Cleanroom product distributors fill niche
Distributors serve as a technical resource and as problem-solvers, offering value-added services to help the end-user effectively utilize resources, manpower and space.
By Susan English-Seaton
Distributors of cleanroom supplies are “niche” suppliers — albeit a `billion-dollar` niche — on whom end-users rely for everything from wipes and swabs to solvents and particle counters. They provide regular or `just-in-time` delivery of everything from apparel, gloves, wipes and face masks to particle counters, HEPA filters, chemicals, and even softwall cleanrooms. They range from the larger “catalog houses,” which warehouse and generate product in volume through a multi-layered network of distributors and manufacturers` reps to buying organizations, and support organizations, which also may work in tandem with the distributor. It`s a convoluted network with many interchangeable parts, with layers of margins and discounts, all designed to provide the ultimate flexibility in pricing and service.
“Consumers rely on a niche supplier to be a source of knowledge, a technical resource who can recommend products that will help improve their manufacturing yield,” says Tom Moore, president of General Lab and Cleanroom Supply (Camarillo, CA). Moore distributes Tyvek garments and consumables, as well as chemicals and intermediates for the industries using cleanrooms in his geographical locale. “The industries we serve run the gamut of biotech, medical device, pharmaceutical, electronic component, semiconductor. They want a company that will offer value-added services, such as custom inventory programs, reserving products by lot number or lot control numbers vs. just picking something off the shelf.”
As a manufacturer as well as a distributor of cleanroom products, Te Tech, LLC (Sunnyvale, CA) offers a combination of services, including cleaning and packaging, says CEO Heidi Monaco. Because the bulk of its customers in Silicon Valley are end-users in the semiconductor industry, Te Tech tests for a variety of contaminants related to wafer processing. “Besides a lot of trend analysis, we were probably the first people in our industry to do lot testing and management. We negotiate on behalf of our customer with the vendor to make sure that product lots have been tested and certified properly by an independent testing laboratory. Our obligation is to make sure that the vendor can meet our customer`s specifications before we even ship product out and, if not, alert the customer to ensure that retesting and substitutions are appropriately handled.”
Why use a distributor?
Distributors offer an end-user literally thousands of different products, where a manufacturer or supplier generally carries only its own product lines. It takes considerable manpower to service end-users on a very efficient scale over a single geographical area, so products are funneled through strategic distribution points along the channel of sales.
Distributors know their areas and their customers; manufacturers depend on them for feedback on their products and technologies. Increasingly, manufacturers are reluctant to stockpile inventory in valuable warehouse space, so the burden is now on distributors to handle and track volumes of inventory for delivery in a timely and cost-effective manner. The challenge, particularly for the smaller distributors, is turnover. Buying patterns for capital equipment — air showers, laminar-flow units — are hard to forecast, observes Jim Kanomata, president of Applied Air Filters (San Jose, CA). “It`s almost impossible to know what your next customer is going to need, because it`s a one-time fill-type application. However, when it comes to HEPA filters — or replacement items and consumables — that`s something that distributors can pretty much forecast,” he says.
Records of past sales alone cannot always be relied upon for accurate predictions. Experience is probably the best tool, say most smaller distributors.
While many of the larger distributor organizations offer continuous, ongoing training of their cleanroom sales staff, as well as initial training programs, grassroots distributors well know the importance of keeping up with the technology. Ultrapure Technology`s Smith says his company looks to hire people who have a basic background in contamination control and then puts them through a year of training before letting them go into the field. “We feel that proper training is our biggest asset, because our end-users come to us looking for solutions. [End-users] don`t always know what to do; rather than making them look through a huge 5,000-page catalog, we try to work out customized solutions.”
A distributor must also be equipped to train end-users in the products and services supplied, says Applied Air Filters` Kanomata, who is certified as an air filter specialist by the National Air Filtration Association. To maintain his certification, he must attend numerous shows and technical classes. “We put on seminars so that we`re constantly educating people. The distributor is asked by the end customer to keep them updated, and our customer is pulling on our arm to give them assistance. Then we in turn grab the manufacturer and say, `help us get the education we need.`”
According to Terry Lahn, vice president of cleanroom operations at Prudential Cleanroom Services (Santa Ana, CA), his company is one of the few organizations to have a corporate quality assurance manager. “At each of the laundry plants, we have a staff of quality assurance technicians who operate independently of the plants and report to our QA manager so we can maintain quality; and obviously, these individuals — particularly the QA manager — can be used as technical support for our customers as well.”
