WESCO

Distribution
Inc.
(Industrial
Marketing)
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 Investment
Company of Clayton,
Dublier & Rice in 1994.

• Major Electrical
equipment and
supplies (EES) full line
distributor in USA.
•
• Branch Office driven
organization managing
own territory across
client segments

 Customer Analysis
Customer Characteristics Customer Needs Relationship / Sales and
Segment Strategy Segment
Share
( 1996 )*

Electrical Contracts for installation JIT and Project Quotes Project based. Sales $ 465 Mn
Contractors of lighting and electrical (lowest price driven) hunting. Branch 20%
systems. office driven
Bid and Quote business.

Industrial Ongoing needs for EES JIT, Multi-year agreements, Long term $ 987 Mn
Customers products in MRO. Serving Intergrated supply, relationships. 43%
major industries like Inventory Management. Collaborative
Utility, Mfg, Mining and approach. NA program
Transportation etc.

Commercial , Smaller business segment. JIT Sales hunting. $ 148 Mn

Industrial and Highly heterogenous Ability to serve 6.5%
Government ( CIG ) customer groups large orders in
Government segment
with low margin
 Supplier and Competitor
Analysis
 Suppliers
• Strong ties with 150 14.33%
suppliers like
Thomas & Betts,
Philips and 5.83%
Leviton.

 Value Addition 17.7%

• Distributing wide
range of products
33%
– One stop
solutions
• Making sales 6%
economically
feasible by scale
and scope.
21%
• Adding value in all
stages of sales
process with
partnership
approach.
 WESCO Suppliers and Selling
Story
Why Supply to WESCO?

•One St op Solut ion

for cust om ers
•Direct Sales
econom ically
unfeasible w it h low
sales volum es
•Value Addit ion at all
st ages of sales
process – WESCO
selling st ory
Electrical Equipment and
Supplies (EES) Industry -
Trends
 During the late 1980s EES industry
witnessed a dramatic change
 Stringent supplier distributer quality norms
 Customers looking for long term contracts
 High levels of customer service demanded
 Effort to minimize procurement costs
 Implementation of concepts like JIT for
procurement – To improve Supply chain
efficiency by reducing inventory
•


The National Account
Program (NAP)
 A uniform, competitive price across all locations
regardless of volume
 Knowledgeable people and effective processes
for nationwide contract administration,
opportunity identification, and problem
resolution (Strong NAM Sales Organisation)
 National programs combined with local service
and support
 Rapid, effective implementation
 Documented cost savings, year after year
•


NA Customers Categories
 Common Characteristics across
Successful NA Relationships
Wesco needs to be amongst the top 5-10 suppliers
accounting for over 70% of annual procurement
budget
Customer’s top management be committed to the
relationship
Unison among the senior management with respect
to the cause
Support from the customer’s local purchasing and
materials staff
Continuous focus of Wesco’s local staff
Multiple products like inventory analysis and
multiple sites


Results
Mutual benefits for the customer and
WESCO
Long term contracts which lead to supply
chain partnerships
Multiple products like inventory analysis and
multiple sites
After successful implementation the cost
reduces to 20%
Increase in earrings may be 10 fold
Value addition to the customers
procurement chain
Why it was failing?
 Customers did not regard it as an exclusive
contract
 The accounts were not realizing their full
potential
 Poor alignment between customers local and
corporate needs
 Cost of serving customers was very high
 The contract clients were being neglected
 They were tempted to abandon WESCO
 Difficult implementation
 Unanticipated differences in procedures and
purchases
 NA agreement and local plants supply not in
agreement
New NA Customer Demands
 Supplier Tiers
 One of the top 5-10 suppliers manages the
smaller suppliers
 Formation of alliances and consortia of non-
competing distributors
 Sharing of Warehousing facilities
 Creation of common billing formats
 Develop integrated product/service solutions
 Enhanced Commitment on Service
 Multi Source Commodity Supply Model
 Service to custom requirements
 End to End solutions for electrical set ups

•


Risks
 Each player needs to learn about other’s
business
 Each customer might expect Wesco to partner
with a different set of suppliers
 Wesco’s own list of suppliers might not be
approved by the customer
 Risk of losing customer’s confidence
 Competition with competitors of our alliance
partners
 Competition with traditional customer base of
electrical contractors
 Alternatives for WESCO
 Get rid of NA?
 Add $12 Mn to bottomline
 Concentrate on Interested CUSTOMERS
only
 Can lose potential Key customers

 Proactively Continue NA
 Loads already invested
 Maximum growth Potential
 Harness Growth opportunity with changing
Industry trends, Change WESCO’s ways
accordingly
 CAUTION: Only for customers with good
prospects and not those who seek traditional
 What we Recommend?
 Understand your Customer
 Improved Analysis of Value Addition opportunities
 Local resources and Goals of the Customer
 Market Research
 Discourage alliances which can be costly
 Proactive approach should be adopted only for
customers with good prospects
 New Age Customer - role of an integrator , a total
supplies manager. Offer specialized/customized
value added services
 Transactional Customer – Traditional Methodology
 Collaborate with electrical contractors so that they
do not feel threatened – Major chunk of revenue
comes from them


 What we Recommend?
 Alternative look: Integrated Supply Solutions
to Customer
 WESCO can develop expertise and provide
Integrated Solution to a business vertical,
and not necessarily customized in the strict
sense. (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 system
 keep a check on branch offices for NA Deals
 Stress on Local Issues handled by Locals who
understand the needs better
 Traditional Customers, provide competitive
prices and sell previous success stories
 Redefine Firm’s Mission
 Do’s/Don’t’s of firm’s key businesses
•