Mighty MRO.
Behind the doors of a handful of nondescript warehouses lies an operating juggernaut that most people have never heard of. For decades, its shipments have arrived reliably and unceremoniously at the doorstep of American industry in record time with remarkable precision. It never runs a discount or sales promotion. Its customers may know the voice, but never see the face of the brand. But ask any maintenance technician, production line supervisor, or engineer about their experience with McMaster-Carr, and you’ll witness deep reverence alongside the grease-stained pages of a big green and yellow catalog.
Since 1901, McMaster-Carr Supply Co. has carried every imaginable product for maintenance, repair, and operations (MRO). From five US hubs, it serves customers coast-to-coast, stocking more than half a million business-critical products delivered to customers within a day by courier or national shipper—from ordinary adhesives, to six-foot hinges, to raw materials, pumps, fasteners, and tools. Years before Amazon Prime became a household name for fast two-day shipping, McMaster-Carr was firmly established within MRO for delivering precisely what its customers need with magical efficiency.
Full Circle Experience
I started my career with McMaster-Carr as a marketing analyst. Beginning with customer database management and catalog allocation, my journey progressed in the following years to include managing a team responsible for the call center and order intake, and culminated as an operating leader of the high-throughput order fulfillment operation touching 80% of Northeast shipments daily.
At the time, customers could place an order by 6pm ET and their shipments would arrive same-day or next day at standard shipping rates. It was a brilliant insight then, as many e-commerce companies exploit now, that fast shipping can be the tipping point between two competing product offerings. For McMaster-Carr, the premise of universal fast shipping was also an operational boon to secure the best shipping rates at volume, and to begin each day with a clean operating slate.
A pacesetting business whose operating model closely matches its business model.
Timeless Then, Indispensable Now
Resilient to price competition, oblivious to fickle trends, and the antithesis of flashy brands, McMaster-Carr doesn’t cater to the whims of the market. Rather, it leads with a deep operating discipline that serves all customers, is not beholden to the latest technology, and keeps rooted in industry, product and customer intelligence to sustain and grow the business for the long term.
Scaling complex operations in proportion to customer needs takes restraint while upholding an impeccable service ethic. It demands cultivating a deep customer base where no single customer can upset the apple cart. It requires fastidious training within operating processes where people offer the greatest value, but who may also be susceptible to mistakes. And it runs on a robust planning and operating infrastructure that flourishes at scale and is buffered from volatility. While a pop of 20% growth might be a blessing to some businesses, it can be problematic for companies that carry the inventory risk. In the race between the turtle and hare, sustained, single-digit growth maximizes opportunities to create winners throughout the value chain over a longer period of time.
Ultimate Win-Win
When we look at the interval of months and years, the value of our systems and operating strategies comes into sharper focus. It is inevitable that customer behavior change and shifts in technology affect the bottom line, and a viable solution demands flexibility toward local needs. This shift was especially pronounced in the early 2000s and the years since.
It was and continues to be a source of great joy for a loyal customer base to place a call and know that a credible voice will pick up the line within three rings, retrieve a customer record within a few keystrokes, and complete an order within a couple minutes, but as the Internet gained traction, a new pattern of demand started to take shape. The website, as a persistent order pad, facilitates larger multi-line orders more readily than a spontaneous phone call. The web is also open and discoverable to all, in contrast to the original printed product catalogue. And as the work day progressed, a customer’s list of desired products might grow into a larger consolidated order than what might otherwise transpire. Multiplied over the course of thousands of daily orders, the growing late-day momentum exerts pressure on the operations when there’s finite time to meet the shipping cutoff for a next-day delivery.
Over time, McMaster-Carr has evolved discrete elements of the customer experience to gently shift behavior, realizing operational benefits and increases to satisfaction. For example, for orders placed by 1pm, customers in New York City enjoy same-day shipments at regular shipping rates, freeing up operational capacity to handle a growing late-afternoon order spike. It’s a great example of how smart operating strategies address needs across multiple constituents with value created for all, and illustrates the ultimate win-win that keeps customers coming back:
Create enduring customer value that is reinforced by your operational mastery.
Living by The One-Day Contract
McMaster-Carr is a marvel of human achievement led by exacting operating standards. Few businesses can claim a century’s-long track record of rigorous optimization, but it all starts one day at a time when we endeavor to close the loop between our operations and customer demand.
Reflecting back on my experience, I am reminded of how this finely tuned operation embodies the spirit of the “One-Day Contract.” Championed by famed basketball coach Rick Pitino, it’s a valuable standard by which you and I and any business can profit when applied day after day:
How good would you be if you only had a one-day contract to retain your job? You would put forward your best effort on every front.
Even now, well beyond the steel toe boots and conveyor belts, the value of the minute is deeply ingrained. Want to hold a meeting? Calculate the value of everyone’s time. It’s amazing how our behavior changes when the opportunity cost becomes real. There will always be an inbound call to take, a box to pack, a trailer to pull. How do you commit to the highest and best use of your time?
