Engagement driving success for K&M

SCHAUMBURG, Ill. — Almost from the first moment they began to consider the acquisition of MotoStar Tire & Auto Products Inc., Cheryl Gossard and her executive team at K&M Tire Inc. believed the Northeast-based warehouse distributor would be a good fit.

As the process played out, Ms. Gossard said it became clear the two businesses operated much the same way: with integrity and character.

"They try to do things for the right reasons," she said of MotoStar, which operates warehouses in New Hampshire, Maine and New York. "If they say they're going to do something, they do it,"

That synergy hit home during K&M's 2018 Dealer Conference, held Jan. 11-12 at the Renaissance Schaumburg Convention Center, located 20 miles northwest of Chicago. About 1,000 K&M dealers and their families, staff and vendors attended the event, which included five seminars, dealer recognition and a two-day trade show featuring 60 vendors.

Before the conference began, Delphos, Ohio-based K&M held several days of training for the 65 former MotoStar employees. Ms. Gossard said she asked one employee what stood out from his experience with K&M.

"He said 'engagement,'" Ms. Gossard said. "Out of everything he learned — they talked with the vendors, heard vendor presentations, talked about accountability — the one thing he picked out was engagement.

"That almost gives me goosebumps. That's exactly what I would envision. I want our customers and our employees, just to be very passionate, love what they are doing, just be happy to be a part of our team."

That certainly was evident during the dealer conference. Many of the seminars, designed to provide practical information for dealers to implement in their businesses, evolved around the conference theme — Driving Excellence.

"At the end of the day, it really comes down to this: driving excellence means doing the small things," Greg Ring, K&M's director of training and development, told dealers. "The small things make the big experience possible."

Mr. Ring said the small things include a great product, outstanding service, hard work, value and brand. "You have a strong commitment to your business and team. It takes a daily effort. It takes a strong spirit of resilience."

International consultant and speaker Scott McKain delivered the keynote address, challenging tire dealers to differentiate themselves in the market, just as Starbucks Corp. has done with coffee and Uber Technologies Inc. has done with taxi service.

"Create the ultimate customer experience," Mr. McKain said.

"That connection that you have with your customer, that connection that transcends a single transaction, it makes all the difference in a world."

Other seminars included:

• Trends in the Commercial Tire Industry, by Gary Schroeder of Cooper Tire & Rubber Co., director of global truck and bus;

• "E+R=O Event + Response = Outcome," by Mr. Ring;

• "The Five 'S' Process," by Dennis McCarron, executive director of the DSP20 Group;

• "Driving Excellence in Cash Flow and Profitability," by Jon Zurcher, chief operating officer, BestOne Tire; and

• Retailing Excellence for You: How to Future-Proof Your Business," by Jeff Wallick, regional sales manager of K&M.

Several dealers not only left with tips and advice gleaned from the seminars, but also with cash or goods. A 2018 Ford Mustang GT, courtesy of Cooper, and two Harley Davidson motorcycles, courtesy of Kumho Tire USA Inc., were raffled off, while several dealers were chosen to participate in the Plinko game cash drop, sponsored by Hankook Tire America Corp. and a cash booth, sponsored by Continental Tire the Americas.

Ms. Gossard, meanwhile, participated in a K&M conference for the first time as president. She said her job duties haven't changed — all of the department heads, including the heads of sales, purchasing, human resources, technology, training development and accounting, continue to report to her.

Her father, Ken Langhals, who founded the company in 1970, is now CEO, a newly created position. The job titles became effective Jan. 1.

Ms. Gossard said she keeps her father informed of all the company's business. "He's involved in some of the meetings, as many of them that he chooses to be a part of," she said.

Ms. Gossard and her father presided over an extremely productive 2017, a year in which she said the company achieved 15-percent growth in sales, coming off the heels of $350 million in sales in 2016.

K&M now operates 26 warehouses in 15 states and Ms. Gossard said the company is in position to experience 12-percent growth in 2018.

Besides the acquisition of MotoStar, in the last year K&M also:

• Acquired the wholesale business of Great Bend, Kan.-based Becker Tire & Treading Inc. Ms. Gossard called it a "great fit," too, since K&M already was delivering tires to customers in central Kansas.

"We were just able to look at the customers, redo the routes, figure out where to split them," Ms. Gossard said. "It was very seamless, and it's going very well."

• Installed a warehouse management system in its Delphos headquarters to alleviate space issues.

Ms. Gossard said the warehouse had been expanded three times previously because the firm kept running out of room. Previously, brands were allocated a certain space in the warehouse, so even though one brand might be low and have room, another part of the warehouse didn't have room to accommodate more inventory.

"It always created a lot of extra work, and we always we're out of room," Ms. Gossard said.

Now, she said, the new system allows workers to scan a tire, place it anywhere, and "you're good to go. Not once since we implemented it has the warehouse told us we're out of room. It definitely has been successful."

The investment not only included the software system, but also 12 pickers, which cost roughly $45,000 apiece.

• Opened warehouses in Grinnell, Iowa, and Lubbock, Texas; and moved into a new warehouse in Minneapolis.

This year promises to be just as eventful for K&M.

With the acquisition of MotoStar just two months old, Ms. Gossard said K&M will make sure it has a handle on its three new locations, then determine where any holes might be. If there are holes, "we'll look at filling those in," she said, later this year or in 2019.

K&M offers dealers the Mr. Tire retail program, which it acquired in 2010, to cover customers throughout the majority of its locations, and it created the Big 3 program in 2012 for dealers in areas where K&M is prohibited from using the Mr. Tire name.

Ms. Gossard said K&M will offer its Big 3 Tire program to dealers in MotoStar's network, but until then those dealers will continue to operate under BestOne Tire's B1 Advantage dealer marketing program.

"With us having our own (program) that has just as many or more benefits, I think the focus is going to be the Big 3," Ms. Gossard said. "We have not determined if we are going to do away with the B1 Advantage, but right now, we're not planning on adding any more dealers to it."

K&M also plans to roll out its warehouse management system to other sites later this year, starting with its Grinnell location.

Ms. Gossard said K&M will continue to focus on the most vital keys to its success.

"There are two things that from Day 1 have been a focus and never stopped. First, the customer is the most important person in our business," she said. "The second thing is continuous improvement.

"No matter where we are at today,...we can figure out a better way to do tomorrow. Those are the two things that have helped us be successful all these years."

"Ken tells us, 'Remember, just because so many bought from us yesterday doesn't mean we don't have to earn their business today, tomorrow and the next day,'" Mr. Ring said.

Looking ahead to the next five years, Ms. Gossard said her focus is to continue engagement for her 600-plus employees, the trait that was so evident to former MotoStar employees.

"The employees are a team," she said. "They like working at K&M, they like working with the customers. That's my goal for five years: That K&M is still very successful and that we're working just as well with each other."