When business is going well, owners and employees tend to sit back, enjoy the ride and hope the good times will keep rolling. But truly successful businesses look continuously at what they're doing and how they're doing it, and ask themselves: How can we be better at what we do?

That sums up the philosophy of Robert J. Munch and the employees at Munch's Supply Co. in Illinois. This family-owned business has served the Chicago-area market for 51 years. But the Munch family and their more than 120 employees are not content to ride on the coattails of their proud past. “We're constantly evaluating,” says Robert J. Munch, who oversees the company's operations, which include six branch locations. “It's a daily thing that we do here. Every day, we walk into our store and say, ‘What can we do better?' That's the mind-set here.”

Looking for a better way is what got Willard Munch into the wholesale business in the first place. He was an electrical contractor on Chicago's South Side, and he grew tired of traveling downtown for supplies. Sensing a market for contractors like himself, Munch began selling electrical supplies out of the family garage in the evenings after working all day as a union electrician. The Munch family pickup truck — the only vehicle they had — doubled as his supply truck. Munch eventually got into the supply business full time.

His son, Robert W. Munch, grew up in the business, helping his father stock products, riding along with him for merchandise pickups and eventually taking over the business. The company grew, adding heating and cooling products in the early 1970s and adding its first branch in 1972. Today, Robert W. and his wife, Judy, maintain an active role in the business, with their three children, Robert J., Bill and Victoria Munch-Strunk, running it full time from its headquarters in New Lenox. “It's been a pretty consistent transition over the last 10 years, and it's been an opportunity for us to take a fresh look at the business and impact the way things are,” Bob Munch, Jr. says.

Munch says he and his siblings share a “hands-on” management style. While he is vice president of operations, he acknowledges that it is not a business where people get hung up on titles. “One of the keys to our success is that there is not a lot of hierarchy,” he says. “We're not managing from an ivory tower. If an employee or a customer has an issue, they know how to get a hold of us.” He knows all of his employees and many of his customers by name.

Munch puts a lot of trust in his branch managers and his employees. Policies and procedures are in place, but the Munch's Supply philosophy is to empower employees to think and then act in the best interest of the customer and the company. The company has successfully employed this philosophy because they groom their employees to be with them for the long term. Five out of the six branch managers started with Munch's Supply in the warehouse and worked their way up, Munch says. He speaks with his branch managers several times a day. He also conducts monthly reviews of each branch. Customer service and safety, as well as sales, are all part of this review.

These monthly reviews help Munch as well as the branch manager get a more accurate read on the branch itself. It's all part of the process of being a better, more efficient branch. Much of the review focuses on data: What's selling and what's not? What kinds of trends does the data show? What kinds of questions are customers asking? Who are the new customers? What are our best customers doing? “We drill down to a very detailed level,” Munch says. Then they compare data with other branches to determine how each branch is doing within the organization. The end-result is a branch-specific sales and marketing plan that the manager can carry through into the next month.

While Munch's Supply relies on technology to gather and sort data, track shipping and build inventory, the company recently asked itself how effectively it was using its technology. “Everybody has pretty comparable computer systems, but most systems have a lot more capabilities than distributors use,” Munch says. “We made a concerted effort to learn about our system capabilities starting from scratch.”

That is, what information would be most helpful to them and how could they best get it from their system? After all, when most distributors set up a new computer system, they want to get it up and running as quickly as possible with minimal disruption to their business. Many features that could help a company get left in the dust. Once the Munch system was up and running, however, they went back for a closer look. “We've found that there are better ways to use that technology, and there's a lot of technology that we weren't using,” he says. This re-evaluation has resulted in improvements in efficiency and in measurements of processes. Also, Munch has recently added new technologies such as a new phone system, improved sales IT capabilities, global tracking of deliveries and EDI.

Making any business stronger and more efficient can't happen unless its employees and customers are learning and improving their knowledge base. Munch's Supply places a strong emphasis on these facets of its business through education and training. “We want to have the best-trained counter people in the industry,” Munch says. “World- class” customer service is the goal. To help get them there, Munch's Supply developed a training program centered on the HARDI Counter Certification Program, offering incentives for completing each level. To date, 33 employees are involved in the program, including 22 who have made significant progress in reaching levels of achievement and three who have completed the program.

NATE certification is also important to Munch because it translates directly to better quality customer service. “Customers know that a counter person who is NATE-certified is someone they can rely on and who has a higher level of knowledge,” he says. Munch's Supply has developed a 16-week training program that covers each chapter of the NATE core curriculum. Participating employees face a quiz at the end of each chapter, with the highest-scoring person at each branch receiving a prize. Those who score well during the 16-week course move on and take the NATE test. All of this is done electronically, Munch says.

Product and technical training remains a staple for Munch's Supply employees and managers. Munch says employees received 650 hours of training in 2006. Through June 2007, employees had already far surpassed that number with 950 hours of training. But it's not just Munch employees who have a higher degree of technical expertise and knowledge; Munch dealers are encouraged to take advantage of training sessions that cover all facets of an HVACR contractor's business. Munch's Supply employees teach the classes as well as outside experts and explore everything from business and financial management to customer service, advertising and marketing. Munch's Supply also offers on-site training and testing for both EPA and NATE certification.

