business

Rather than simply filling parts bins, Replenex President Matt Cohen said the company his grandfather and great-grandfather founded in 1946 aims to help manufacturers remain competitive while hanging on to more of their cash.

Replenex, a supply chain management and industrial distributor headquartered in Eden Prairie, supplies everything from massive grinding wheels to high-performance cutting tools and everyday production supplies to manufacturers across the United States and Canada.

"This isn't the first time that we've had a recession," Cohen said. "This isn't the first time that there's been fear, uncertainty and doubt in the economy. But for most people this is the first time where access to cash has been as tight as it is. We target areas in which we can help decrease [spending], improve productivity and decrease the demand on working capital, so [customers] have more money to invest."

Replenex also serves as an example of how smaller companies -- 42 employees and $20 million in revenue last year -- take advantage of their flexibility, quick response times and custom offerings to partner successfully with much larger manufacturers and suppliers.  

In one example, Replenex last year teamed with 3M to standardize products, pricing and processes at the three manufacturing plants that heavy-duty transit bus manufacturer New Flyer Industries operates in St. Cloud, Crookston, Minn., and at its headquarters in Manitoba.

New Flyer discovered inconsistencies in products and prices coming from decentralized 3M subsidiaries operating in each country. In addressing those concerns, Replenex and 3M developed custom solutions. One involved using rolls of paper with adhesive on the top and bottom edges to replace the more-time-consuming process of using masking tape and paper to cover windows before painting a bus.

As a result of this and other supply chain improvements, New Flyer is spending an average of 10 percent less per labor hour on production materials, according to Scott Nicol, manufacturing, repair and operations purchasing manager at New Flyer. 

Other Replenex steps include streamlining the selection of gloves New Flyer employees use from a lineup that spanned the length of 2 1/2 conference tables to one that now covers just half a table. Replenex also installed machines to control cost and inventory of production materials. 

"These cost savings are extremely important to reducing the cost of doing business," Nicol said. "In these times when a lot of companies are experiencing a reduction in business or production is flat, cost control and cost reduction initiatives are key."

Besides the savings for New Flyer, the effort also earned Replenex and 3M the prestigious American Eagle Value-Added Partner Award from the Industrial Supply Association. According to the nomination, New Flyer's yearly savings amount to $250,000.

"I recognize the award as our job," said John Fortuna, 3M's area business manager for the Twin Cities. "Our job is to help customers. Otherwise, we don't have any customers."

A 'premier distributor'

Replenex is one of a select number of independent channel partners 3M recognizes as premier service distributors, meaning Replenex gets specialized product training, earlier notice and direct access to new products, Fortuna said.

For Replenex, Cohen said, the award represents "validation of the work our employees do on a daily basis" through a period of dynamic changes at the company. While family owned, Replenex -- the name is a contraction of "replenishment experts" -- was under non-family management from the late 1970s until Cohen took over as president in January 2008.

Cohen, who got a law degree from William Mitchell College of Law in 1996, practiced corporate and real estate law before getting an MBA at the University of Minnesota's Carlson School of Business.

Cohen began working at Replenex in 2002 and became president just after "the stock market disappeared" in the fall of 2007, he said. Revenue dropped from $30 million in 2009 to $20 million last year, and the workforce is down from more than 50 two years ago to 42 today.

Business began to stabilize last summer and has been up most months since. Cohen credits the improvement, in part, to a new strategy that has salespeople focusing on expanding and deepening sales to customers in a more compact territory.

Replenex has routinely shared business information developed from sales data to help customers spend more efficiently and improve productivity, Cohen said. The company now is sharing that information with its sales force to help identify opportunities to supply additional products to customers -- looking into, for example, whether a company that buys cutting tools from Replenex would begin buying coolant to use with those tools.

That information is available because Replenex has made a point over the years of investing in technology and employee training to automate ordering and control costs.

"I'm significantly smaller than a lot of my large competitors," Cohen said. "Significantly smaller than a MSC, a Fastenal, a Grainger. So I have to be better and have flexible technology and well-trained employees. I have to be more innovative, with that ultimate goal of driving customer productivity."

The expert says:

William McCleave Jr., an industrial distribution expert and president of North Carolina-based consulting firm W.R. McCleave & Associates, said Replenex exemplifies the smaller distributor that succeeds by providing just what customers want, instead of offering a "catalog of commodities."

Smaller distributors like Replenex often are agile enough to respond quickly to customer needs and will customize offerings to meet those needs.

"They are also very good at listening to customers' future requirements and designing solutions that have not been provided before," McCleave said.

The award that Replenex won with 3M is well known within the industry. "I would highly recommend that any distributor or peer or of theirs try to attain that award," McCleave said, "because it says a lot about the company and the value that they offer to their customers."

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com.