Product Innovation Award 1

Corporate & North America Water Heating


Values Product1 storyTo meet the broadest set of specific applications, the Cyclone series of commercial gas water heaters comprises more than 30 different models. While our wholesale customers love the ability to offer facility managers the specific model for their needs, high inventory carrying costs limit the number of Cyclone units a wholesaler can stock.

Enter Catalyst, an innovative inventory flexibility program that reduces those 30+ models down to six core models whose software can be configured on demand to meet the end user's specifications. When every model can be "in stock" in a matter of moments, wholesalers will never lose a sale because the product isn't on hand.

2022.06.22 Values Button"We also chose the Catalyst project because it applied innovative thinking and problem solving to a real issue many of our customers face: maintaining inventory on an extensive range of Cyclone models without excessive costs," chairman, president & CEO Kevin Wheeler said. "During a time of growing supply chain challenges, this program not only offers a creative solution but also lays a solid foundation to expand and broaden our market leadership."

Catalyst was created as a joint project of BTS, Corporate Finance and North America Water Heating and involved designing and implementing a number of unique software and hardware technologies, ranging from NFC programming to a proprietary Android-based app to allow our wholesale customers configure a non-functional commercial water heater into a fully functional unit.

"With the pandemic in full swing when we started this initiative, it was a huge challenge to align the many cross-functional teams involved," said SAP solutions architect Madan Nagaraju, who led the project from BTS. "Despite a project team spread across different locations, we were able to collaborate, run through discovery and brain storm ideas to develop practical, real-world solutions in a segment where we’re already the market leader."

In addition to the technology inside, a creative two-tier invoicing structure alleviates wholesalers' concerns about carrying inventory: they pay 70% when they receive the core unit and pay the balance only when the unit is configured and sold to their end customer. Believed to be an industry first, the program was designed to create a stronger win-win partnership with our wholesale customers. It worked.

"One of our major customers involved in the launch called the program 'truly the most innovative and successful launch A. O. Smith has had in years,'" Madan added. "That kind of feedback not only validates the enormous effort and time spent making this program a huge success, but also reinforces that this was a win in partnership with our customer base."

Internally, the success of the project proved the potential of collaborating across functions and business units.

"Learning we had won the Values Recognition award, the entire team was excited, thrilled and honored," Madan said. "The win renews the energy to continue on our customer-focused journey of innovation!"

2022.06.22 Values Recognition PRODUCT1Left to Right: Melissa Scheppele, Kevin Wheeler, Madan Nagaraju, Randy Johnson, Sam Fish, Carl McDow, Denielle Johnson, Matt Schulz, Dave Warren, Wayne Perkins, Tom Van Sistine. Not pictured: Mark Allen, Kim Bailey, Brandi Barnes, John Beatrice, Chris Burdette, Mike Carr, Norm Christner, Matthew Courville, Savvas Erotokritou, Kelly Hatfield, Rob Henderson, Danielle Howard, Shawn Johnson, Patricia Kirchner, Randy Kundert, Phil McAfee, Jaymes Miles, Mike Schultz, Debbie Shortreed, Selva Sivakumar, Chris Smothers, Mike Spivey, Zhai Taizhen, Patti Tankersley, Nick Woessner, Elbert Wright. © 2022 Aaron Johnson for A. O. Smith Corporation.

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