The 24/7 PVF Wholesaler
By Pat Lenius
Mechanical Pipe & Supply has grown its business into a multi-million dollar operation in seven years with a customer service philosophy.
Picture this: It's 2 p.m. on a weekday afternoon. You're sitting at your desk and the phone rings. An excited voice calling from an industrial plant tells you that a 42-inch water line has blown out of the side of a building, out of the ground. No one was injured but the plant that is now without water is losing $3.5 to $4 million a day. Can you supply the pipe, fittings, flanges, bolts, nuts, washers and gaskets needed to fix this problem? If you're Mechanical Pipe & Supply, based in Nashville, Tenn., the answer is a resounding yes.
"We just say yes, then we hang up and spring into action," says Phil Cannady, owner and president of Mechanical Pipe & Supply (pictured above). "That day we had two trucks in Atlanta. We called and got a bolt, nut and screw manufacturer to stay open," he recalls. The wholesaler arranged for another truck to pick up additional materials by 5 p.m. Cannady loaded the gasket materials in his own vehicle and delivered them to the site. Bobby Marlin, industrial sales manager at MPS, who had recently purchased a new car, left it in a distributor's parking lot so he could rent a truck and drive the pipe to the plant. Cannady sat with the plant manager and together they planned the construction inventory. By 12:30 a.m., within 10 to 12 hours of the original phone call, Mechanical Pipe & Supply had dispatched three trucks that delivered the necessary material. Mission accomplished!
"If a customer needs it, we will get it, anywhere in the world," Cannady says. "We know specialty manufacturers. We use our expertise. We have the most knowledgeable employees in the industry."
Cannady stayed at the plant until 1 a.m. that day. He received a phone call from Marlin at about 2 a.m. The industrial plant was up and running the next morning.
"They never gave us a purchase order," he says. "We did it together. When they need additional pipe, valves and fittings, they will look at us for the business."
Mechanical Pipe & Supply already has reaped rewards from this philosophy. After working on a project for a power plant in Nashville, it was asked to work on other jobs for the same organization in Texas and Oklahoma. Upon completion of those jobs, MPS was invited by the same people to work with them on projects in Florida, Georgia, North Carolina, South Carolina, Michigan, Indiana, West Virginia and Ohio.
"We said, sure, our trucks run like anyone else's," Cannady says. "Now we know a large number of project managers and site engineers on a first-name basis. More than 600 construction workers are employed on three of these separate jobs. It's like a pyramid. When those people leave and go somewhere else we are right there with them, wherever they go."
The wholesaler does business in 27 states and Mexico from its single branch in Nashville. "Why would we need other branches?" Cannady says. "Our territory served extends from London to Singapore. We can go anywhere we can fly, drive or walk."
According to Doug McGrady, inside sales manager, one day in July the wholesaler received calls from people in about 50 different cities.
"The last call of the day came from Nebraska," McGrady says. "These people can buy from a supply house in Nebraska, but they were calling us in Nashville because our service is second to none. We reiterate to our customers that they can give us the order and forget about it. We'll take it from there."
The company grew from an idea in February 1995 to a multi-million dollar company in one year, Cannady says. He started the company in March 1995 after spending 21 years with Ferguson Enterprises.
He will not disclose the company's sales but says they are at the multi, multi-million dollar level at present and still growing.
Service Available 24/7
Mechanical Pipe & Supply delivers 24 hours, seven days a week. For the next year and a half, a truck will leave its Nashville headquarters at 1 a.m. for an industrial site where a $1.5 billion construction job is underway.
"We get 20 phone calls a day from that customer," Cannady says. "Our product knowledge is so helpful to their engineers."
Cannady doesn't like answering machines and doesn't have an answering service. A sales representative from MPS monitors the 1-800 hotline each night and weekend.
The on-call service also applies to holidays. Mechanical Pipe & Supply was taking calls on the Fourth of July and made deliveries to customers all four days of that holiday weekend, McGrady says.
