Membership has its Benefits

IDI Independent Distributors Inc.

At IDI Independent Distributors Inc., the expression “Strength in Numbers” describes the organization perfectly. A highly efficient network of select Canadian distributors, IDI Independent Distributors Inc. – better known as IDI to its shareholders and vendor partners – is not a buying group, but a highly efficient purchasing cooperative serving the needs of 100 member companies across the country…

As Canada’s largest industrial distribution network, IDI’s network of distributors specialize in industrial supplies, bearing and power transmission products, safety supplies, fluid power products, and janitorial supplies.

“Our members keep industry rolling in Canada,” says IDI President Scott Bebenek. “IDI’s shareholders are in a wide number of sectors, and service manufacturing, natural resources such as mining, the oil patch, lumber, transportation, shipping, and aerospace.” Selling only to its members Canada-wide, IDI members in turn sell product to others, including governments, Maintenance, Repair and Operations (MRO), various businesses, and often, other IDI shareholders. The IDI model, says Mr. Bebenek, has evolved strategically through forward-thinking decisions that benefit not only IDI, but all its shareholders and vendor partners.

When he joined IDI as President in February of 2006, Mr. Bebenek brought along years of relevant experience. Having worked with buying groups and cooperatives in the past, including with independent restaurateurs for Groupex Systems Canada, in food service distribution for Sysco, and in business development for the independently owned Federated Foods distribution co-op. As someone who understood the dynamics involved in working with groups and the metrics necessary to unite unrelated businesses, he was impressed with IDI from the beginning.

“Moving over to IDI and dealing with our shareholders, who are the owners of the co-op, was a breath of fresh air,” he says. “They treated me like a new neighbour, and were immediately very accommodating. The first thing I noticed when I got here was actually how much there was to work with, and the willingness of the shareholders to commit to the initiatives of the co-op, and the benefits that could come their way.” Only the second president in IDI’s history – there was no such position in the early years – Mr. Bebenek pays homage to his predecessor, Don Knowles, as the architect of IDI who helped make it what it is today, with a stable platform and solid management team and staff.

Strength of the Past, Success for the Future

Like many great groups, IDI Independent Distributors Inc. was founded by member companies who recognized the need to sell products in a well-run, free market system. Founded in 1981, IDI was formed by four industrial distributors in Toronto, Stratford, Brantford and Oshawa who sought to retain their independence in a rapidly changing and dynamic marketplace. Selling products to each other at special prices through lines they did not have directly, founding members B & M Bearings & Power Transmission Co. Ltd., B.G.S. Bearings & Equipment Limited, Marshall Industrial Supply Limited, and Oshawa Bearing Service Limited were joined by Hardin Supply in 1982, and CBS Equipment in 1983. The mission of IDI was, and remains, to advance the interests of its members, customers, suppliers and staff, and to work in harmony toward the continuation of their success in a free enterprise system.

Today, IDI has grown to 100 member companies, ranging in size from $2 million to over $100 million, with 275 locations across Canada, and total sales in excess of $1.25 billion. With a highly effective staff of 20 and an aggregate staff of shareholders in excess of 2,400, IDI and its members continue to enjoy the benefits of well-planned, measured growth.

In IDI’s Corporate Brochure for prospective shareholders, Mr. Bebenek outlines the importance of IDI and the true entrepreneurial spirit of the country, which begins with independents. “Without independent distributors, the end user suffers from lack of purchasing options,” he states. “You are reading this brochure because you are one of those entrepreneurs. And through IDI, YOU have an option on how to compete with the national chains, while preserving your company’s independence!”

IDI Benefits Shareholders, Customers, and Suppliers

IDI Independent Distributors Inc. is not a buying group, but a business cooperative in the truest sense of the word. “What sets up apart is the breadth of the benefits that we provide,” says Brad Harper, IDI’s Vice President of Finance and Operations. “There really is no other entity out there that is going to be able to replicate what IDI can offer the independent MRO distributor.”

Since shareholders, and shareholders alone, make decisions at IDI, processes are not bogged down by corporate bureaucracy, and decisions can be implemented quickly. Shareholders are also assured that while IDI is designed to turn a profit, 100 percent of those profits are returned back to the shareholders, either at year-end or in the form of allocated share equity that portions out any earnings retained in the company to facilitate growth in the following year. Money is then re-invested into the supply chain to grow IDI, invested into the elements needed to run the office and distribution centre in Mississauga, or paid to shareholders.

For shareholders, there are numerous benefits that come with membership in IDI, including annual rebates, the availability of 100 distribution center lines, a buy/sell program, a central pay program, ecommerce solutions, group buy opportunities, national contract opportunities, and much more that comes from being in a partnership with a strong, national organization. One of the biggest benefits, however, cannot be quantified in financial terms: the ability for IDI shareholders to openly share best practices, challenges and lessons learned with a network of companies. “The ability to network with the best MRO distributors in Canada is a tremendous benefit,” says Mr. Bebenek of the organization, which holds two shareholder conferences a year, a mandatory one in January, and a well-attended conference with a networking focus in June.

