The Right Location

While Erie has felt the effects of a downward economy, being located in upper New York state and eastern Pennsylvania also has shielded the company. Erie is not impacted by large shifts in construction demand, so the peaks and valleys it comes up against are much smaller than they may be in markets such Florida, Georgia, Nevada, or Arizona. “We have to make adjustments in our business model, but I assume these changes are much smaller than in other parts of the country,” says Chris, who joined the company full time in 1993 and was named executive vice president in 2000. Approximately 55% of Erie’s overall sales are from remodeler sales, better than 30% are in new residential construction, and 15% are in commercial sales.

In the markets in which the company operates, it’s a who’s who of competition, including Stock Building Supply, 84 Lumber, Curtis Lumber, Marjam, and Bradco, plus several strong, small independents.

Such competition makes it a natural for Erie to play up its tradition of service and doing the things no one else wants to do. The $25 delivery is one such case. But a more substantial example can be found in an innovation launched five years ago that allows Erie to deliver products to any of its yards and a jobsite within a day.

Erie’s 75,000-square-foot distribution center is a short drive from its Syracuse headquarters in a former recycling plant linked to rail service. “This was a horrid mess,” recalls Pat Guinto, vice president of operations and a classmate of Chris Neumann’s at West Hill High School. He worked summers at Erie Materials during the mid-1980s, unloading siding trucks by hand.

What makes the six-acre facility unique is it lets each of Erie’s locations pick up new materials while trading materials between locations. If another location might lack a particular siding, chances are it can fill an order from one of Erie’s other branches.

Between 3 and 4 p.m., a large swap meet takes place, with product needs broken down by location. Trucks leave each location around noon and meet at the distribution hub, with everyone on the road by 4:30 p.m. Products then can be delivered to jobsites by the next morning.

The only exception to the rule is Erie’s store in Williamsport, Pa., which is on a second-day lead time. That location receives and trades products the morning via a truck dispatched from the company’s store in Elmira, N.Y.

Within the warehouse, shipments are waiting for the trucks and designated by colored tags. For instance, Syracuse has an orange tag, a reference to Syracuse University’s school colors and nickname. Utica has a pink tag. It’s a playful reference to the day when Leo Dudziak, general manager of Erie’s Utica location, first met Bob and Chris Neumann at a golf tournament before he joined the company. Dudziak pulled up in a pink Cadillac. Bob hasn’t let him forget it.

Dudziak thinks the distribution system speaks for itself, especially when locations are handling the same products but not the same color. “I can have what I need the next day,” he says. “I don’t know of anyone that has that type of service.”

Branches in Syracuse, Utica, and Scranton, Pa.–the Erie locations with the largest residential sales volume– also maintain night shifts, where vendor deliveries are accepted, stock is put away, and trucks are loaded the night before. The Syracuse distribution hub maintains a millwork shop as well, with its own fleet of box trucks that run at different intervals than the flatbeds used in the swap meeting.

Crazy About Inventory

The facility has let Erie expand its inventory even more, especially with specialty products such as Owens Corning Cultured Stone, CorrectDeck decking, CertainTeed Cedar Impressions siding, and numerous high-end roofing products.

This brings up another case of how Erie differs from other dealers. Executives at most yards pay close attention to inventory turns and, especially these days, try to have as little product in stock as possible. Erie, on the other hand, keeps a lot. Bob figures someone eventually will drive in and want those products, so they’d better be in stock.

“Our locations might be reaching their peak, but in order to sell effectively, you have to have it,” Bob says.

Chris says the company still views inventory as an investment rather than an expense, which provides opportunities. “Our sales people can sell with confidence, knowing the product is on the floor. Our product offering rarely distinguishes us from our competition anymore, but having it in stock every time does,” he explains.

“When customers place an order with us, they know it is going to be in stock, it is going to be delivered on time, and the people involved in the process from start to finish are professional,” he adds. “That all comes at an expense, but if our customers see the value in it and continue to buy from us, then we will continue to make those investments, whether the economy is weak or strong.”
Three years ago, the company rolled out an internal service department, or call center of sorts, for its windows and doors. With three service reps inside and two field service technicians between Syracuse and Elmira, the department has cut the time between a complaint and resolving a problem to “literally nothing,” Guinto says.
When Erie strictly relied on vendors solving the problem, the wait could take weeks to months. Most problems are now solved in a week or two, and contractors and homeowners get their calls returned within 24 hours.

Jeff Erhard, vice president of sales, and Stephen Syron, vice president of sales and marketing, point to the program as another example of Erie’s service and another tool that doesn’t weigh down the company’s sales staff. Combined, the two executives have nearly 50 years with Erie. Erhard is also another high school classmate of Chris Neumann’s who worked at Erie during summers and joined the company straight out of college.

Syron describes Erie’s culture as a “self-policing institution” designed to serve the customer. “There are very few politics here,” Syron says. “It’s customer service only.” He also describes the typical Erie employee as someone who is smart, honest, has a good personality, and can hear other positions.

“It comes down to heart. We care about our customers, and we care about each other,” he says.

According to Erhard, Erie has given its salespeople as many tools and options as possible, including vehicles, phones, specialized brochures, and the service department. “We try to simplify things and give them anything that we can to expedite sales and sell in a shorter period of time,” he says. Erie maintains about 32 residential outside sales personnel and one commercial salesman.

Marketing director Jim Santoro is responsible for some of the literature produced specifically for Erie sales personnel. The pieces boil down the specific needs of Erie customers while focusing on particular vendor lines. “Our goal is to pave the way for sales, to grease the wheels,” Santoro says.