Share the Wealth
NO. 1 Commodity Sourcing Group
Darryl Hart sees Commodity Sourcing Group as a rising tide (the company grew 10,028 percent from 2000 to 2004) and Detroit's small businesses as boats. Hart, the 44-year-old CEO of the nation's fastest growing inner city company, has invested tens of thousands of dollars helping other businesses--including potential competitors--achieve some of the same success he has.
That help takes many forms. Since 2001, CSG has bought equipment, created brochures, installed technology, and trained employees for close to 10 local businesses. The mentored companies sell to hospitals--most of them through CSG, whose business is integrating supply chains for health care organizations. So Hart is strengthening his links, but he is also improving prospects for those struggling around him. "This isn't something we have to do," he says. "This is something we want to do."
Hart says "manifest destiny" led him to this role in this place. But unlike the original manifest destiny, Hart's migration was from west to east. A Washington native, he worked for years in Seattle banks, rising from night janitor to credit sales manager with stops at all stations in between. That life ended one day in 1992 when Hart went fishing with a friend who owned a company that made promotional products. "I asked him if he actually made money selling pens and jackets, and he told me that his net each year was about 10 percent of his gross and he was doing $10 million," says Hart. "I did the math. I got excited."
Within 18 months Hart used his 401(k) and personal savings to buy a franchise of his friend's business. A second franchise in Michigan required the kind of perpetual travel that strains young families, so in 1997 Hart relocated his wife and two children to Detroit. He soon merged the promotions business with another one; and in 1999 Hart and partner Robert Schummer closed down that company and sold the assets to launch CSG.
CSG was created to manage automakers' spending on things like janitorial supplies, hand tools, and light chemicals. At the time, e-commerce mall Covisint, a collaboration of the Big Three plus Toyota and Nissan, was reaping "revolutionize-the-industry" headlines, and Hart and Schummer wanted in. "We spent several hundred thousand dollars before the dot-coms bombed and a lot of air went out of that space," says Hart. "We hadn't gained any traction, so we decided to get out too."
Like the auto industry, health care was passing through a crucible, and those changes proved kinder to the young business. Less-generous reimbursement policies were forcing hospitals and health care chains to outsource noncore services and to make what remained lean to the point of sinewy. CSG responded by assuming management of printing, transportation, laundry, medical-supply procurement, and a host of other services its new customers wanted to eliminate or downsize. The company contracts for such activities with other vendors and coordinates their delivery.
The first nudge toward mentoring came from CSG's customers. Diversity programs require many hospitals to purchase supplies and services--medical, janitorial, administrative--from minority- and women-owned businesses. But the more diminutive among these sometimes lack the resources or expertise to support large accounts. "A customer said to us, 'We're working with these guys who need some help. Can you do something?" recalls Hart.
CSG has been doing something ever since. Whenever Hart considers mentoring a company, he dispatches one or more top executives to interview its management and figure out where CSG can help. Assistance may be as abstract as discussing strategy or as hands-on as consolidating billing services. "Everyone needs something a little different," says Hart. "It's a matter of touch, feel, need."
In one case, CSG purchased more than $50,000 worth of equipment and technology on behalf of a small printing business so it could fulfill a large contract. CSG sold the equipment to the company over three years, and recruited and trained skilled workers to run it. On another occasion, CSG helped a small supplier of janitorial and paper products create marketing materials, including sales presentations.
Devon Promotions and Advertising is one small Detroit business that owes a big contract to CSG. Two years ago, the $1.2 million advertising and printing company was up for a job that required it to purchase all the equipment from a large hospital's print shop. CSG bought the equipment on Devon's behalf and sold it to the company over six months at no interest. CSG executives also sat in with Devon executives on hiring interviews, lending advice and support where necessary. "CSG was instrumental in our getting the contract," says Jerome Mallet II, Devon's director of operations and the founder's son. "They went above and beyond in everything."
All three of those companies now sell through CSG as well as directly to some of CSG's customers. "These guys could be competitors, but we don't view them as a threat," says Hart. "They can't do what we do at the level we do it. And if someone approaches Devon and asks for a service they can't provide, they may call us."
Hart expects to mentor more businesses, but his is not a come one, come all philosophy. He personally evaluates each engagement, weighing the value CSG can provide against the human and capital resources required. "More small businesses in this space is healthy for the industry and for the area," says Hart. "We want to give so long as it makes sense."