group 3 wesco

8/7/2019 Group 3 WESCO

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WESCODistribution

Inc.(IndustrialMarketing)Submitted By (Group 3) :

Gaurav Chouksey (09927814)Shreyas Ganesh (099278)Meghna Tyagi (09927840)Paritosh Chaube (09927850)Subodh Joshi (09927903)



Introduction • Founded in 1922 as the

distribution arm of Westinghouse.

• Sold to InvestmentCompany of Clayton,Dublier & Rice in 1994.

• Major Electricalequipment andsupplies (EES) full linedistributor in USA.

•• Branch Office driven

organization managingown territory acrossclient segments



Customer Analysis Customer

SegmentCharacteristics C us to me r N ee ds /Relationship

Strategy Sales and

Segment

Share( )*1996

Electr icalContractors

Contracts for installation of lighting and electrical

.systems.Bid and Quote business

JIT and Project Quotes( )lowest price driven

.Project based Sales.hunting Branch

office driven

$ 465 Mn%20

Industr ia lCustomers

Ongoing needs for EES.products in MRO Serving

major industries like, ,Utility Mfg Mining and

.Transportation etc

, - ,JIT Multi year agreements,Intergrated supply

.Inventory Management

Long term.relationships Collaborative

.approach NA program

$ 987 Mn%43

,Commercial I nd us tr ia l a nd

( )Go ve rnm en t C IG

.Smaller business segment Highly heterogenous

customer groups

JIT .Sales hunting Ability to serve

large orders in Government segment

with low margin

$ 148 Mn. %6 5



Supplier and CompetitorAnalysis

Suppliers• Strong ties with 150suppliers likeThomas & Betts,Philips andLeviton.

Value Addition• Distributing wide

range of products– One stopsolutions

• Making saleseconomicallyfeasible by scaleand scope.

• Adding value in allstages of salesprocess withpartnershipapproach.

14.33%

5.83%

17.7%

33%

6%

21%



WESCO Suppliers and SellingStory

Why Supply to WESCO?

•One Stop Solutionfor custom ers•Direct Saleseconomicallyunfeasible wit h lowsales volum es•Value Addit ion at allstages of sales

process – WESCOselling story



Electrical Equipment andSupplies (EES) Industry -

TrendsDuring the late 1980s EES industry

witnessed a dramatic change

Stringent supplier distributer quality normsCustomers looking for long term contractsHigh levels of customer service demandedEffort to minimize procurement costs

Implementation of concepts like JIT forprocurement – To improve Supply chainefficiency by reducing inventory

•



The National Account

Program (NAP)A uniform, competitive price across all locations

regardless of volume

Knowledgeable people and effective processesfor nationwide contract administration,opportunity identification, and problemresolution (Strong NAM Sales Organisation)

National programs combined with local service

and supportRapid, effective implementationDocumented cost savings, year after year

•



NA Customers Categories



Common Characteristics across

Successful NA RelationshipsWesco needs to be amongst the top 5-10 suppliers

accounting for over 70% of annual procurementbudget

Customer’s top management be committed to therelationship

Unison among the senior management with respectto the cause

Support from the customer’s local purchasing andmaterials staff

Continuous focus of Wesco’s local staff Multiple products like inventory analysis and

multiple sites



ResultsMutual benefits for the customer and

WESCOLong term contracts which lead to supply

chain partnershipsMultiple products like inventory analysis and

multiple sitesAfter successful implementation the cost

reduces to 20%Increase in earrings may be 10 foldValue addition to the customers

procurement chain



Why it was failing?Customers did not regard it as an exclusive

contractThe accounts were not realizing their full

potentialPoor alignment between customers local and

corporate needsCost of serving customers was very highThe contract clients were being neglected

They were tempted to abandon WESCO

Difficult implementationUnanticipated differences in procedures andpurchases

NA agreement and local plants supply not inagreement



New NA Customer DemandsSupplier Tiers

One of the top 5-10 suppliers manages thesmaller suppliers

Formation of alliances and consortia of non-competing distributors

Sharing of Warehousing facilitiesCreation of common billing formatsDevelop integrated product/service solutions

Enhanced Commitment on ServiceMulti Source Commodity Supply ModelService to custom requirementsEnd to End solutions for electrical set ups

•



RisksEach player needs to learn about other’s

businessEach customer might expect Wesco to partner

with a different set of suppliersWesco’s own list of suppliers might not be

approved by the customerRisk of losing customer’s confidenceCompetition with competitors of our alliance

partnersCompetition with traditional customer base of

electrical contractors



Alternatives for WESCOGet rid of NA?

Add $12 Mn to bottomlineConcentrate on Interested CUSTOMERS

onlyCan lose potential Key customers

Proactively Continue NALoads already invested

Maximum growth PotentialHarness Growth opportunity with changing

Industry trends, Change WESCO’s waysaccordingly

CAUTION: Only for customers with goodprospects and not those who seek traditional



What we Recommend?Understand your Customer

Improved Analysis of Value Addition opportunitiesLocal resources and Goals of the CustomerMarket Research

Discourage alliances which can be costlyProactive approach should be adopted only forcustomers with good prospects

New Age Customer - role of an integrator , a totalsupplies manager. Offer specialized/customizedvalue added services

Transactional Customer – Traditional MethodologyCollaborate with electrical contractors so that they

do not feel threatened – Major chunk of revenuecomes from them



What we Recommend?Alternative look : Integrated Supply Solutions

to CustomerWESCO can develop expertise and provide

Integrated Solution to a business vertical ,

and not necessarily customized in the strictsense. (Less Costly)

Outsource to Third Party, Share Profits



What we Recommend?Stress on e-procurement

In vogue with emerging industrial practices(LEAN/JIT)

Integrated IT systemkeep a check on branch offices for NA Deals

Stress on Local Issues handled by Locals whounderstand the needs better

Traditional Customers, provide competitiveprices and sell previous success stories

Redefine Firm’s MissionDo’s/Don’t’s of firm’s key businesses

•

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group 3 wesco

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