Firm Reinvents Itself by Plugging Into Clients’ Needs
After 20 successful years in a small niche--distributing electrical components to a wide variety of manufacturers--Huntington Beach-based On-Line Electronics saw its industry change radically in the mid-’90s. Small competitors merged or were acquired by bigger companies, and the market began to tighten. To stay competitive and resist the pressure to be gobbled up, President Colton Rickert introduced a new, value-added strategy that has increased volume, attracted new customers and taken the company global. Rickert was interviewed by freelance writer Karen E. Klein.
We knew the marketplace was changing, the distribution network was shrinking and we had to adapt if we were going to survive. What we needed to do was offer better value and services that would separate us and insulate us from our competitors.
We had started out buying and warehousing simple wiring and termination devices that connect electrical wires. About 15 parts manufacturers supply us and we sell their parts to companies that make products such as computers, lighting devices, security systems and automobiles.
A few years ago, we realized that technology was changing and we would have to reinvent ourselves if we were going to resist the trend to get bought out. It became obvious that our customers wanted us to do something more than just sell them individual parts.
They wanted us to do sub-assembly of the connectors for them, so they wouldn’t have to use their highly paid labor force to do tedious, simple assembly jobs. We started putting products together that we had in stock and selling them as assembled components under our own parts numbers, so our customers could buy a unit and plug it into their own electrical panels.
Doing this increased our business and ingratiated us with our customers so much that we decided to take it one step further and provide this kind of value-added service on a broader scope.
We began to gather all the components necessary for more complex, broader sub-assembly jobs and put together custom-ordered, complex electrical panels, printed circuit boards and cable assemblies. What we were doing was, in effect, expanding from being just a distributor into becoming a sub-contractor.
Now we offer a complete package, from design to delivery. In the last year, we’ve hired six or seven people who have expertise in production, manufacturing and quality control.
We also have highly qualified inside and outside sales personnel who can go to an engineer at one of our customers’ plants and offer help with designing our products into his assembly.
When we get the job, we take it through the prototype stage, deliver the parts that engineer needs, do the purchasing for him, deliver the finished product and make sure his backshop employees know how to use it and have the right tooling for it.
Our customers are no longer just buying a part number from a catalog, they’re buying our services, application design, and the right products for that application.
Since the purchasing agents are now buying 50 or 100 parts in one sub-assembly, under one part number, their purchasing time is condensed, they don’t have to track deliveries and purchases from eight or nine different vendors, and the sub-assemblies we deliver have been quality-controlled and tested to their specifications.
It’s a huge labor savings for our clients, not only in assembly but also in administration and purchasing costs, paperwork and checks they have to write. They get a totally quality-controlled, tested unit and all they have to do is plug it into their system and do the final assembly.
Since we introduced this value-added strategy, we’ve increased customer satisfaction and repeat business. We’ve also extended our boundaries by offering a service that’s not available globally. Instead of just selling parts as far as our cars would get us, we’ve become an international firm, dealing with Fortune 500 companies based in Europe, New Zealand and Asia.
We offer our clients, many of whom manufacture products on a cyclical basis, year-round production at a competitive rate, since we mostly use parts that we are already selling and can access directly from our own inventory. Because of our ability to do that, we’ve become a very important source to our customers and our potential for growth is great.
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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.
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At a Glance
* Company: On-Line Electronics Inc.
* Owner: Colton Rickert
* Nature of business: Electronics distribution
* Founded: 1978
* E-mail: crickert@on-lineelectronics.com
* Web site: https://www.onlineelectronics.com
* Employees: 25
* Annual revenue: $7.5 million
