Supplier Side Talk: KBC Tools & Machinery

KBC Tools & Machinery President Paula Bass talks supply chains, COVID, and customer relationship management.

Founded in Detroit in 1965, KBC Tools & Machinery, or Kabaco Tools as it was known then, began as a catalogue house selling surplus tools to the metalworking industry at a discount.

Since then, the company has grown through acquisition, by opening branch locations, and through supplying tooling from more than 600 manufacturers, all with an eye on value. KBC Tools now has a footprint in Michigan (Sterling Heights), Illinois (Elk Grove Village), California (Fullerton), Ontario (Mississauga and Oldcastle), and B.C. (Delta).

Recently Editor Joe Thompson spoke with President Paula Bass about the company’s direction and how the COVID-19 pandemic has affected purchasing trends. Here is part of that discussion.

Thompson: As a supplier that carries multiple brands and thousands of products, you must have a wide and varied customer base. How important are your customer relationship management (CRM) skills and how has your CRM strategy evolved in recent years, especially given the pandemic?

Bass: Our CRM process is evolving, and we made huge improvements in 2021/2022 to help us get closer to the needs of our customers as the markets changed by creating and identifying subsegments within our customers.

We also know that any CRM system is only as good as the information we input into it, and there is no substitute for real knowledge of our customers at a deep level.

We have tens of thousands of active clients in North America. We know many by voice, name, and company because they buy from us daily and have for many, many years. We’ve been in business since 1965 and have clients that have been with us from the beginning. Still, it often is hard to know each client in depth, so we are committed to treating all clients and their orders, regardless of how big or small, with the same urgency and care. We engage with our clients daily to find out what they are doing, what they are planning, and how can we help them.

Thompson: Did the pandemic change the strategy of inventory control employed by machine shops in terms of their tools and related supplies?

Bass: Yes, it did. And the strategies are different today versus early on in the pandemic. Early on it was all about how to attain products with no contact or face-to-face interactions, and we worked to help our customers order online and remain open.

Lately it’s all about supply chain pressures to deliver and rising costs. Massive supply chain delays and product shortages are affecting many of our clients.

With tens of thousands of clients from one- or two-person machine shops to the largest manufacturers in North America, inventory control is vastly different from one of our clients to the next, and reactions to the pandemic also vary in those customers.

For the job shops and prototype shops, that usually means that if they get a new job or break tools, they call, email, or place an order online for immediate delivery or pickup, relying on our large inventory to fill their needs and get back to machining right away.

For production shops and larger manufacturers, the pandemic increased the number of bulk purchases and blanket purchase orders they placed (if they have the luxury of being able to plan out their upcoming needs or to maintain a larger tool crib to facilitate their day-to-day needs).

Still, many manufacturers have been slow to appreciate the changes the pandemic is wreaking in the industry, and they use up all of their lead time and call at the last minute in a panic hoping for the best.

Thompson: What do you think is the best model for managing tooling inventory for a modern shop?

Bass: The best model for managing tooling inventory is one in which efficiency and proper planning are considered. The current supply chain environment quickly exposes bad habits, poor planning, and inefficiencies that normally are covered by deep inventories and short delivery cycles. Regardless of the model being used, ones that identify projects and budgets and quickly build back to what tooling is used are best. Buying in advance and securing pricing and inventory early are keys to escaping some of the supply chain issues we are facing.

It’s also prudent to develop an alternative product list ahead of time, avoiding the panic related to long delivery times for first-choice items.

In my humble opinion, a good inventory system starts with good housekeeping. Everything should be clearly labelled, identified, and in a specific location with a min./max. order point set, and it should be reviewed on a regular basis. Bar coding also is helpful.

Apart from tooling used for specific jobs or on specific machines, centralized tooling storage is the most economical way to manage inventory and allows for inspection, repair, and reordering.

Thompson: As inflation levels rise to 30-year highs in Canada, how can a machine shop best protect itself from rapidly rising variable costs like tooling and other supplies?

Bass: Plan and share information with your suppliers. Secure longer-than-normal swings of tooling inventory and secure the prices now, while inventory is on hand. With rising costs, each batch of tooling could represent increases from the last one. Choose your core tooling that always needs to be in stock, and then double, triple, or quadruple your inventory. Also, comparison shop.

By consolidating your purchasing to fewer suppliers, you can get a bigger bang for your buck. You may be able to lock in prices for a longer horizon at this point and also ensure timely deliveries.

You can design machining operations based upon your stock core tooling choices, when possible, to diminish the number of tooling SKUs needed.

You should also take care of the tools you have, for example, using a sleeve-web for your round cutting tools. Buying coated tooling [TiN, TiAIN] and using the right cutting oils and coolants keeps your edges sharper longer.

Thompson: Supply chain disruptions have deeply affected how shops purchase their assets. Have you noticed a change in buyer attitudes? Is there such a thing as brand loyalty anymore, or has the need for fast deliveries changed the buyer’s path to purchase?

Bass: We have noticed swings in attitudes from one end to another. Some customers want to negotiate on price, and other customers are trying to secure all our on-hand inventory.

It is not business as usual. Inventory is king right now. If buyers hesitate now, the goods can be gone and the replacement cost higher.

As far as brand loyalty goes, buyers do have their preferences but are being more flexible based upon inventory levels.

Thompson: How should a machine shop judge its supplier base to decide which company to make a purchase from?

Bass: At KBC we have been ramping up our already huge inventories in all of our branches and central distribution centres so we can keep our clients supplied, happy, and machining. You only are as good as the last order, and we work daily to make sure we maintain our level of 99 per cent same-day shipping of in-stock SKUs.

Of course, price, delivery, ease of interaction with the supplier, inventory, personal choice, consistency of quality, and knowing what you order is what you’re getting all are important.