"We were sitting on the dock at the lake writing up orders, doing a project," Cannady says. "On weekends and at night a lot of industrial plants shut down for maintenance. Our competition goes home and cuts off the phones. We look at that as an opportunity.
"All of our truck drivers have keys to the office," he adds. "The drivers have satellite beepers and are on call 24 hours a day."
Every employee of Mechanical Pipe & Supply shares the same business philosophy: to provide service above and beyond any competitor in the industry.
For example, the wholesaler has six trailers with built-in racks that it loans to contractors for the duration of a job. "They can put their material in the truck," Cannady says. "It saves them a couple of hundred dollars per month. It's not a huge concession, but a little something extra."
Jim Cline, mechanical contractor manager, adds, "It's nice to be able to focus on the extra service and effort you can provide your customer instead of having to worry about a corporate system you would have to follow as part of a larger, more complex operation."
Stick To The Basics
Don't expect to find popcorn or T-shirts or even a counter sales area at Mechanical Pipe & Supply.
"We'll go into a mechanical contractor's office and tell him he can pick up his order, it will be ready when he gets there," Cannady says. "Our customers don't pay for T-shirts or popcorn. We are in the PVF and industrial business. We will fly or drive in to take a customer to lunch or dinner, but we don't make our money on the golf course or in a restaurant. We make our money on the jobsite where we help the contractor make money."
Cannady says he doesn't believe in distribution centers and other corporate America expenditures. "We strive to keep our business as simple as possible to service all types of customers," he says.
Computerized systems that automatically identify the aisle and bin location for an item when it is purchased enable wholesalers to hire counter salespeople with minimal product knowledge, Cannady notes. The downside to this is that the counterperson may not be able to help a customer who refers to the product he seeks by a slang term used in the field, or someone who doesn't provide the information in the form required by the computer system.
"They're not selling anything, they are just order takers," McGrady says.
"We worry about the customer," Cannady says. "Corporate America is training people to be distributors, not salespeople in customer service."
At Mechanical Pipe & Supply, Scotty Marlin, warehouse manager, keeps an immaculate warehouse which enables inventory growth and bin changes to be handled easily and effectively, Cannady says. There are no bin labels, product codes or section numbers in the warehouse.
"We know what they want, how it works and where it is," says Shelly Cannady, procurement manager. "We don't need a compiled part number or description to slow us down."
Different people are assigned to pick orders from time to time. "They know the products," Cannady says. "Everyone starts in the warehouse, even college graduates. We move them inside after about five months."
The experience gained by working in receiving, stocking and shipping gives Mechanical Pipe & Supply's employees confidence in their product knowledge.
"No one here is afraid to answer the phone because they might not know what they are talking about," says Marvin Moser, inside sales associate. "When you call in here for product expertise, anyone can handle your call."
MPS believes in experience rather than current technology to do its thinking, Cannady says. "We have the latest technology in our accounting department, but strive to keep our sales team filled with product knowledge instead of relying on technology. Customers come before systems. We know how much profit we make every day. We don't need computers to tell us."
Mechanical Pipe & Supply is not interested in becoming a warehousing guru, he says. "We don't care about selling the same object over and over again. We want to deal with the guy who is building a whole facility and furnish everything he can ever imagine he would need in that area, from underground HDPE (high density polyethylene) to engineered support systems."
Price Isn't Everything
"The first thing we tell people is that we are not the cheapest on the block, but when you finish the job, you will love us," Cannady says.
"We don't get many orders because we are competitively priced," he says. "Sometimes we won't get the business because of competitive pricing, but when the customers don't get proper service they come back to us. We like to lose an order sometimes so customers can compare the service levels."
Cannady says he told a prospective customer at their first meeting that if Mechanical Pipe & Supply couldn't ship the order complete, there would be no charge.
"You take care of the customers and the other things will take care of themselves," he says.
Mechanical Pipe & Supply expects a lot from its people, but also offers generous compensation. At Christmas the wholesaler takes 10% of its net profits and divides it among all of its employees.
