Goodman Manufacturing has been the value leader in the residential heating and air conditioning market for the past 25 years, and the company vows to continue its leadership role for the next 25. With an expanding network of independent distributors and by increasing locations within Goodman Distribution Inc. (company-operated), the company is well-positioned to lead the way.
Consider its recent growth. Just four years ago, Goodman Distribution Inc. had 96 branch locations throughout the United States and Canada. Today, that number has grown to 148. A strong infrastructure backs this store expansion, including technology, customer service and a 700,000-square-foot logistics facility based at the Goodman Global Inc. headquarters in Houston.
Goodman Distribution Inc. President Jim Mishler began the expansion when he joined the company four years ago. “When I came aboard, we recognized that we had a number of markets that were significantly underserved,” he says. Many of the new distribution locations have gone into those underserved markets, including Florida, Texas, California and Canada. For example, Goodman increased its company-operated visibility in California from seven locations to 23, and in Canada from two locations to eight. The expansion will continue well into 2008 and beyond, Mishler promises.
Goodman Distribution's parent company, Goodman Global Inc., is the second-largest domestic manufacturer of HVACR products for residential and light commercial use based on unit sales. It markets the products predominantly under the Goodman and Amana brand names. “Absolutely one of the strengths of the company is that we provide tremendous product and support offerings for the contractors in terms of what they get for their dollars,” Mishler says. “Being the low-cost value leader is a cornerstone of our success.”
Distribution occurs through both Goodman Distribution Inc. (company-operated stores) and through independent distributor stores. Mishler says the strategy is to continue growing the business through both channels.
Thirteen sales regions comprise Goodman Distribution, with field technical consultants in each region. This represents the first line of support for contractors with technical issues. They'll go out on job sites as well as provide scheduled technical trainings for customers. Goodman Distribution understands that each HVACR installation is, essentially, a time-sensitive custom job, which makes the technical support so critical.
Goodman Distribution recognizes that the HVACR contractor plays an important role in moving its products from dealer showrooms into consumers' homes. With this in mind, the company devotes a great deal of attention to assessing and then meeting the needs of contractors. “We feel very strongly that the contractor gets to make the brand decision probably 90 percent of the time,” Mishler says. If the homeowner trusts the contractor, then the homeowner will trust the contractor's recommendation on an HVACR system. After all, they're the experts.
Goodman Distribution connects with contractors and distributors in a variety of ways, keeping them informed on training programs, product introductions and special offers. Several thousand current and prospective contractors come to Goodman's Houston headquarters each year to tour the facilities, meet employees and receive product training. Goodman employees at all levels talk directly to the contractors and hear about the issues they face — whether those issues have a connection to sales, logistics or products.
Contractors also receive significant marketing support from Goodman Distribution. “Unlike some of our competitors, we're very liberal in letting the contractors decide how to use the dollars to support their business,” Mishler says. “We tell them, ‘You know your business better than we do. Use the money effectively and show us how you spend it.'” With this formula, Goodman Distribution seeks to complement — not control — a contractor's business.
Because dealers are such an important link in the supply chain, Goodman Distribution ensures that they, too, have the tools to market themselves. Monthly specials, in-store promotions and a variety of direct mail pieces that are designed to promote their businesses — not Goodman — are all part of the marketing effort. “We're going to help the dealers promote their business; we're not promoting our brand.”
Mishler notes that the brand awareness of Goodman is not extremely important to the organization. “We feel strongly that the most important brand in this equation is the dealer,” he says. “Our brand plays a support role to the dealer. When our dealers have gained the trust of the homeowner, then Goodman Distribution and independent distributors will be successful.”
As Goodman Distribution was ramping up its support to dealers and contractors, it was simultaneously upgrading its logistics and operations systems to support the store expansion. At the heart of this operation is its Houston logistics center that the company built about 10 years ago. Here is where all of the Goodman and Amana products come together for shipping to distributors throughout the United States and Canada.
They evaluate sales at company-owned stores on a daily basis, allowing for rapid replenishment of products wherever and whenever they need to fill demand. With its state-of-the-art logistics system, Mishler says Goodman Distribution has been able to keep more of its products in the centrally located Houston logistics center, thus creating a just-in-time replenishment cycle. This allows distributors and dealers to keep a lean inventory, but with the security that they can have any part or product within 48 hours or even overnight, if necessary. Goodman can respond to a heat wave whether in Southern California or on the East Coast, and dealers in the affected markets need not fear they will run out of equipment — the logistics center will immediately ship the appropriate amount and type of equipment to the affected areas.
In 2004, Goodman Distribution Inc. scrapped a mix of multiple operating systems and implemented one powerful system across all regions. This system allows the 148 branch locations to check the available inventory at each branch location. A store on the north side of the city looking for a specific piece of equipment may be able to get it from a store on the city's south side with no delay. “Without question, this system, combined with the capabilities of the Houston Logistics Center, is the most advanced logistics effort in the industry,” Mishler says. “We feel very, very strongly that being able to consistently have the products that contractors need when they need it is one of the cornerstones of our success.”
Because the logistics center is so large and its just-in-time philosophy works so well, Goodman Distribution Inc. locations have been able to maximize inventory effectiveness and optimize the physical footprints of their branch operations. In fact, they have revamped, relocated or remodeled virtually every store during the past four years. Optimized stores reduce Goodman Distribution's costs and also make it easier for contractors to get in and out of the store with what they need more quickly. “If we can replenish on a daily basis through a smaller and more efficient footprint, then that's a competitive advantage,” Mishler says.
Goodman Distribution also counts the knowledge of its personnel at its locations as a significant strength in supporting contractors. Having an employee at the counter who knows how to answer a contractor's question or has the ability to find the answer quickly is a huge plus for any distributor. “We have significantly upgraded the caliber of our people at all our locations,” Mishler says. “Over the last four years, we have implemented a very aggressive branch manager training program, reaching out to college graduates and providing them with a career within our company and industry.” Finding qualified and talented individuals continues to be a challenge for the entire HVACR industry, he says.
To maintain Goodman's position as the value leader requires the company to continually review all aspects of its operations and look for ways to improve productivity and efficiencies. The guiding principle behind all of this is supporting customers. “That's the central pillar of our company's strategy,” Mishler says.
At Goodman Global Inc., future success is tied directly to the growth and efficiency of its distribution. “As a company, we would absolutely say that there is a future for good, strong, independent HVACR distributors. We continue to invest in and grow our independent distributor network, along with our company-operated network,” Mishler says. “We see the vitality of the distribution network as a critical long-term success factor and we have a long-term partnership with our independent distributors.”
Michael Maynard is a business writer based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at [email protected].
Karl Pomeroy, divisional vice president, West Region
Steve Saunders, divisional vice president, Canada
David Spitz, divisional vice president, Northeast Region
Bradley Snyder, divisional vice president, East Region
Definition and Example: Centralized logistics and operations center developed to achieve world-class customer service, shipping and inventory control.
Significance: Enhances ability to receive and ship customer orders more accurately and on a timely basis. Allows frequent inventory replenishment and/or redirected shipments to areas of the country where increased demand for equipment, supplies or parts rises quickly.
Benefits: Increases customer satisfaction.
Sales Team: Experienced, external sales staff supported by common logistics and operations staff.
Customer Service: In-house customer service representatives can quickly and accurately track shipments and provide information to customer inquiries.
Technical Support: Accessible via telephone, e-mail or fax to provide accurate, fast response to any customer issues.