One of the first things you notice when you step into Arnie Baron's office is a
poster-size photograph of Baron running the Boston Marathon. The words "Boston
'80" run across the top, with Baron, in mid-stride, pictured below. Baron has run
Boston six times - most recently in 1990. While he doesn't run as much as he used to,
Baron channels much of that energy into running Chicago Hi-Speed Tool & Supply along
with his partners, Stuart Bulmash and Morry Levin. The three purchased the cutting tool
distributorship 13 and-a-half years ago.
Chicago Hi-Speed Tool is a one-location firm situated on Chicago's north side. The
distributorship sells cutting tools and MRO supplies to tool and die shops, machine shops
and other small- to mid-sized end users in the Cook County area, a region that spans
Chicago and its surrounding suburbs. Being in the Chicago market is key, says Baron,
because it is still a focal point for distribution and industry. Being in the city proper
is even more important, he says, noting that the company's 5480 N. Elston Avenue location
is just minutes from the expressways and main routes that lead to the bulk of the firm's
customers.
Of all the factors contributing to Chicago Hi-Speed's success, the motivation behind
its three leaders and their ability to penetrate an important market stand out. When
Baron, Bulmash and Levin bought Chicago Hi-Speed in June of 1986, the 34 year-old firm had
annual sales of $1 million. Since then, sales have risen to nearly $12 million and the
firm's capabilities have expanded to include integrated supply and special cutting tool
services such as regrinding, re-conditioning and custom manufacturing. A focus on carbide
tooling has emerged as well. The partners credit the firm's progress to their continued
effort to concentrate on the "gaps" that larger distributors often ignore
specifically, providing technological knowledge and service to cutting tool customers.
Among the fruits of their labor, the firm became ISO 9002 certified last summer, the same
time it was named one of Industrial Distribution's 50 Outstanding Small
Distributors.
Accolades and commendations aside, what's important, say Baron, Bulmash and Levin, is
the work the Chicago Hi-Speed team - which consists of 40 employees - accomplishes on a
daily basis. Chicago Hi-Speed uses its strength as a specialist to open up new
opportunities within a customer's plant. That may mean providing them with specialized
tools or with a wider range of products through integrated supply. Whatever the case, it
means forging stronger partnerships that result in an increased bottom line for both
parties. And that requires a strong effort from everyone at Chicago Hi-Speed Tool. As
Baron says "It's not the three of us, it's the 40 of us that make this company
successful."
When the general line Industrial Supply Company they worked for went out of business in
the mid-1980s, Baron, Bulmash and Levin searched the Chicago area for a distributorship
they could purchase and run themselves. They found Chicago Hi-Speed Tool, whose owner was
looking to sell. Accustomed to selling a range of MRO supplies, the trio welcomed the
chance to become specialty distributors. They agreed that having a niche was the way to
succeed in the changing business world.
Many would agree they were right. Competition has increased significantly for small
general line houses since the mid-80s, with consolidators and catalog houses creating
bigger and bigger distribution networks. On top of that is the threat of non-traditional
competition - like online sources, retailers and others. But having a niche doesn't mean
Chicago Hi-Speed Tool can rest on its laurels. Even as a specialty distributor, the
company has had to change with the times. About five years ago, the firm took two
significant steps in the direction of change.
The first was to join the Industrial Network; a nationwide alliance of independent
distributors designed to give smaller supply houses the buying power and national reach of
larger companies. The Industrial Network is Chicago Hi-Speed's answer to integrated
supply, allowing the company to service customers with multiple locations across the
country. While Chicago Hi-Speed services the customer in the Chicago area, other
distributors in the network provide services in their region - all with one purchase order
and invoice marked "Industrial Network."
"As a smaller distributor in this economy, you have to be part of the bigger
group," says Baron. "Those that think they can do it alone are in for a big
surprise."
The firm's second step was to buy Quaker Tool, a grinding company that reconditions,
regrinds, and modifies tools, as well as manufactures special cutting tools. Quaker tool
represents 10 percent of Chicago Hi-Speed's sales. And much like it's integrated supply
program, that special service can be a door opener for new business. It is also an attempt
to further specialize in cutting tool technology. End users from across the country send
their tools to Chicago Hi-Speed for regrinding and re-conditioning, as do other
distributors.
