Staying ahead of the curve

Agency Sales,  Mar 2003  

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The following rep firm was profiled last year in the pages of RepConnections, the official publication of NEMRA. The strategies employed and business philosophies that are followed by this firm have paved the way for continued growth in the markets it serves.

Diversification and valueadded service are more than popular corporate terms for the folks at Hugh M. Cunningham, Inc. In fact, the acceptance of those words into the corporate culture have propelled the 55-year-old manufacturers' representative firm to an enviable position in the Texas, Arkansas, Louisiana, and Oklahoma marketplaces that it serves.

Headquartered in Dallas, Texas, Hugh M. Cunningham is an independent manufacturers' representative agency representing major plumbing and mechanical, electrical, and lighting manufacturers. There are seven separate business groups that include fire and water, flow control, warehousing, and factory service expanding the existing customer base and their product mixes with the agency's manufacturers.

The Importance of Value-- Added Services

"It's not so much that we're smarter than anyone else," explains Dan Townsend, director of operations, "it's more that what we've done is an example of 'survival of the fittest.' David Cunningham (the agency's president and CEO) saw and understood the need for business synergies. In order to grow and be successful, he realized he had to change, diversify and provide a full range of value-added services to our customers."

What Cunningham's vision brought about is an agency that today boasts several distinct product/service groups serving a fourstate region. Visitors to the Hugh M. Cunningham web site (www. hughcunningham.com) will find information and descriptions of the following groups:

* Electrical products.

* Lighting.

* Distribution.

* Factory service.

* Flow control.

* Fire and water.

* Plumbing and mechanical.

Townsend continues, "What we've done is different, although it might be considered a little like integrated supply, but we glimpsed the future, and we got there first. Look across other industries and you'll see concepts like this at work. Our goal is to be the sole source provider for our customers, much like the many manufacturer acquisitions and distributor consolidations that we see every day."

Realizing Economies of Scale

While that kind of thinking may have been what set the agency on a course to provide a diversified range of products and services to its manufacturers and customers, Townsend adds that it made sense for another reason. "Because you already have all the back-office infrastructure in place to begin with, it's not as if you have to increase the overhead tremendously to take the next step. You're already doing the human resources, computer and accounting functions, so it doesn't matter whether you're supporting a five-person or a 100-person operation." Cunningham currently has 110 employees. "Instead of supporting just one group, all those functions now support several," he adds.

Along with the products' groups that Cunningham supports, the firm adds to the mix a full range of value-added services. According to Mike Carruth, electrical products group manager, "This concept has proven to be very successful for us. For instance, we have a group of people who only call on architects and engineers, contractors and general contractors. We'll start our efforts with takeoffs at the general contractor level and then track the activity so we know many times before the distributor, who the electrical and plumbing contractors are going to be on a project. A lot of our distributors see what we're doing and work closely with us to secure business. This allows us to help pull through the business for electrical distribution."

Townsend adds that this "allows us to stay ahead of the curve. We're able to look at plans ahead of time and identify the supply needs for our salesmen who call on distributors only."

The Valuable Combination of Products and Services

Carruth emphasizes that the firm's approach has worked well in the competitive marketplaces in which they operate. "With the system we're operating with, we're not claiming to have all the solutions to everyone's problems, but there aren't many agencies like ours that can provide the combination of products and services that we do." He adds, however, that one challenge he's had to face is that of the perception that his company is one specializing primarily in plumbing. Carruth says, "We're not a plumbing rep who also does electrical. For each of our groups - including electrical - we have separate sales forces. The salesmen from the electrical group sell electrical products. They focus all their energies on that market. We know that the needs of each of these markets are different and to be properly served, they must be strictly focused on."

It's being able to focus so tightly on the electrical market that has placed Hugh M. Cunningham in such a desirable position with its manufacturers. According to Townsend, "When Mike and our salesmen are sitting in front of the manufacturer, those manufacturers know that 100 percent of their efforts are devoted to their products - and that they're not distracted by anything else."