"You would be surprised at the size of some of those checks," Cannady says. "We have some of the highest paid people in the industry."
MPS is constantly looking for "good people" and hires and promotes from within, he says.
One of the major challenges faced by the wholesaler is finding self-motivated people "who desire more in life than just becoming a number in corporate America," Cannady says.
He isn't the type of business owner who gives an employee a gold watch after 30 years. "MPS provides the chance for each employee to succeed to his or her fullest potential," Cannady says. "The opportunity is there for each associate to lead a high quality of life."
No Recession Here
Vendors and local reps tell Mechanical Pipe & Supply that things are tough, but for this wholesaler, business is "booming," Cannady says. "Every month our sales are going through the roof. We don't even think about times being tough."
Less than 5% of its business is in Nashville, but that is not because of a decline in its jobs there. It's because the wholesaler is working on more projects in other cities, he says.
"We started the business in March 1995 with cash," he says. "We composed a one-page letter and referred the vendors to our bank. Weldbend, Mueller, Crane, Sawhill and Wheatland were among the manufacturers that gave us credit immediately. They told us they knew we would become a major player. Those vendors who would not do business with us at the beginning are now trying to be a part of our business. We stay loyal to those we started with. We are as loyal to our vendors as we are to our customers."
When a giant wholesaler and a manufacturer agree on a purchase and set a price which will apply to all of their locations, spread across the United States, they can affect market prices, Cannady says. "We do our negotiating with the manufacturer on a job-to-job basis," he says. "This allows for better pricing and services that can be passed on to the contractor."
Running A Tight Ship
After hearing gloom and doom reports about the economy, Mechanical Pipe & Supply targeted 17 of its controllable expenses for possible reduction. Trisha Davis, operations manager, and Marcia Childers, accounting manager, created a budget for expenses such as cellular phones, electricity, travel and lodging, and vehicle gas and maintenance costs. One employee was designated to monitor each controllable expense. At its monthly company meetings employees are asked to report on how much they spent and how much they saved.
"Everyone in this company is cost conscious," Cannady says. "We lowered our operating expenses by $432,000 last year. Our cellular phone bills were reduced from $47,000 to $19,000 by switching carriers. This money goes directly to the bottom line and to our employees."
Mechanical Pipe & Supply doesn't set specific goals, Cannady says. "We just keep on going. Do the job is our philosophy. We have aligned ourselves with the best mechanical contractors in the United States. From the smallest to the largest, they know they can count on us."
For the future, Cannady says he expects to see continued growth at a tremendous pace. "We want to attract even more customers than we currently have by proving our quality of customer service."
Background Of An Owner/President: Phil Cannady
Phil Cannady, owner/president of Nashville, Tenn.-based Mechanical Pipe & Supply, was born and raised in Nashville. He served in the infantry in Vietnam and was decorated. He proudly displays his service record and awards in his office.
After the service, he went to work for Tennessee Pipe & Supply, a family-owned business. "I swept the floors," Cannady says. "I learned the business from the ground up." After about five years, he was hired by Ferguson Enterprises (Newport News, Va.) to work in its Nashville branch. He spent 21 years with Ferguson Enterprises, 19 years as a branch manager.
He started his own business with a cash investment in March 1995, along with his wife, two daughters and several dedicated employees.
MPS opened its doors in a newly constructed building surrounded by colorful flowers and attractive landscaping. The business has been successful from the outset. It has grown rapidly over the past seven years and the future looks even brighter, Cannady says.
Mechanical Pipe & Supply was nominated by its bank for the 2002 Nashville Area Chamber of Commerce Music City Future 50, which recognizes the most successful local businesses.
MPS is proving to be a rising competitor in its industry and a flourishing business for the Nashville community, Cannady says.
Mechanical Pipe & Supply truly represents the American way, he says. "Only in America can you start a company from scratch and transform it into a profitable, multi-million dollar business in only seven years."