Safety Marketing Group
Safety products are not difficult to come by for construction companies, manufacturers or others who need them the most. Although many distributors carry gloves, hard hats and other essential equipment, the companies within the Safety Marketing Group (SMG) go one step further when it comes to service and product knowledge.
“Today, everybody sells safety products, but they just put it in a box and ship it and may not always know what they are or how they work or how the product protects the worker,” says Mike Smeaton, President-CEO of the distributor-owned cooperative. “We’re dedicated to safety and saving lives, and have embraced that responsibility. The [maintenance, repair and operations] distributor is a generalist, while SMG distributors are safety specialists. This is what separates SMG distributors from everyone else that is selling safety equipment.”
The Brooksville, Fla.-based cooperative includes 60 distributor members with 180 locations located across North America. The organization’s main responsibility is to support its members and negotiate rebates from manufacturers. The average SMG member earns roughly $200,000 from rebates and group incentive packages arranged on their behalf. “Our members are typically dominant safety distributors in their geographic areas,” SMG says. “They are locally owned and operated, headed by committed community industry leaders, technologically advanced, financially strong, exceptionally responsive to customers’ needs and dedicated to providing ultimate customer value.”
SMG distributors are also able to build strong relationships with the group’s preferred suppliers. This partnership process includes completing joint marketing agreements (JMA’s). “Our JMA’s are considered a business plan for the upcoming year between the SMG distributor and the SMG preferred supplier that focuses on goals to help grow each other’s business,” Smeaton notes. “The JMA process covers joint sales calls, supplier education events, coop strategy, target opportunities, new market opportunities and new product introductions. SMG has a proven track record when the SMG distributor and preferred supplier execute on the JMA process.”
‘Educate, Equip, Empower’
SMG takes an “Educate, Equip and Empower” (3E) approach to its membership and suppliers. “What we try to do with our end user customers is find out what kind of injuries and illnesses they are prone to and come up with solutions to help their workers,” Smeaton says. As an example, SMG will advise companies reporting frequent hand lacerations about the appropriate kinds of gloves to purchase.
The group’s distributors are committed to education. SMG Distributors participated in more than 6,000 hours of SMG sponsored 3E Events in 2014.
The association also provides training for members. Texas A&M’s Industrial Distribution program partners with SMG on training and recruitment efforts. “Our distributors are always finding ways to differentiate ourselves from MRO generalists,” he adds. “One successful method is our 3E education program and our relationship with Texas A&M’s Industrial Distribution program. We give our distributor members tools to optimize their profitability through programs such as inventory stratification, customer stratification, utilizing current and future human capital and sales and marketing optimization.”
SMG further distinguishes itself from its purchasing cooperative peers by being selective in its membership. “We started out 27 years ago as kind of a ‘good ol’ boys club,’ and as a result, expectations were not high and distributors and suppliers were not held to any type of a standard. This typically does not produce results,” Smeaton says. “In many cases, a distributor joins a buying group and nothing happens. We decided about eight years ago to really start to drive behavior.”
The cooperative has established 10 key performance indicators for its membership. These include total purchases made through the cooperative, market allowance growth, growth in purchases based on joint marketing agreements, participation in SMG’s annual distributor/supplier survey, product category reporting and the timeliness of their reporting and payments.
Members are ranked based on these and assigned gold, silver and bronze status. Distributors and suppliers that maintain bronze status for longer than two consecutive quarters are fired. “I don’t know of any other group that fires its members,” Smeaton says.
All members must offer safety equipment as at least 60 percent of their offerings. Companies have been dismissed from the cooperative as a result of being acquired by other companies that offer other types of products. Distributors have also been added to SMG as a result of acquisitions. “It can either go with us or against us,” he adds.
Supplier members must also provide monthly spending data. “Ten years ago, it was a challenge for us to receive that data,” Smeaton says. “After heavily weighing the timeliness of data as one of our KPIs, our average turnaround is now 14 days as opposed to 60.” The gold, silver and bronze status helped change this behavior, he notes.
SMG assists companies who are on the verge of losing their membership. “We give report cards that make our distributors and suppliers aware of what’s going on and what they have to do to not be in bronze status,” he adds.
The cooperative’s high standards have allowed it to grow. The organization’s membership has a combined revenue of more than $900 million, it says. “We have high expectations, and it has driven our results,” Smeaton says. “We measure ourselves against other buying groups and national distributors, and our growth exceeds theirs.”
Smeaton says he is proud of the cooperative’s growth and dedication, which he attributes to the guidance of its board of directors and supplier advisory council. “Over the past 15 years because of the strength and passion of our distributor members and the direction of our board, we have grown into the largest consortium of safety equipment specialist distributors in the world.”