Rubber and Plastic News on Satori Seal

Satori Leader Steers Firm in Right Path as Distributor
By: Bruce Meyer, Rubber & Plastic News
August 23, 2010

Distributor focus

Anne Houlihan is President of Satori Seal Corp., a distributor based in Rancho Cucamonga, Calif., that specializes in O-rings and custom molded rubber goods. A story on her company, along with and article on Eaton Corp. program designed to boost its hydraulic hose line, headlines a special report on distributors that starts on p. 10.

There was a time in Satori Seal Corp.’s history that President Anne Houlihan had to decide whether she wanted her company to be both a manufacturer and distributor of rubber products, or just a distributor.

It was 1996, just three years after her first husband—Alex Acebo—died unexpectedly at the age of 44. Acebo founded the firm in 1971 as an O-ring distributor, importing the products from Japan and delivering them out of a Volkswagen Beetle with the seats pulled out.

In the early 1980s, though, he wanted to diversify when O-ring prices started to drop. While at a Toyota dealership buying a window knob, he saw someone holding a bag of about 50 O-rings and gaskets. He inquired and found the automatic transmission overhaul kit cost about $134.

This led him to transform Satori—the Japanese Buddhist term for enlightenment—into both a distributor of O-rings and a top manufacturer of automatic transmission kits, said Houlihan, who had joined the company in 1980, focusing on sales and marketing.

Satori produced the kits from 1985-96, but then Houlihan needed to make a critical decision about the future of the firm, of which she became president in 1993 after her husband’s death. “There was a transition going on and everything was becoming more and more competitive,” she said.

California also was becoming a difficult landscape for manufacturers, given the high price of workers compensation and other costs. She also looked at the costs of both sides of the business. Manufacturing meant spending money to go to trade shows and buying steel to produce its in-house molds.

“I was looking at the bottom line in manufacturing and in distribution, and it seemed like it was more profitable in distribution,” said Houlihan.

Another consideration was that while Acebo loved the manufacturing side of Satori, Houlihan’s penchant always had been on the sales side.

“I decided if I can’t have fun doing it, I’m not doing it—especially after Alex’s death,” she said. “I decided manufacturing wasn’t fun, so I got out of it.”

The right decision

So while Satori exited manufacturing, Houlihan knew the distribution side of the business couldn’t just stand still. At the time, the one-location distributor carried O-rings only in a couple materials.

It was decided to expand its offerings into more exotic materials, with Satori now carrying a full line of O-rings in five elastomeric compounds. The firm also widened its distribution scope to include a variety of custom molded goods, serving a variety of industries such as lighting, electrical, pool/spa, automotive, filtration, hydraulic systems, irrigation, and food and beverage. Most of its sales are domestic, but Satori does export to China, South Korea, Malaysia, Canada, Mexico and South America.

“It definitely was a great decision,” she said. “A year later, sales had grown more than 70 percent and we were more profitable.”

As a distributor, Satori’s main concern is getting a top-notch product made from high-quality materials. Houlihan said the company prefers its suppliers to at least be ISO-certified, and the firm’s staff travels on a regular basis to inspect supplier facilities to assure they maintain Good Manufacturing Practices. About 80 percent of what Satori sells comes from foreign sources, she said, depending on the line and product requirements.

Its own customers always talk price first, but in the end on-time delivery, shipping the right parts and selling quality goods normally outweighs cost, according to Houlihan.

“We take great measures to assure our customers have confidence in Satori Seal,” she said. “They love the fact they can place an order with us and forget about it until the day the parts hit their dock.”

One step further

In the past couple of years, Satori has taken its quest for quality beyond what most distributors are willing to commit to, the company president said. The firm did that by adding its own testing laboratory to its Rancho Cucamonga home, where it employs 10.

Houlihan said the seed for the idea was planted by someone who asked her point-blank how Satori controlled the quality of its products when the components are made elsewhere. She rattled off about all the data and reports the suppliers provided, but it still got her to thinking.

So the company added equipment enabling it to perform physical property testing on the products to make sure they meet the ASTM D2000 standard for physical properties of elastomer compounds. Its lab also sports a tensometer to test tensile strengths and an FT/IR scanner to fingerprint the material.

“We felt as a distributor we needed the capability to measure and test the product we sell,” he said. “We do not want to rely on the supplier and simply pass measurements and test results from them to our customers.”

Satori Seal's Juan Garcia is using a Video Measuring Machine in the firms laboratory. It measures features on parts that are too small or otherwise can't be measured with traditional handheld calipers. It magnifies the part, making it easier to see and measure small features, and also increases the accuracy of the measurement.

This enables Satori to test compounds throughout the year and make sure the materials are consistently what is promised. Houlihan said one customer was producing a valve and wanted to purchase seals that were certified by NSF International as being safe for water and beverage use.

“Several months after their first shipment from Satori, they came to us unexpectedly and proceeded to take apart several valves and asked us to prove they were the NSF compounds we said we sold them,” she said. “With our FT/IR scanner we were able to scan the seals and compare against baseline scans of those compounds we had in our system. They were a perfect match.”

Passion for the business and communication are two other areas where Satori sets itself apart, said Houlihan, who also is a certified business and life coach, which she teaches through her other business, Elevated Leadership International.

“Most of our key employees have been here more than 20 years,” she said. “We have a passion for what we do. We care about our reputation and we care about our customer.”

Satori’s staff also is committed to helping out customers in an emergency and in keeping them fully informed on order status. “Whether it’s good news or not so good news, keeping the customer promptly informed gives them time to plan accordingly, especially when production line schedules are involved.”

Growing in a down market

Last year was a challenging year, topped only by the year Acedo died, Houlihan said. Despite the down economy, the company decided to focus on industries that were busy, such as medical and agriculture.

“We focus on opportunities and I know when we focus on opportunities, we will find them,” she said.

And when the distributor’s fiscal year ended this past April 30, sales were actually 1 percent ahead of last year.

“When it gets tough, you find new industries,” Houlihan said. “We found more firms to do business with us in the medical industry. A poor economy is not an excuse.”

It also laid groundwork with other customers that were afraid to buy in bulk to help set the stage for a resurgence this year. Satori did something simple, she said. The staff called on these customers and just had conversations without pressuring for a sale.

“So when the economy started picking up, the first company they’d call was Satori Seal,” Houlihan said.

That led to a strong first quarter for this fiscal year, with sales 35 percent ahead of 2007, which the Satori president pointed to as an excellent year.

Like many smaller distributors, Satori has been approached on several occasions by larger distributors looking to buy a business with a strong reputation. But Houlihan tells the suitors that she wishes for Satori to remain independent.