New shareholders of IDI – especially those who belonged to other groups or who have attended industry association conferences – often comment on the camaraderie that exists among others at the shareholder conferences, and it’s no wonder. Many long-time members have formed relationships that span decades, and are eager to see others contribute to the strength of the successful, 32-year-old cooperative. Many have faced the same challenges over the decades, and are willing share their wisdom.

For customers and suppliers, the benefits of IDI are many. Able to access service 24 hours a day, seven days a week, customers ordering from IDI’s massive shareholder network are able to access over 2,300 vendors’ product lines and over 600,000 different SKUs from more than 275 coast-to-coast locations. IDI’s large central distribution facility, accessible to shareholders only, helps to reduce delivery times while providing competitive prices, has the flexibility to meet shareholder customer needs, boasts strong national and international capabilities coupled with local expertise and technical service capabilities, and remains Canada’s largest industrial distribution network with core competencies in bearings, fluid power products, industrial supplies, janitorial supplies, power transmission products and safety products.

“By bringing in the power of the group, we are able to fill shipping containers,” says John Morrison, Vice President of Supplier Relations, speaking to IDI’s importing and private label lines, one of the many valuable services provided to shareholders. “Since IDI has a large distribution centre that is exclusive just to our shareholders, we can hold the stock and shareholders can draw off as they need it.”

For suppliers, being an integral part of IDI means coast to coast coverage, financially sound independent distributors, member support and loyalty, national contract opportunities, a network of owner-operated distributors, the preservation of brand identity, and more.

Tuff Grade Product Line

Another one of the many IDI benefits is Tuff Grade, a private label product line aimed at customers of shareholders (end users) who aren’t particularly brand-centric. “Most of our import lines are under the Tuff Grade label, and are marketed, packaged, and branded as Tuff Grade,” says Mr. Morrison, “and they offer great value at a great price.” Looking at expanding the present Tuff Grade line, IDI has a dedicated resource who works exclusively for the organization. Selective about the product lines it chooses, IDI also looks to domestic suppliers who have done their homework when it comes to products that need regulatory approvals.

“By producing Tuff Grade, it is a brand our 100 shareholders can confidently call their own, and they can promote this product knowing that it is the one brand in the marketplace that they know the national competitors, the big box stores, will never be able to buy,” says Mr. Bebenek. Some Tuff Grade products include adjustable wrenches, combination wrenches, safety vests, and dozens of other product lines.

Becoming an IDI Shareholder

With a presence spanning over three decades, IDI is well known in the industry, and does not advertise. Mr. Bebenek says potential shareholders approach IDI and once contact is made, arrange to meet in person. During the meeting, the potential shareholder and IDI review how the organization operates and examine tangible benefits based on company data. “It is very important to see if a company is a fit for IDI,” he says. “One of our competitors is a buying group, not a cooperative, and they try to sign as many members as possible into their group, something IDI does not do. The strength if IDI is not built on the number of members we have, it’s built on how well our members work within the group and work together.”

To ensure proper representation and market presence, IDI divides Canada into regions, and a certain number of shareholders are in each region. Ideal IDI shareholders are enthusiastic, interested in becoming involved, attend meetings, look for business opportunities, share knowledge for the good of the group, and work together, says Mr. Bebenek. Materials such as an application form are submitted, while a financial statement is sent to an independent third party for review. There is a 15-day incubation period where any concerns or objections from existing shareholders regarding the potential shareholder can be addressed, and a vote is held with IDI’s Board of Directors. “By the time potential shareholders commit, they are well aware of what is waiting for them and most of them want to dive right in.” A tour of the distribution facility is given, and shareholders pay applicable membership fees. “IDI doesn’t just admit any distributor,” states the President. “For our shareholders, there is a sense of exclusivity that comes with being a part of IDI.”

Operating under its 2011-14 strategic plan, IDI calls for three net new members per year of growth. The strategic plan acts as a vital guiderail for the organization to stay on course, says Mr. Bebenek, who also pays credit to IDI’s Board. Comprising 12 shareholders, members are part of a fluid board, committed to a three-year term (if asked to go on to the executive, they then serve a subsequent three-year term). Along with being comprised of shareholders from each of IDI’s four verticals, the Board represents all regions of Canada and serves to ensure large and small companies are represented. “At IDI, we always need to make sure that the $5 million distributor is heard from, not just the $50 million distributor.”

Since it was founded by four shareholders back in 1981, IDI Independent Distributors Inc. has grown to 100 shareholders, opened a large distribution centre, published print and on-line catalogues totalling thousands of pages, established an overseas presence to support the Tuff Grade import program, introduced the IDI Value Card to members, launched the IDI Connects ecommerce network, electronically connecting shareholders and vendors, surpassed over $7 million in rebates, and represents over $1.25 billion in revenues.

“There are few, if any, markets in Canada where the survival of the local independent – the true entrepreneur – is not being threatened by the national, publically-traded competitors,” says Mr. Bebenek. “The irony of this is that every market in Canada was built by these very same independents, and the Industrial MRO distribution market in Canada is no exception. Without independent distributors, the end user suffers from lack of purchasing options. And through IDI, shareholders have an option on how to compete with the national chains, while preserving their company’s independence.”

December 14, 2017, 10:15 AM EST