Neuco, a master distributor of HVACR controls, is a fourth-generation, family-run business. Headquartered in Bolingbrook, Ill., the company’s focus is to help other distributors throughout the United States and Canada. When wholesale distributors need to source a product they don’t typically carry or are out of stock, they turn to master distributors to fill in the products needed to complete a sale.

Stocking products that customers need is a delicate balance. Neuco currently stocks more than 275 distinct HVACR product lines with more than 50,000 SKUs, including Honeywell, Johnson Controls, Siemens and Danfoss. It also stocks replacement parts from OEMs such as Carrier, Reznor, Trane, Lennox, Rheem and York. Adding in its value-added services of vast inventory with a laser focus on delivering excellence in customer service, Neuco works with its distributor customers to successfully fill their customers’ orders.

We sat down with Neuco President Paul Neustadt  and Vice President Jon Neustadt to learn about how business patterns have changed over the years, how Neuco has adapted to new market trends, and its path to help distributors fulfill customer’s needs. 

Automation and Customer Service

In June 2019, Neuco opened its 145,000-square-foot facility in Bolingbrook. The new facility is three times the size of its former location and packed with automation and warehouse technology to expedite the picking, packing and shipping of its products to its customers. The automation allows for a streamlined process and helps Neuco team members be more efficient in serving their customers. 

“We have a lot of automation in our facility,” Paul Neustadt says. An automated conveyor belt moves packed totes through the facility and to the packing and shipping area, where they are automatically weighted, then move to the taping and labeling area where automation allows up to 4 machines to label and tape up to 1,000 boxes each per hour. It’s all about making work easier, safer and more effective while opening the possibilities of what can be implemented. 

From barcoding totes on the conveyor belt to an automated weighing machine at the end to assist in freight management, Marketing Manager Brian Zwolinski notes that Neuco is investing in its people by bringing in these efficiencies: “By adding technology, it was never to replace workers - we have no goal for robots to replace people. We need people and the mind power to operate the machinery and equipment. When I started seven years ago, we had 100 team members, and now we are close to 220.” To which Jon Neustadt adds,“We invest to make us operate better — the dollars aren’t the end goal.” 

During the COVID-19 pandemic, the company maintained job security for all employees, and no one lost their jobs; instead, more people were added to the team. Neuco ensured the continuous shipment of orders placed before 5 p.m. Central  time, as promised to customers, reflecting a solid commitment to customer service even during those challenging times.

The distribution center team worked onsite every day. The commitment to uphold promises to customers was unwavering, even when it required extra effort and longer working hours from the staff. Neuco gained a reputation for reliability among distributors, who were assured of receiving products they ordered if they were in stock.

The company’s leadership expressed respect and value for the staff, with no intention to cut staffing or decrease benefits. Their goals was to improve the existing workforce by integrating new technology and investing in internal training and communication. Because of this mindset,  a noted improvement was apparent in internal communication and transparency across different levels of the company hierarchy during and after the worst of the pandemic. Daily updates were shared to keep all employees informed of the company’s developments and goals.

Business Landscape, Post-Covid-19

“As a master distributor, there are SKUs that make more sense for us to stock than it does for our customers who might sell those items once every 2-to-4 months,” Jon Neustadt explains. “By consolidating volume, we can have those products on hand, so our customers don’t have to. The breadth and the depth of inventory is part of the value we provide.”

One of the many things impacted by the pandemic was the supply chain. Companies across the globe were impacted from unprecedented manufacturing and shipping delays. “I believe it highlighted that the just-in-time model isn’t flawless,” Paul Neustadt notes. “From our model of how we service people, our inventory level is a big piece of it. The investment in our inventory went up significantly.” 

He adds: “We took a look at our traditional lead times, and we more than doubled our time to get those products in-house. We were very aggressive on ordering and having something on order! You can’t sell unless the product is in the building — which is our role!” 

Knowing that having the product its customers wanted and needed was crucial to the business, Neuco also invested in its expediting team. “We have around seven team members on our expediting team, and they are responsible for getting product information and lead times out to our team and customers,” Paul Neustadt says. Doing so allows the company to keep customers informed and manage their expectations. 

The company has also implemented a program to allow for transparency in shipping totals, and not having to wait until a final invoice is received to see the charges. The program is called TrueShip, an exclusive feature allowing Neuco customers to better service their customers. In addition, the program features newly discounted shipping rates available to distributors.

And shipping times are essential. “Times have changed, and people are used to immediacy now,” Jon Neustadt explains. “They want this product in all forms, from ordering to same-day delivery. A lot has changed — you need to get the product into the people’s hands as quickly as possible.” 

Orders placed with Neuco by close of business for in-stock items ship the same day. The company has implemented an N2G shipping upgrade program, ensuring that orders will be delivered to the wholesale distributor, or the distributor’s customer, within two days.  Also, Neuco will place the distributor’s company information on the packing slip — making it the hero in ordering and delivery!

