B2B Case

Submission

WESCO Profile
Company
Company Profile
Profile
Founded in 1992, distribution arm of

Westinghouse & was sold to

investment company in 1994
$ 2.2 Billion company in 1996
3rd largest full-line wholesale

Electrical Equipment & Supplies (EES)

distributer in USA
279 branches in US
Value to suppliers : generating

demand for their products.

Value to Customers : Offered one stop

Market
Position
Market
Position
Leading
Provider
of:
National Account Programs
Integrated Supply Services
OEM Direct Materials and

Services
Electric Utility Distribution Grid

Solutions

Consistent strategy of

market share growth:

Local market penetration with

national programs
Acquisitions
Operational excellence

CUSTOMERS
Electrical
Contractors
Bid & Quote
Business
Shortlisted
Distributors
Offers with
lowest overall
price

Industrial
Customers
Ongoing need
for EES Products
Maintenance,
Operations &
Repairs (MRO)
activities
Several industry
segments
(Utility,
Transport etc.)

CIG Customers
The smaller
WESCOs
business
Commercial
customers :
hotels & motels
Institutional
customers:
hospitals &
universities
Small, stable &
low potential
customers to

Competitors
Three competitive arenas namely-

Specializa Product specialists

Retail Generalists
tion
Geograph Regional Chains
Local Distributors
y
Peer

Major national
distributors
3rd in sales volume in
1996

National Account Program

Goal Annual growth rate of 6% to 8 % in sales and 12% to 16% in profitability
over the next five years.
Premise Large contracts could mean significant savings for both customers and
WESCO.
Benefits
Competitive Advantage Customers & Suppliers
Competitive Prices Regardless of volumes
Inventory Reduction
Inventory Management JIT Delivery
Efficiency Improvement (Price, Reports, IT etc.)

NA customers
NA Customers

Key NA Clients
.Top 50 customers by
sales vol.
.Multisite agreement
.Multiple EES
products
.Over $180MM sales
.nearly $4MM per
customer

Focus NA Clients
.Next 100
customers
.Single site
.Single product
agreement
. Over $500,000
sales
.

Other NA Clients
.Buttom150
customers
.non-exclusive,
product-only
accounts
.Less than $$250,000
sales

SALES DISTRIBUTION
Branch Sales
Representatives
Outside Sales Rep Inside Sales Rep.
* Served 20 40
Customers
* Visiting Customers
Regularly, identifying
new sales
opportunities and
developing solutions
together
* Hunter Mentality

* For each outside

sales rep there is an
inside one
* Process new orders,
Expedite existing
orders, and provide all
necessary service &
support

ACQUIRED

RETENTION

NAMs
18 NAMs across the
country
Functions :
* Expected to call
prospective customers
* Lead the active selling
and implementation
process with new NA
customers
* Maintain long standing
relationship with existing
NA customers

CAUSES OF FAILURE FOR

NA PROGRAM

Difficult Implementation and

Management of different types of
customers
o In case of any service requirement/defects problem/replacement of parts etc.
local plant manager contacts the local branch manager, who in turn contacts
the National Accounts Manager(NAM).
o NAM tries to resolve the problem with his NIT counter part at the local level.
o Every NAM has 10-15 current customers to handle along with 15-20
prospective clients. Also every customer has on an average 5-20 plant
locations across US.

NO coordination between
customers HQ and local plants
o In case of some customers, the local procurement officers are procuring materials
from the local distributors irrespective of being the NA customer of WESCO due to
good relationship
o If the customers corporate HQ does a Rate Contract with WESCO, then the local
plant managers are not ready to procure the materials from them
o Local procurement is still doing the procurement of EES items in their own individual
capacity despite their plant being included in the Rate Contract

New trends among NA

customers
o Focusing on price more than relationship
o Cost reduction routes like forming alliances
o Share ware-housing facilities with other distributors to create common billing formats
o Explicit customer demands

Mentality of sales
representatives
o Mentality of sales person needs to be changed. If they are catering to the industrial
customer then they have farmer mind-set and when they are searching for
electrical contractors then they have hunter mind-set.
o Also, one of the sales rep say that he doesnt want to serve a NA plant which is
giving $50,000 revenue per year.
o If we see the overall scenario, then that customer is of $5.4 million revenue per year
across all plants.

Possible solutions to correct

NA PROGRAM

ANALYSIS
Customer Type
Industrial
Customers
Key NA Customers
Focus NA
Customers
Other NA
Customers
Other Industrial
Customers
Customer Type
Industrial
Customers

Sales

Price
Index

Cost
Index

Cust. Value
Index

266
180

90

80

120

52

93

110

105

34

95

100

100

721
Sales

Price
100
Index

Cust.
95
95 Value
Cost Index
Index

Comparative
Profit Margin

266

Key NA Customers

180

90

84.21

126.32

0.069

Focus NA Customers

52

93

115.79

110.53

-0.19

Other NA Customers
Other Industrial
Customers

34

95

105.26

105.26

-0.097

721

100

100

100

Assumption: Fixing index values for other industrial customers at

100 for comparative analysis

Interpretation
o Focus NA customers are provided customer value but in turn yield lesser profit

margins compared to other industrial customers.

o Only Key NA customers yield higher margins in comparison to Other industrial

customers.
o WESCO is not able to generate margins comparative to the value they provide

the Key NA accounts.

o Even other NA customers return higher margins compared to focus NA

customers.

Recommendations
o WESCO needs to be proactive towards potential and existing key NA accounts.
o

To active purse these potential key customers and becoming their first tier supplier thereby
increasing margins.

Not to lose these customers to competitors

o For all the other customers, WESCO needs to take a reactive approach.
o

Identify those customers who show a strong interest in the NA program and try to make them
key customers.

o WESCO needs to try to reduce cost for the focus customers. (cost/value =

1.04)

Recommendations
o Segmenting the Focus NA customers to find profile which can be converted to Key NA customers.
o Increasing the NAM staff:
o

Reduces cost-to-serve per customer(Low customer to staff ratio)

Helps in adding new customers

Improves relationship with customer by giving more time to them

o Including local branches in NA team for better negotiations.

o Effective sales team management
o Grooming of the sales representatives through a training program

Future road map for Industrial NA

customers
As the growth potential is high and there is a scope of long-term relationship

with NA customers , Wesco should be proactive in acquiring them.

Wesco being the third major distributor occupies the sweet spot of the
customer list and has the potential to forge long term relationship with the
industrial NA customers who are willing to go beyond transactional
relationships.
Pitch for Value added services to these customers and convert non-exclusive to
exclusive NA contracts.
Convert reliable focus NA customers into Key NA customers.

Contd
To cater to the new trends of Integrated solutions WESCO should for tier

system rather than an alliance because

Alliances involve investment in learning about each others businesses.
Scope of each customer coming up with a different set of suppliers and
distributors.
Compete with competitors of alliance partners.
Being proactive will enable WESCO to be in the first tier and hence earn
profits by marking up the prices provided by second tier.
For example ,in India Blue Star Air Conditioning services provides Facility
Management Services through outsourcing.

THANK
YOU