Cooperative Strength Producing Unmatched Customer Focus

Dec. 1, 2014
At Johnstone Supply the cooperative model not only allows the company’s stores to stand out from the competition, the cooperative model allows Johnstone Supply to outperform them. Customers of Johnstone Supply have a partner who does not want to simply sell them something; they get a partner who wants to understand their needs and expectations and create and implement solutions designed to exceed them.

As managing partner and president of four Johnstone Supply locations in the Twin Cities area of Minnesota, Aaron Radke says the cooperative model not only allows their stores to stand out from the competition, but outperform them. “Individual ownership, cooperative strength” is how Radke puts it.

What does success look like? Radke says they are on target to surpass $20 million in sales for the first time in 2014 and are positioned for even stronger growth in 2015 and beyond. The four locations are part of the “Bloomington Group,” an ownership group comprised of Radke, his wife, Jessica, his brothers-in-law, Andrew Leone and Phillip Andrew, and their spouses, Jillian and Jennifer. Both Leone and Andrew hold leadership roles in the business’ finance department.

The Bloomington Group was born out of a conversation on a golf course in Montana in the early 1980s, according to Radke. Radke’s father-in-law, Rusty Mace, had a conversation with his good friend Jack Kenneally. These conversations led Mace to move his family from Billings, Montana, to the Twin Cities where he opened his first Johnstone Supply store. From there, the business grew under Mace’s leadership and expanded every year, serving more and more customers in the Twin Cities area.

Radke was introduced to the industry just out of high school when he was on his way to college in St. Paul. He was dating Jessica, Rusty’s daughter, at the time and he offered Radke a position in the warehouse that worked around his academic and athletic schedules. “It was here that a seed was definitely planted,” he says. “Over time I came to realize the amazing power of the cooperative and the opportunity that it offered.”

Blaine team (left to right): Troy Mattson, Bart Sederski, Chad Green.

After college, Radke joined Honeywell’s Automation and Control Solutions Division. He initially worked as a product manager in Golden Valley, Minnesota, but spent a majority of his time on the East Coast as a territory manager for its building solutions division. “I cannot say enough about how much I enjoyed my time there and the talented people that helped shape my development as a business professional entering the workforce,” Radke says. He credits Honeywell’s Todd Shuman, whom he networked with while he was working towards graduation, with helping him get to Honeywell.

Late in 2004, Radke made the decision to return home and work for Johnstone Supply. Having held a variety of roles within the company, from his first experiences in the warehouse, to counter sales, outside sales and various management positions, gave him the perspective – and appreciation – to understand the importance of great people and the critical nature of those roles held by everyone in the business.

Bloomington Group at a Glance President and CEO: Aaron M. Radke Headquarters: Bloomington, MN Operations: 4 locations Bloomington, Saint Paul, Blaine, and Rochester Year Founded: 1983 Major Product Lines: Coleman, Amana, Goodman, Fujitsu, Navien, Regal Beloit, Honeywell, Emerson Climate Technologies, Nu-Calgon. Several hundred active vendors. Annual Sales: $20M+ Website: Number of Employees: Approx. 48

With its four locations – Bloomington, Saint Paul, Blaine and Rochester – as well as a neighboring Johnstone Supply in Golden Valley, Radke says the Bloomington Group and their neighbor represent the Johnstone Supply brand well. For Johnstone Supply customers, this means they get a partner who does not want to simply sell them something; they get a partner who wants to understand their needs and expectations and create and implement solutions designed to exceed them.

Saint Paul team (left to right): Dan Turcotte, Brandon Brady, Jake Welch and Jesse Bagley.
Not pictured: Tom Corbo.

“Having a broad range of industry-leading products available through an extensive distribution center network offers tremendous supply chain advantages with best in class product availability to our customers,” Radke says. “The expectation every day for the Bloomington Group is to have what the customer needs, where they want it and when the customer needs it.”

In the event the Bloomington Group does not have a product in their warehouse, they have daily ordering capabilities with next day delivery from their regional DC. “This allows us to replenish daily what is being pulled through by the demand of our customers,” he adds. “It gives us the ability to create a decisive competitive edge in availability, but remaining very successful at high inventory efficiency.”

Having the ability to get products to customers quickly is more important than ever because customers are less inclined to deal with inventory and the headaches that come with it. “Our residential repair and replacement customers often tell us that managing inventory is your expertise, not ours,” Radke says. “This represents a shift from the past, but if that’s what customers are seeking then that’s what we’ll do.” There is a lot of opportunity that exists in helping the contractor better manage inventory and logistics.

