When John Billson took over as managing director at wholesaler Dean & Wood, he had a lot of decisions to make and a business to turn around. Here, he discusses the first two years with Paul Braithwaite.
IT has been a busy couple of years for John Billson, managing director of Dean & Wood.
As far as he is concerned, the wholesaler is two years old.
Yes, he knows it was established in 1904 as an exporter of engineering products. And that when refrigeration took off, it became an exclusive distributor of Danfoss controls. In 1979 when the then management retired, Danfoss bought Dean & Wood and that is how it carried on until 1994 when it purchased Midlands-based WF Air Conditioning, an air conditioning wholesaler.
'Dean & Wood was a route to market for Danfoss, never core business.'
In December 2004, Dean & Wood was bought by Swedish-refrigeration company Beijer Ref. John stepped up to managing director of the company at the same time. During 2005 he restructured the wholesaler.
John admits to a lot of soul-searching.
Take branches, for instance! Were there enough? Should they all be big? Should they all be small and more of them? What about transport! Should it be third-party or not? Or both?
'We were trying to service more than 4,700 customers and were struggling to serve them well.'
John adds everyone wanted something different and the infrastructure to do this just did not exist.
So Dean & Wood went back to its core wholesaling business.
As for the branches, they tended to be 1,000ft2 or 5,000ft2 and, here again, customers' expectations were not being met.
'What had been intended was to have full-service branches - the bigger ones - with satellites but the company ran out of money and it did not happen.'
John insists the corporate image was virtually non-existent.
'The core customer base we wanted to attract was small- to medium-sized contractors and to retain and grow supermarket contractors and the OEM market.'
And these are the people the branches had to serve!
It requires branches of about 5,300ft2.
'The smaller branches had to be made bigger or integrated into a bigger existing branch.'
Dean & Wood had 21 branches when the exercise began, now there are 14 including Ireland. Two of the smaller branches - Southampton and Nottingham - were made bigger. John says this is enough for national coverage but long term he wants more.
Further, he reckons each existing branch will be able to do at least 10% more business with the same staff and facilities.
One of the depots which was closed was in Aberdeen with the business being transferred to Glasgow.
'Some customers were upset - and told us so.'
But John has increased the frequency of the delivery service.
'A vehicle goes to Aberdeen every day instead of every other day as before. If a contractor rings in his order before 5pm, he will have next-day-delivery from local stock in Glasgow.'
'Even without the depot, I believe our service is better than that of the competition.'
Most customers are happy with a trade counter pick-up service or next day delivery, says John.
The company also offers - at a price - in-built replenishment where van drivers have the keys to customer's trucks and replenish them during the night.
'It confuses the hell out of the neighbourhood watch, someone turning up and putting things into vans,' he laughs.
In 2005, all branches were refurbished.
Dean & Wood has begun a search for new premises in Leatherhead which was the head office.
With the distribution centre and the sales office now in Leeds, the 25,000ft2 branch is not necessary. However, as it has been traditionally the largest branch, Dean & Wood believes it will need a warehouse of about 10,000ft2. The administration centre will remain at Leatherhead.
John does not see a problem with directors being in different locations. When there is a management meeting, a video conferencing facility is used. Plus some of the computers are equipped with webcams.
One change that is obvious for customers is the trade counters. John admits customers could wait at a small, dark trade counter for ages.
'Customers could stand at trade counters for up to 20 minutes because we didn't have sight of them.'
Now they have been opened out. Internal windows have been placed in walls and administration and sales staff have, where possible. been moved into rooms next door and are visible.
'The concept is that customers and staff are closer together.'
Audio visual screens have been placed in the trade counter area so that while customers are waiting, they will be able to watch marketing videos.
'If the customer is drinking Dean & Wood's free coffee, while he/she is in the queue, we have a chance to influence his/her buying.'
Another idea is to have the top front of the counter glassed over so products can be displayed - another chance to influence the customer. Certainly, in the Leeds depot, traffic to the trade counter has increased substantially.
Distribution was another problem. John believes the third party company Dean & Wood was using 'did not take ownership of the goods or customers'. He insists that, for a wholesaler, giving away the distribution function is like giving away contact with the customers.
'Why outsource our business because this is what our business is?'
Dean & Wood has invested £500,000 in its own vehicles and only uses carriers in emergencies or when their own vehicles are off the road.
'I want anything to do with customer contact in-house.'
During restructuring, John stripped out a tier of middle managers, replacing them with 10 business managers. Each is responsible for one or two branches. Above them is the director of sales Nick Kilner or his operations counterpart Steve Smith.
Dean & Wood has more than 12,000 lines from suppliers: Danfoss; Maneurop; ECO; Harp; Outokumpu; Armacell; Bitzer; L'Unite; and AIA.
Air conditioning suppliers are Mitsubishi Electric and LG.
The idea is to have well-stocked branches with top brands and local contacts.
'One of the biggest challenges for Dean & Wood last year was de-centralising the technical call centre from Leatherhead.'
Now, virtually every branch has a technical specialist available - and the rest will have as soon as they are recruited.
'Each branch will have an operations manager looking after the logistics, a sales engineer and a technical engineer. One of theses will also be the business manager. How can a technical advisor in Leatherhead have a relationship with an installer in Glasgow?'
Also, technical advisors are being trained as super-advisors on a product.
'For instance, one technical advisor will be an authority on Bitzer products, another on Mitsubishi and the others can call them with the more specialist problems.'
As a new supplier comes on board, he will train all advisors broadly and one in-depth. Plus Dean & Wood offers contractors and installers training too - at the branch or at their premises and it is free.
The wholesaler is looking for two technical apprentices - one in Bristol and another in Highway - at the moment and, as well as the company training them, the apprentices are swapped with suppliers and contractors to add to their knowledge.
And 'the biggest thrill I have had was attracting back staff who had left'.
As for the future, John believes there is great potential. For instance, the company has just taken on Mitsubishi Electric top 100 spares in its branches.
'Contractors who call the Mitsubishi call centre in Hatfield are told the spares can be sent from Hatfield or collected from Dean & Wood. Dean & Wood can offer this service for the other air conditioning suppliers,' says John. And customers will soon learn the branches are where they need to go.
John concludes: 'the management team is run by people who have spent their working lives in the industry. It helps when you live and breathe air conditioning and refrigeration.'
John Bilson: trade counters have been opened up and audio visual units will advertise products to tradesmen as they await their turn in the queue.
Message for OEMs
JOHN Billson, managing director of Dean & Wood, has a message for OEMs who ask why they should bother with a wholesaler?
Yes, they can go direct to China or Turkey or elsewhere but the main OEMs in the UK that we deal with, the refrigerated cabinet makers, can only give a broad idea of what is needed.
Who wants to be left with thousands of pounds-worth of stock when a supermarket changes its policy and stops its investment in that sector?
“This way Dean & Wood is left with the stock because it is the wholesaler. The OEM pays a slightly higher price from the wholesaler but he does not have stock left in his warehouse.
Conversely, Dean & Wood has more customers and can sell off the unused stock quicker.”