Munch's Supply dealers know that the expectations of all parties in the supply chain — beginning with the customer — are higher than ever before, so they eagerly take advantage of additional training. “The bar has been set higher,” Munch says. “In general, dealers are much more sophisticated than they were 15 to 20 years ago.” They also utilize the wholesaler's in-house marketing department, which is available to them at no cost. Customers can use this fully staffed department to design an ad, develop a multimedia ad campaign or create a direct-mail piece with a targeted customer list. Because Munch's Supply has offered this service to customers for 20 years, Munch says they know what works for dealers. “We can offer them that experience,” he says.

Perhaps there's no greater example of how Munch's Supply continually examines its business than by looking at how it went about improving its safety record. For most companies, on-the-job injuries happen. They are a cost of business. But Munch's Supply took a step back, identified it as an issue and then set about making changes. In just four years, the company's on-the-job injury rate dropped from 50 percent to 20 percent. Across the board, injuries are down. “I want our employees to be safe,” Munch says. “It's not just enough to say it. We need to make sure every day that we are operating safely and doing the necessary things to keep a safe work environment.”

The company brought in a safety consultant who interviewed employees and managers at every branch, including the headquarters. From that, they developed a series of safety practices and policies, backed by a communications and training plan which management reviews and updates regularly. Employees attend weekly safety meetings, and safety representatives from each branch meet monthly at the corporate headquarters. “We have seen dramatic results,” Munch says.

Munch's Supply branches are fairly large, with the smallest location about 30,000 square feet. The six branches are all located within a 50- to 60-mile radius of each other. Munch relies on direct shipping as much as possible to keep costs low and increase the efficiency of the entire operation. But Munch's Supply's 45 trucks are still on the road every day making deliveries from the company's main warehouse to its customers and branches. Munch is proud to say that he can deliver virtually any product to a branch by 9:00 the next morning.

The pressure to cut costs is probably the greatest challenge facing the business, Munch says. Everyone in the supply chain is putting a full-court press on economizing. For his part, Munch tries to communicate the value in offering customers a higher level of customer service. The message resonates with customers. Many have been with Munch's Supply for 50 years.

Munch also cites a closer relationship with vendors than in years past. “It's much more of a partnership. In the old days, it was price, price, price,” he says. Today, there's a willingness to work with one another and find mutual ways to help one another succeed.

“There's always going to be pressure from somewhere,” he says of the wholesaler business. “You will always have issues. The challenge is how are you going to deal with them.” Flexibility, he says, is key. “Use that challenge to change and become better. That's how we look at it.”

Michael Maynard is a business writer based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at michael.maynard@lycos.com.

Best Practice

Employee Training & Compensation Program

Definition and Example: We have developed an employee training and certification program centered on the HARDI Counter Certification Program. We started with the four levels of the HARDI certification (Assistant, Associate, Senior and Certified). We added to these additional skills that we consider Munch-specific skills (i.e., computer skills, order entry, procedural skills) and arrived at four skill levels for a counter person. If an employee meets the skill requirements for a level, he will receive a performance evaluation. There is a compensation amount tied to each level. If the performance evaluation meets a minimum requirement, the employee will receive the compensation for that level.

NATE certification is a part of the HARDI program. We noticed that we had several of our employees advancing up to the NATE requirement but not proceeding past it. Anyone who looks at the large NATE manual is bound to be intimidated. We decided that we needed a little extra push. We took the NATE core manual and broke each chapter into a weekly training program. The program consists of daily reminders, branch training and an end-of-the-week quiz. Prizes are awarded for the top quiz scores. Each chapter is one week of focus. At the end of 16 weeks, employees who scored adequately on the weekly quizzes will take the NATE exam. We have 50 employees involved in the weekly training and expect to have more than 30 of them prepared to take the NATE core exam at the completion of our training program.

Significance: We feel that education is one of the key factors to improving customer service. By increasing the level of education among our employees, we have been able to further increase our level of service.

Benefits: It takes the guesswork out of compensation for a counter person and gives them the opportunity to advance as fast as they would like. It rewards the person who works hard to educate themselves and benefits employee retention.

Procedure: We have one person administer and track the program. We review with supervisors monthly as to the status of each person in the program. An employee must demonstrate core competency skills in order to enroll in the program.

Timing: The program runs year-round. Advancement is dependent on the employee's effort.

Cost: We pay for all costs associated with company-sponsored training. We also pay for costs with HARDI Counter Certification and NATE testing.

Contact: Bob Munch, Jr., 815/723-1111, bobjr@munchsupply.com

Munch's Supply at a Glance
President & CEO Robert W. Munch
Vice President, Operations Robert J. Munch
Vice President, Administration Victoria Munch-Strunk
Treasurer, CFO Bill Munch
Secretary Judy Munch
Sales Manager Keith Kramer
Headquarters 1901 Ferro Dr., New Lenox, IL 60451
Operations Wholesale distribution of heating, air-conditioning and hydronic products serving the Chicagoland and NW Indiana markets. We serve both residential and light commercial customers participating in replacement and new construction markets.
Employees 120-140
Annual Sales N/A
Major Product Lines American Standard Heating and Air-Conditioning Products
Heatilator Fireplace
Dunkirk Boilers
Hart & Cooley Registers
Uponor Radiant Floor Systems
Website www.munchsupply.com