Territory managers (left to right): Trent Grunklee, Doug Hill, Shirley Buchberger, Bob Major and Garry Davis.

To that end, technology has played a key role in allowing the Bloomington Group to be successful with its solutions for customers. “Our inventory management solutions are something that we are very proud of and we’re working tirelessly to improve every day,” he says. It starts with powerful tools internally that offer business intelligence at your fingertips necessary for effective supply chain management. These tools also help the company utilize replenishment strategies that are in sync with what is really happening in the marketplace, making a just-in-time inventory method in the supply chain more attainable than ever.

Best Practice Definition: A Passionately Serving Family … Our success is built on our culture and our people. We all hear and read about core values and core focus in business. For us, it’s without a question, being a family of people who want to serve, passionately, everyone we come in contact with. Period. Significance: We recently lost a very important part of our family unexpectedly in Sean Kelly. Sean was a customer service and sales associate, and he was known for consistently delivering exceptional service with a smile to everyone he dealt with. I can’t help but be reminded of why we have a great company getting great results. The answer is simple. Great People. We have a very special culture at the Bloomington Group. You won’t find it in textbooks or leading business book titles. It stands alone. We know the reason we deliver exceptional customer service to our customers is because that’s WHY we all get out of bed to come to Johnstone Supply. To serve people in any way we can. We serve each other, we serve our vendors, we serve the companies cleaning the building or delivering the mail. We can’t help but not be passionate about serving the customer. I truly believe that every single person in our organization would give the shirts of their back if it was the last thing they owned to help somebody else. We have some of the most unselfish, honest, loyal people in the workplace today and that is what makes the most complex aspects of business become simple. When you have these kinds of people, building an organization that people want to be a part of or do business with gets a lot easier.

The Bloomington Group has taken this one step further. They are leveraging these tools and their knowledge to offer similar replenishment strategies to their customers. It’s a pay-it-forward approach to doing business. “Much like the cooperative taking certain things off our plate to help us focus on the customer, we want to offer that same value to our customer so they can focus on the end user,” he says. “Effective solutions in the supply chain to our customers allow them more time to focus on the consumer.

Rochester team (left to right): Mike Hesch, Scott McCallum, Ryan Radke and Bob Major.

“Part of the culture has to be ‘yes we can,’” he says. “We believe there is always a solution to a challenge or problem. It may not always work or be profitable enough for both parties to implement, but there is always a way. We investigate every request as if we will hit a home run.”

That “yes we can” philosophy makes the men and women of Johnstone Supply that much more valuable for customers. It proves to them that when you buy from one of the Bloomington Group locations, you’re not just making a transaction but buying into something bigger. It’s a partnership that is built on staying in sync with the customer and checking in with them on a regular basis about what’s working for them and what’s not.

These strong relationships also allow the Bloomington Group to get a pulse on what’s happening with end users. “Being in tune with, and understanding what is going on in the world of our customers’ customers is becoming more and more critical to success,” Radke says. “The industry is changing rapidly with technological and generational changes; understanding the consumer is more important than ever for the entire supply chain,” Radke notes.

The Bloomington Group’s locations primary market is residential repair and replacement followed by serving secondary markets in the light commercial and institutional segment. While its typical customer has traditionally been a small- to medium-sized residential contractor, their growth and development has them seeing more business with larger residential HVAC repair and replacement companies. You don’t get those opportunities unless you are truly adding value as a trusted partner.

So how do the Johnstone Supply teams in the Twin Cities area work with these customers? It starts by acknowledging you don’t have the one size fits all silver bullet for every customer in the marketplace. “We don’t believe what is good for one customer necessarily will fit all customers. You must first take the time to discover what issues (opportunities) exist with that specific customer,” Radke says. “Then we get to work on packaging a mutually profitable product, service or solution to achieve the desired result. We like to think of it as DCI or Discover, Create, Implement.”

With the cooperative model, the Bloomington Group is able to focus on what’s important to the customer. “We work hard to be more agile and quicker in decision making than our competition, allowing us to respond quickly to what customers are looking for,” Radke says. “We have a unique ability to reflect the local contractor’s needs while leveraging the strength of over $1 billion in revenue across the cooperative.”

Radke sees the future as one of excitement and opportunity. “Technology is going to continue to make its mark at every level in the supply chain and the world around us, driving rapid change in products, services and the way we operate our businesses.

Younger generations will continue to move into buying positions in the market and their demands and buying habits look a lot different than those in past generations. The Bloomington Group is committed to helping their customers remain relevant in a rapidly changing environment.”

Michael Maynard is a contributing editor based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at [email protected].