Chicago Hi-Speed has invested considerably in Quaker Tool division, a move that has
turned out to be worthwhile. But when Bulmash approached his partners with the idea to
spend $250,000 on a CNC grinding center few years ago - a special machine for
manufacturing and re-grinding tools - Baron admits he thought the idea was a little crazy.
The partners agreed to go ahead with it, though, and have since purchased two additional
CNC machines to accommodate the new business the additional purchase brought their way.
The situation speaks to the trust that the three partners have in each other.
"The three of us act as a trio," notes Baron. "I don't make a decision
unless I talk with my two partners."
"In 13 years, we've had no major disagreements," adds Levin.
"We've had some disagreements, though," adds Bulmash.
"But it's always a question of what's best for the company:' says Baron. "We
agree about the direction in which our company is going."
The owners agree that more often than not, as well, on the best way to take their
company in the direction they want it to go. What it comes down to is a simple philosophy
of helping customers control costs and become more efficient. That means providing them
with products that save time and last longer. It can be a tough sell, the partners admit.
Often, it means seeking out the right people in the customer's organization - people with
vision who understand cost savings, not just price.
"It all goes back to what our company is all about," says Baron. "We
sell them products that are going to save them [money] in the long run."
While that means selling a higher quality, often higher-priced, item it also involves
selling programs and services that help customers make the best use of their time. To that
end, Chicago Hi-Speed developed a tool crib management program that can be tailored to fit
the needs of any customer. Dubbed the CHS-Connection, the program can include several key
elements: bar coding; EDI; automated inventory replenishment; integrated supply;
consignment inventory; computerized tool dispensing machines; one purchase order to cover
annual needs; price stabilization; and once-a-month billing.
One of the fastest-growing components of the CHS-Connection is its vending machine
program. The company has about 20 tool-vending machines set up at various customers'
plants. The machines stock cutting tools and accessories, keeping track of how much gets
used and who uses them. At the end of each month, Chicago Hi-Speed compiles that
information and sends it to the customer. Chicago Hi- Speed salespeople have been selling
the vending machine concept for five years. The bottom line, say the owners, is that the
vending machines offer customers yet another way to control inventory, thus controlling
their own costs.
"And that's where the savings is," Baron points out. "Not in the price
of the drill."
Of course, Chicago Hi-Speed Tool's innovative programs and services would mean nothing
without the right people to bring them to the customer. The partners say they've tried to
create a knowledgeable team of inside and outside salespeople - employees who don't rely
on catalogs and part numbers to help customers solve problems. And they feel they've done
that. Most of the firm's eight inside salespeople have between 10 and 30 years' experience
in the business. And of the seven employees, who worked at Chicago Hi-Speed when the
partners bought the firm in 1986, five are still with the company.
The real test of how well those employees perform, however, is in the customer's
opinion of them. And Chicago Hi-Speed gets excellent marks in the customer service
category from Jim Coulas, Jr. of Weldbend Corp., a local manufacturer of carbon steel pipe
fittings and flanges. A Chicago Hi-Speed customer for over 20 years, Coulas didn't expect
to stay with the distributor when it was sold bark in 1986. The previous owners had the
"personal touch," says Coulas, and he feared the new owners would not carry on
that tradition. He was wrong.
"Nowadays, with the fax machine and e-mail and everything else, companies tend to
lose the personal touch that started the business in the first place," notes Coulas.
"But that's something that Arnie and his people haven't forgotten."
Coulas has been working for years with the same Chicago Hi-Speed salesperson, whose
knowledge and responsiveness, he says, are second to none. What's more, Baron continues to
call on Coulas, as well - just to make sure everything is running smoothly. That
customer-focused attitude carries over into all aspects of the business, adds Coulas,
pointing to the helpfulness of the employees who run pick-ups and deliveries, too.
Baron, Bulmash and Levin attribute much of their high customer service levels to low
employee turnover. A profit sharing program and 401K plan may be part of the reason
employees choose to stay with Chicago Hi-Speed Tool. It could also be the close-knit,
friendly atmosphere that characterizes the firm. The three partners stress that theirs is
an informal company, where everyone is on a first-name basis and the doors are always
open.
"We know our employees. We don't have to look at someone's name badge," says
Baron. "We know their names, we know their families."
And sometimes, he adds, that makes all the difference.
