Three-tiered approach has Toyota-Lift of Los Angeles thriving under veteran leadership.
When Dr. Shankar Basu retired as CEO and chairman of Toyota Material Handling, U.S.A., Inc. in 2007, he was ready to face a new challenge in the only industry he’d known for the last 35 years. “The material handling industry has been my passion all my life,” Basu says. “After serving from the manufacturing end, I wanted to try it from the retail end.”
CEO: Dr. Shankar Basu
Basu purchased Santa Fe Springs, California-based Toyota-Lift of Los Angeles (TLA), which was one of Toyota’s original dealerships in the United States. Founded as Freeborne Equipment Company in 1972, the company became an industry stalwart serving customers in the wide-ranging Los Angeles market. The business was purchased by Toyota in 1991 and run as a factory-owned store until being purchased by Basu.
So far, Basu has been up to the challenge of transitioning to the distribution side of the business. “At a corporation like Toyota, only a handful of the business is direct with the customer, whereas a distributorship works with end-users 100 percent of the time. We have to be a lot more responsive. We have to communicate more quickly with the customer,” Basu says. “Making the transition to the distribution side has been quite a significant change from running a billion-dollar manufacturing entity, but I am enjoying it tremendously.”
It’s not hard to understand why. Since taking over, the company has grown both in revenue and profit by 10 percent each year, thanks to a comprehensive growth strategy and diligent adherence to the company’s customer service principles.
Expanding the Focus
One of Basu’s first actions upon taking over was expanding the product line to include more than just Toyota products. “As a company-owned store, this facility sold and performed service on Toyota equipment almost exclusively,” Basu says. “One of the major changes we made as an independent was to add some complementary product lines to help us maximize the potential of the Los Angeles market.” With two of the nation’s largest ports, Los Angeles and Long Beach, just a short jaunt from TLA’s 100,000 sq. ft. facility, Basu wanted to attack the import/export business that makes up about a quarter of the market. To do so, TLA added Hoist and Konecranes products for shipping warehouse applications. “We needed a bigger capacity product to complement our Toyota line,” he says. Basu has also added Aichi boom lifts, Combilift and Flexi articulating trucks, and EZ Go carts to supplement the line of Toyota products.
The presence of the ports makes warehousing and distribution the top end-user segments for TLA, but the diverse market in Los Angeles has plenty of other opportunities in the food, beverage, transportation and logistics markets. “It’s a very mixed market,” Basu says. “We’re lucky to be in an area that isn’t reliant on one end-user base.”
Basu also has stressed efficiency. He upgraded the internal computer system, particularly as it pertains to the quoting and sales processes, to allow for more user interaction and quicker response time. “Internal processes now capture more information and make it seamless for employees to follow a truck’s history from the cradle to the grave. It’s a wholly integrated system from the time we put in an order until delivery to the end customer,” Basu explains.
While the company has changed some under Basu’s leadership, that’s not to say that TLA has abandoned the tenets of customer service and employee empowerment on which the company was built. The company’s mission statement—“To exceed customer expectations of material handling needs by providing the highest quality services and products at the most economical cost”—is printed on the back of every employee’s business card and is the centerpiece of day-to-day business.
Basu preaches a three-tiered corporate culture: customer first, employee second, dealership third. “We encourage employees to look through that filter when they make decisions,” he says. “In every meeting, we want to make sure that everybody understands that customers are the reason why we are in business. It doesn’t matter if it’s an accounts receivable person, parts person or service technician, everybody is a salesperson and must treat the customer with respect.”
To instill that philosophy, Basu and his management team expose employees to it at every opportunity. Mission and culture are discussed at every meeting. The results of customer satisfaction surveys are regularly shared with employees to keep everyone on the same path. Customer complaints are funneled back into the affected department for discussion about how to handle similar situations in the future. The company’s monthly e-newsletter features a letter from Basu and a customer satisfaction success story.