What to look for in a distributor
There are a lot of things to look for in selecting a distributor, says Ultrapure Technology`s Smith: “somebody who`s got presence in a geographical area; who`s got the reputation of knowing what they`re doing; someone who`s going to service your products and your end-user customers in a professional and knowledgeable manner. And somebody who`s going to be able to turn their inventory over. You want your distributor to make money, because if they`re making money, then obviously, you`re making money as well.”
Te Tech`s Monaco says the only way any company can really leverage itself above the crowd of cleanroom distributors is by supplying product at rock bottom prices or by providing value-added services. “I think the only way a distributor can intelligently differentiate himself or herself is, you are either going to have the absolute lowest prices in town, or you`re going to have the best service. The practical answer for all but the largest of us is that you really have to find your niche and excel in service.”
Value-added services make all the difference, particularly along the small-to-medium distributor sales spectrum. Product lines may be limited, but service is usually “up close and personal.” Often, customer support means being willing to sit up with a sick fab all night if necessary. More than vendors of products, distributors supply valuable customer service and even in-depth technological expertise. “Successful distributors do offer those added pluses,” says Applied Air Filters` Kanomata, who has also been asked to assist with designing manufacturers` prototypes.
Manufacturer/distributor Te Tech will warehouse a certain amount of product for a customer at its facility, says Monaco, as well as provide on-site servicing of warehousing or gowning areas, depending on customer requirements. Being available 24 hours a day seven days a week is another way of differentiating itself to its customers. “All of our guys carry pagers, and if somebody calls on a Sunday afternoon, somebody comes over here, loads up the truck, and away we go,” says Monaco. “While small distributors may provide a high level of customer intimacy because they serve a limited range of customers in a limited geographical area, larger distributors can offer not only discounted prices but a whole host of solutions-based approaches.”
VWR Scientific Products, a $1.2 billion corporation whose principal business is research and laboratory supplies, commands a sales force of about 350 salespeople in the U.S., 20 or 30 in Canada, and another 350 inside sales/customer support people, who are, in turn, supported by a team of 15 technical specialists.
Rusty Bromley, vice president of the company`s critical environments division, says, “We have within our critical environment supplier community about 107 companies. And because we`re 50 percent owned by Merck, our affiliation with them offers us a worldwide support network. So there are a lot of different places we can go to tap into the resources necessary to solve a customer`s problem.
“I think what we`ve done differently is that we`ve worked with the client on things outside the scope of just the products or services we provide. It`s looking at their business process and saying, `Okay, what else do you need that our systems lend themselves well to managing for you? Is it wafer carriers, wafers, quartzware, spare parts, any one of a number of other things.` Then, we expect a client to reimburse us for the cost of doing that,” Bromley explains. “It`s a very simple equation for them: Is it cheaper to have us do it or for them to do it themselves? In most cases, we`ve found that for those clients who can quantitate those costs, it`s almost always less expensive for us to do it. We can provide a business solutions` approach to clients that takes them from the basic `brown box on the dock` to the lowest unit of measure at point of use.”
Using a variety of different methodologies and inventory management software solutions installed at a customer base, stockroom operations can be run in much the same way a distributor like VWR would operate one of its own distribution or service centers. Bromley describes this “echelon” approach by which the customer can be serviced at all levels — from the lowest unit cost to on-site customer service.
Whether the problem is operational or one of technical product performance, large companies can offer a whole host of options: servicing of multiple sites and acting as an internal consultant to help identify the right solution or solution options, depending on customer business requirements.
As a major distributor of products for sterile and non-sterile cleanroom environments primarily in the pharmaceutical, medical device, and biotech cleanroom market sectors, Benchmark Products (Highland Park, IL) must not only provide competitive products and technical service and support, but in many cases, must validate its products before they leave the warehouse.
Benchmark Products` President Eileen Caffrey says, “Because our company has so much experience working with pharmaceutical companies, we`re very familiar with the whole cycle involved in getting new products approved. But end-users who are storing sterile products with us will come out and audit our operations and our facilities.”
Manufacturers can conduct their own validation to support the product they would like to supply into the pharmaceutical company. This typically includes testing to make sure the product is sterile and meets all company specifications. Sometimes the distributor will assist in the process, helping the manufacturer to create specifications to fit the customer`s requirements. “Or a manufacturer will do that completely on their own — come to us with the data, and then we, the distributor, are expected to provide the proper data, expertise and support to the customer who is going to do validation on their end,” Caffrey says.
Just like an electronics customer, the pharmaceutical customer will test a product in-house, although they will be looking for bacteria and bioburden, as well as particles, packaging integrity, and expiration dating. With this type of information, explains Caffrey, a customer can validate a product using their own in-house field trials and their own operators.
Vendor consolidation and partnering
Mirroring the tendency of semiconductor manufacturers and other sectors of the cleanroom market, distributors are forming partnerships to offer the end-user more efficient, cost-effective service. But while OEMs are partnering in order to acquire complementary functions as well as broader sales and distribution channels, distributors are forming alliances with the end-users they serve so they can forge stronger customer links with more value-added services.
Says Bromley, “There are customers out there today who are saying, `we`re going to focus only on our core competencies — look for partners who can provide us with the most cost-efficient solution to getting everything else we need to do that process.” He claims the jury is still out from a cost standpoint, but adds his own company considers it a much more efficient model. He says, “We think we`re going to have to have partners in that process, because we want to allow the end-user to take their scarce purchasing and materials management resources and apply them to the areas of their business and procurement process that have the highest value added.”
Tom Moore, president of General Lab and Cleanroom Supply, also sees partnering as a way for end-users to consolidate vendors. “They want us to fulfill their needs, and in order to be that partner, they`re willing to give a larger share of their total purchases to a fewer number of suppliers or distributors. That way they cut down on the number of invoices,” he says.
Prudential Cleanroom Services has six cleanroom garment service centers comprising a 13-state service area, and a Consumables Products Group consisting of five U.S. distribution centers, with locations in Singapore, Malaysia and Mexico. According to Terry Lahn, the company has inventory planners on the consumables side whose job it is to look at trends and collect input from salespeople and account managers in the field on shifting market demands, using it to forecast inventory requirements.
“The company is active in technological partnering,” says Lahn: “We have a number of large customers — especially in the Silicon Valley area — where representatives of our company sit on their contamination control committees. We`ve formed some very strong partnerships there.”
VWR`s Bromley says the supply of skilled workers is a real factor driving some OEMs to initiate partnerships with both suppliers and distributors. “Part of the issue for many of our clients is that they operate in areas of the country where finding qualified workers is a challenge, both at an engineering and at a production level. You don`t need the same skill set requirements to put gloves and garments on the shelf as you do to operate a $500,000 or million-dollar fab tool. So this is what I think has led to many of our clients inviting us to come in and take over these operations.”
The affect of industry trends on distributors
Whether large or small, distributors of cleanroom products tend to see some of the same trends across industry lines: process automation; growth in the number of cleanrooms, cleanroom workers, as well as the number of industries using controlled environments; outsourcing; vendor consolidation; and partnering.
Benchmark Products` Caffrey predicts that the number of cleanroom workers is actually expanding in order to keep pace with growth in the cleanroom industries. But at the same time, in the pharmaceutical marketplace, she sees automation actually reducing the number of employees in these manufacturing facilities. “Some of those are pros and cons for distributors like ourselves. It`s great to see more cleanrooms going in, but down the road, I think there`s going to be a trend toward fewer suppliers in certain applications. We`re hoping the number of cleanrooms that open up will outstrip that trend toward fewer and fewer people in the environment.”
Te Tech recently conducted a survey of some of its larger customers, asking whether it was likely to be dropped from their vendor roster if consolidation were to take place. The answer was, “it all depends,” says Monaco. “They said, `if you can satisfy us that you can handle our service and volume requirements, we don`t give a hoot what size you are. What we care about is, do we have confidence in the fact that you can service us at the right price and with the right degree of responsiveness. And that might include, how you handle us internationally.` The second answer we got pretty consistently was, `only an idiot gives all of their business to one vendor.` It`s certainly accurate to say that [consolidation] is a trend, but I think it`s overly simplistic to say that there`s only one answer, and it`s `big`.” Monaco thinks partnering is a trend that will continue to grow and predicts another trend: buying consortiums.
But the most interesting challenge, she says, is to help people who are not in the traditional, known markets understand the benefits of using cleanroom products and procedures. “And I think part of the challenge for people like us in distribution, as well as in manufacturing, is to help educate industry around us. It`s still a very highly specialized, little understood, little known set of technologies and approach to manufacturing.”
It will be important, Monaco feels, to apply the practices, procedures and products so common today in the semiconductor and electronics industries in the international market, where quality control is clearly regulated by ISO certification procedures and standards. “It has something to do with how you keep the U.S. at the forefront as a producer of goods and services,” she says. “One of these days, the Web really will become a sales vehicle, and that makes you international. Among other things, it means you`re going to have to be ISO certified, particularly in dealing with an off-shore manufacturer. That`s kind of the great leveler. I think it`s something that most people who are in manufacturing — especially in this controlled manufacturing area — are just going to have to step up to.”