Post-Pandemic Sourcing of HVAC Products

There is a saying that behind every challenge is an opportunity; for Neuco, it was to have the products on hand that its customers needed at a time when getting products was a challenge unto itself. “We learned during the pandemic that we needed to get ahead of the inventory,” Paul Neustadt notes. “COVID presented many challenges and opportunities. We expanded the depth of products and the amount of inventory we carried.” In doing so, it expanded the opportunities to its customers, and carried it forward. 

He adds that, “post-COVID, we are maintaining our expanded inventory, and going a little higher.” 

Adding to a higher inventory, the company keeps a keen eye on tracking product demand. “If a customer is out of a product, he can’t sell what’s not on his shelf,” Paul Neustadt says. “So we keep an eye on those products and fill in the demand when outages occur,” Jon Neustadt adds. 

Neuco’s online digital presence evolved to adapt to its customer needs.

Zwolinski expounds on how the master distributor’s e-commerce site aids in getting customers what they need, when they need it: “The tools we provide wholesalers through our website replicate many of the resources we previously only had in-house. For example, if a customer calls in to replace a control board for XYZ furnace, they would have had to call us, and we would go through catalogs to locate the exact item. Now, we have digitized the technology so our customers can review the products on our website while at their desktop computers — or even while they have customers at  at their counters.” 

While that may be standard for some, Neuco takes it to the next level. “The live chat feature on the website is an incredible addition,” he says. “Wholesalers working a counter could be talking to contractor customers and have a live chat with our inside sales team — cross-referencing if needed.” 

The company found that website traffic has increased dramatically, allowing its customers to review inventory lead times and, often, options. Zwolinski notes how much the need and use of the company’s website has changed. 

“When I started with the company in 2016, we would have 7,000 to 8,000 hits daily,” he says. “Today, the company has nearly 21,000 active web accounts (needed to purchase from the site). The sheer volume of users and the information we have available has grown exponentially. And by implementing our growing expediting team and getting that information from the manufacturers and vendors into our system, it populates on the website. Our customers can log in and see immediately our inventory and lead times.”

Going one step further, the company also includes an “auto notify” feature. “It started during COVID,” Paul Neustadt explains. “We wanted to place a feature on the website so that if  customers wanted a particular item and we were out, we could notify them when the product is available to ship. If they are still interested, they can order it immediately.” 

“The digital presence is a component of the relationship, and it must be solid and really good,” Jon Neustadt notes. “It doesn’t replace our relationship, but it’s a bigger part of it. By adding new features to the site based on our customers’ feedback, more people will use it, and that lets us help them even more.”

‘Let’s Grow Together’ 

As a fourth-generation, family-run business, one thing passed down through the generations is developing real partnerships with its customers — not merely transactional relationships. As such, Neuco instilled a motto of “Let’s Grow Together,” and its meaning is anything but transactional. 

“Part of any partnership is trust,” Paul Neustadt notes. “We know our place is to help distributors, and we don’t venture outside our lane. This is what we do. I believe our customers have developed a high level of trust in us and, hopefully, we have earned it and will continue to do so. The first time you get a sale correct is the easiest sale you will get with a customer. Now, the level of expectation is very high — and we think it should be high, so we want to earn their business continually. And, while people’s habits have changed, what hasn’t is our consistency and that we are a dependable partner for them.” 

Neuco understands there may be a hesitancy to purchase needed stock from a master distributor; it’s the perception that the master distributor may be a competitor to other wholesale distributors. However, it’s not the case, as the company stocks specialty items that others may only need a few times a year. 

“We’ve had customers say, ‘We buy too much from you,’ and that’s one way of looking at it,” Jon Neustadt says. “Then we will respond that everything they bought from us, they sold. And so that’s money in the bank, not on their shelves.” 

He adds: “We’re not owed anything. We must work for the business we get today, and I hope we always keep in mind that we must work to earn this. And it’s not only true with our customers, but also with all our stakeholders, their vendors, and employees. We need to earn their trust and keep coming through for them.”

Celebrating 60 years of Partnerships

This year marks Neuco’s 60th anniversary, and it truly is an anniversary of partnerships — with its vendors, team members and customers. The company held a family barbecue and picnic for its employees and family this summer. 

“We had a service award presentation for all employees celebrating their 5-, 10-, 15- and 20-year mark,” Zwolinski smiles. A 40-year celebration of a team member showcased the strength of teamwork and its culture in action.

Looking ahead, the only thing Neuco asks from its customers is to be given an opportunity. “I’m not afraid to ask for an opportunity,” Paul Neustadt says. “Give us an opportunity, and we will prove that we are a valuable and good partner.”