The customer mentality is so ingrained that Basu’s official title at the company is Chief Customer Relations Officer and CEO. “I gave myself that title to emphasize our commitment to the customer. It’s such an important part of our culture,” Basu says. “Every time we interact with a customer, we have an attached customer satisfaction evaluation. I see every one of those, and I pick up the phone and call any customer who has an issue. We always are looking to improve how we serve the customer.”
Basu knows the customer-first mentality has sunk in when he sees employees take the initiative to provide creative solutions for customers. He shares the example of Accounts Receivable Manager Manny Ramirez, who worked with a large customer to devise a payment plan during the down economy. “I wasn’t involved in that,” Basu says. “Manny had the confidence to solve the customer’s problem and protect that relationship.”
Another example comes from the service department, where technicians often pass up routine maintenance if a customer’s trucks don’t need it. “We could easily go ahead and perform the maintenance and get paid for it,” Basu says. “But it would be selfish of us to do that if it’s not in the customer’s best interest.”
These examples are among the reasons why TLA has a customer retention rate of 95 percent. Basu says the biggest secret to achieving customer satisfaction is taking care of employees so they are motivated to perform. “We teach our associates to take ownership of the business. What would you do if you were the owner of the company? What would you want us to do if you were the owner of the customer’s company? Our people are empowered to do what it takes to make the customer happy.”
The employees appreciate their freedom, as evidenced by an average tenure of 15 years among the company’s 98 employees. “This is a good place to work because it’s been a very stable company over the years,” Basu says. “Plus, there’s a good feeling of camaraderie inside the business. Our people have grown together and know each other’s families. They want to be productive and support each other.”
Building that rapport is another area on which Basu has focused. It starts with communication. “I believe 100 percent in staying actively involved with all the associates as much as possible,” he says, whether that involvement comes via weekly luncheon meetings about strategy and planning or from social events such as company picnics. Each department—new equipment, used equipment, rentals, parts and service—holds weekly meetings as well, so there is no shortage of employee interaction throughout all areas of the company.
Structure and Goals
A closer look at the company structure reveals that just about 50 employees, more than half of the company’s total work force, are in the service department, another indication of the company’s dedication to the customer. The sales department comprises 14 employees, with the remainder of the staff divided just about evenly throughout the rest of the company. Each department has a manager who reports to Basu.
Within that framework, Basu works with his team of managers to develop action plans to help each department reach its goals. “Our strategic objective doesn’t change much—we want profitable growth through customer satisfaction and retention. Specifically, we have a stated goal of 10 percent minimum sales growth and 10 percent minimum growth in profit before taxes.”
It’s a lofty goal, but one that has been reached every year of Basu’s leadership. To achieve it, each department head crafts a plan for his or her department to reach that goal. For instance, how many trucks will the rental department need to obtain or dispose of to maximize profit? How many technicians and vans are needed in the service department?
Such plans are created in the fourth quarter for the year ahead and implemented at the start of the year during departmental and company-wide meetings. At the beginning of the year, the overall plan is unveiled to all associates. Basu says, “We want everyone to know what’s going on every step of the way.”
Of course, fluidity is an important ingredient in any such strategic plan. Progress reports are delivered in the second and third quarters, and any revised action plans are installed at that time. “As the months progress, some things do not work out as planned and we revisit the action plans. In fact, the revisions are probably more important than the initial plans because they’re more reflective of current market conditions,” Basu says.
Looking Ahead with Caution
At the moment, current market conditions give Basu an outlook of cautious optimism for the future. In spite of a depressed housing market and an unemployment rate of 12.5 percent in Los Angeles, Basu expects TLA to achieve its goals and maintain steady growth. Expected growth in the import-export market and a growing population that will keep food and beverage companies busy will help offset the negative signs. “If we do our homework right and execute our plans correctly, we’ll be able to grow according to our plans,” Basu says. “Despite the economic indicators, we’ve seen a tremendous amount of quotation activity. Companies have held back but need to make purchases.”
It all comes back to providing what’s best for the customer. “As material handling suppliers, we must be open with our customers and show them hard numbers on how we can add value to their operations,” Basu says. “We want to work with customers as their partner, not just their vendor. It takes a major commitment, but we are willing and able to make it.”