John Argitis no longer employs a salesperson to call on his company's largest account, Bose, a $400-million acoustic-speaker maker in Framingham, Mass. Still, Argitis sells Bose more molded-plastic parts than ever. And the cost of those sales, as well as the price Bose pays, has come way down.
Instead of using a salesperson, Argitis's $12-million G&F Industries, in Sturbridge, Mass., assigns an employee, Chris LaBonte, to work full-time at the Bose plant. LaBonte spends most of his time in the Bose production area, making sure that enough G&F-supplied parts are always on hand, making quality-control checks, and helping Bose with new-product engineering. Mornings and evenings, LaBonte drops by G&F to brief production people on Bose's plans for the next few days or weeks. He also tells Argitis about Bose's new-product plans and straightens out any problems with the moldings G&F has supplied to Bose.
Bose agrees to buy certain components from G&F at a negotiated price, and in exchange for the exclusive contract, G&F delivers the parts as Bose needs them and fixes any problems. LaBonte participates in Bose product-engineering meetings, advising Bose engineers and gathering information G&F can use to develop new processes or molds for products Bose is going to want.
"It's absolutely lowered my cost of doing business with Bose," says Argitis. "We've made a 50% cut in our quality-control department because we have a better understanding of what the customer wants." Despite the expense of maintaining a full-time employee to service one customer, the setup has saved G&F and Bose money by eliminating selling costs. Argitis says G&F's prices to Bose have come down roughly 25% since the arrangement started, in early 1987, but higher sales volume has pushed G&F profits up.
Argitis has begun a similar arrangement with Kiddie Products, which makes plastic goods for infants. In time he wants to shed smaller customers and do business with only five or six major buyers under similar arrangements. "I could afford to give them such good service, they'd never go to anyone else," he says. -- Tom Richman* * *