the Ohio Plumbing, HVAC and Water Systems industry with four branches. They're not the kind of organization known to "rest on their laurels". They are heavily involved in industry associations and actively benchmark with industry peers to continue their forward momentum. It was through this type of networking that they discovered the power of Strategic Pricing Associates' (SPA) pricing process.
According to company president David D'Arcy, Westwater came to the realization that they had a problems brewing a few years ago:
"We recognized we had a pricing issue and started taking steps to find a solution. Our research indicated that our older, more mature sales people got higher margins than their younger peers. We didn't think it was a matter of business acumen because these newer members of our team carried strong credentials and developed the same kinds of customer-driven solutions. Our quest into the pricing world began; we used the power of our Eclipse business system to employ matrix pricing. We found it was labor intensive. Our margins improved in a small way, but these quickly faded away."
Another issue faced with the in-house model efforts came via credibility. As they moved pricing authority from branches to corporate, the Westwater management team faced fear-based pushback from their sellers. The SPA team lives the pricing process. Their model builds is more than just a computer program. It's a process applying components with education, training and feedback. David quipped, "Besides normal pushback, our internal pricing efforts aggravated nearly everyone because we did side-by-side margin comparisons that may not have been 100% justified. And even though margins moved forward, we were still struggling to find the optimal price level."
Westwater Supply learned of SPA via industry networking. "We heard about the success of Joel Becker and his team at Torrington Supply. As we studied the situation we discovered SPA solved some of the critical issues we faced with our "home-built" system."
Mr. D'Arcy commented, "SPA's analytics streamline the need for massive amounts spreadsheet work and data entry. We were able to simplify the steps required on our end because the information came to us - ready to load."
The results for David and his Westwater Supply team have been very positive. "We have experienced an increase in margin that is well ahead of the two points advertised by SPA President David Bauders. As a matter of fact it's more than double that number for the sales that flow directly through the pricing process."
With this type of success one would suspect that customers would be squawking. But after going live with the program, the only negative customer comments came from a half dozen customers whose work is fundamentally different than everyone else in the market. "Our customers are attracted to our service, our counter - which offers the fastest service in the market - and our inventory. We aren't a price driven supplier, our MRO-based customers especially have come to appreciate the way we can help them achieve the really important things on their agenda - uptime, lower admin costs... the stuff that really puts money in their coffers."
This high level of success has only primed the process improvement pump for Westwater Supply. They have earmarked a couple of areas for future improvement. They plan to move forward with a plan for improving the way they handle bids and long term contracts. And, they see additional bottom-line results to be harvested in channeling larger segments of their business through the SPA process.
During our time together, we posed a question to the folks at Westwater: Has pricing process impacted other areas of your business? The answer confirmed many of our thoughts about the central interaction around pricing process. "Since we launched our pricing process we have freed our people to provide more innovation to the customers. Better customer segmentation which is a natural part of the pricing process gives us a guidepost for understanding which customers provide the greatest impact to our business."
Before we brought our conversation to a close, we asked David if he could give us insight into the whole SPA experience. He told us:
"The SPA folks have worked with our business system provider (Eclipse) to automate the data transfer. They do all the heavy lifting and come back with data to allow you to understand where pricing should fall. But, they're not just a computer program - they worked hand-in-hand with us to educate our branch people - there are no surprises. They bring credibility and that builds trust in their work. We are a better and more profitable company because we work with them."
We think that's quite a statement. Westwater really does have a bright future. Learn about others' experiences at the following link: