Splitting the Tab

If you’ve asked a restaurant to split a check lately, you might be able to appreciate the new brand management strategy at Newco, the holding company for b-to-b catalogers Wilmar Industries and Barnett. Most restaurants, in this computer age, haven’t figured out how to input one order ticket and output four invoices. It’s the same in industrial distribution.

Newco intends to integrate its back end for seven catalog brands — J. Sexauer, Trayco, Wilmar, Barnett, Hardware Express, Maintenance USA, and Leran — while keeping the brands separate. In other words, the company’s idea is to ship seven boxes in a row with seven shipping labels and seven invoices, all out of the same warehouse.

“There isn’t a viable public company on the industrial distribution side that’s been able to do that today,” says Newco chief financial officer Bill Sanford. “Most of the companies that operate more than one brand are not integrated. And we intend to integrate everything. That’s where you get leverage.”

Most industrial distributors, Sanford says, operate on a “flat file” invoicing system: You input one order and export one invoice. When distributors merge, one company’s system generally can’t handle input from the other. “If companies desire to get savings from integrating their back ends, they have to change to a common front end,” he explains. For example, banks that merge almost immediately change names to accommodate accounts from both institutions.

“Technology is a wonderful thing,” says Ron Schreibman, vice president of the National Association of Wholesale Distributors in Washington. “But different systems speak different languages.”

Newco’s system, however, allows invoicing flexibility. “We can make connections between the data, as opposed to the data all being on one file,” Sanford says. Developed inhouse, the system allows the company to enter orders under any of the seven brands; from there the orders are queued together and picked alongside each other in the warehouse. Then the system outputs brand-specific shipping papers at the warehouse shipping station.

“So all the warehouse operations are integrated,” Sanford says, “but the system accepts orders from multiple sources and ships under multiple brand names.” As a result, he says, Newco doesn’t have to give up back-end efficiency for front-end loyalty: “We feel this is a better way to maintain customer relationships.”