Cape Electrical Supply
Cape Electrical Supply (CES) has enjoyed success for more than 60 years by having the perfect mix of talented employees, industry-recognized vendor partners and the right locations to serve its great customers, President and CEO Kyle Thoma says. With all three, the company has “a pretty interesting recipe for success,” he states.
Based in Cape Girardeau, Mo., CES supplies electrical, utility and communication products, including gear, wire and cable, lighting, fittings and boxes for the commercial, utility and industrial construction markets. A typical wholesale electrical distributor, Thoma notes that the company started operations in 1953.
As it grew, “We started out adding locations through either greenfield startups or via acquisitions,” he says, noting that CES avoided locations in metropolitan areas. “We like the rural and secondary markets because of the limited competition and how those markets match up to our core competencies.”
Today, “We have a leading market position throughout our geographic footprint,” Thoma says, adding that CES has 19 branch locations in seven states and a staff of 185. “It’s a good mix of longtime, experienced employees [and] young, talented folks that are willing to be groomed for the future of Cape’s business.”
CES’ No. 1 client base consists of electrical contractors; however, utilities, institutions and industrial facilities have become an ever-increasing part of the company’s business over the past decade. Additionally, “We sell turnkey power solutions directly to engineering, procurement and construction (EPC) clients, utilities and industrial end-users,” he says. “It’s been such a good growth niche for us.”
A longtime veteran of the electrical industry, Thoma joined CES in 1997. Five years ago, he created its CES Integration division (CESI for short), which enabled the company to sell products and offer other services, including procurement, packaging and project management.
“I started the division basically out of necessity,” he recalls, explaining that he sought a way to distinguish CES from competitors after watching them commoditize the sale process of day-to-day items. “I kept seeing our margins continue to shrink as we battled larger national chains for market share on the daily material requirements of our self-performing EPC contractor customers.
“What I did learn from our EPC client base at that time was that they needed someone who could offer a complete turnkey solution to help them do more with less for their project’s permanent-plant power requirements.”
Today, the CESI division largely supplies power distribution centers stuffed full with electrical switchgear and motor control. The division also gives the customer advice on what to buy and how to use it. “We’ll look at the specification, review it and offer insights,” he says. “It’s really a smorgasbord of what products and services our clients want.”
After CESI has secured its client’s order, “We manage the whole entire process,” he says, noting that the company handles the order from birth to grave, from order entry to shipment of the building. “They order the pieces and parts as an extensive BOM. At the end, we hand over a complete solution. We like to think of it as still selling a widget just with a lot more time and effort poured into making that widget a reality and on a much larger scale than say simple commodities.”
The company’s ingenuity has paid off. Since introducing the CESI division, “We have grown CESI into a third of our business,” Thoma says, noting that other electrical distributors usually do not participate in this market space or offer as extensive a list of value-add options.
“If we’re just a pricing service for our customers, then how long can we expect to make it in this industry?” he asks. “We try to look for what customers need, structure a strategy to fulfill those needs and then execute. From my perspective in this industry, we have to ‘de-commoditize’ ourselves to compete and bring ‘value to the chain.”
On Its Own
CES recently changed its logistics operation that serves not only its customers but Cape’s branch network as well. Thoma says this initiative included reviewing requests for proposals from some of the top local transportation carriers.
During the process, CES looked at costs and other aspects, including delivery times. “[We] ended up choosing two carriers for our process,” he recalls, noting that evaluating the cost was important but that improved customer service was the ultimate goal even if it raised overall expenses in the end.
CES also made the decision to do its own deliveries for the majority of its locations. “It’s [part] of our strategy to improve upon our customer loyalty and turn our logistics into a core competence,” he says. “We’re making deliveries and replenishing inventory daily at 16 of our 19 locations.”
The remaining locations, he notes, are replenished three times a week. “We’re using less-than-truckloads for the remaining three,” he says.
A Great Industry
Thoma is proud of CES’s low turnover rate. “We’ve had great people work here over the years,” he says, noting that its associates have adapted to its goal of setting itself apart. However, recruiting new people remains a challenge. The electrical industry “is not the sexiest industry, but it’s a great industry,” he asserts. “Once you get into it, it’s hard to leave.”
CES’s strategic moves, including adding new technology, will help it recruit new workers, Thoma says. “Technology is going to make us more efficient, attract younger talent and make us better in all of our business processes,” he states.
Its recent steps included implementing Solar Eclipse, an enterprise resource planning system. “It’s allowed us to do some things from an inventory perspective that have definitely affected our logistics,” he says.