WESCO Distribution Inc

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Section D , Group 12 Vikram Agarwal 11P237

Puneet Sapra

11P214 11P230
4/27/12

Sugandha Gupta Vaibhav Sharma

Nature of Service

Distributor in Electrical Equipment & Supplies Caters the need of

Electrical Contractors acquired by biding , $ 465M sales in USA Industrial Contractors maintains inventories of ESS products, $1 Billion sales in USA CIG Customers - $ 147.5M sales in USA

NA has high procurement cost but low maintenance cost 50 key customer accounting for $180M sales
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Customer Analysis
Customer Segment Characteristics Customer Needs Relationship/ Strategy Sales and Segment Share (1996)

Electrical Contractors

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

Industrial Customers

Ongoing needs for EES products in MRO. Serving JIT, Multi-year agreements, major industries like Utility, Intergrated supply, Mfg, Mining and Inventory Management. Transportation etc.

Long term relationships. Collaborative approach. NA program

$ 1 Billion

Commercial, Smaller business segment. Industrial and Highly heterogenous Government (CIG) customer groups

JIT

Sales hunting. Ability to serve large orders in Government segment with low margin

$ 148 Mn

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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

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National Account Program

Significant savings for both customers and WESCO by establishing long-term contracts, started in mid 1995 will receive competitive, year-long, national pricing regardless of volume contracts are product driven and minimal value added services and 80% are just for lamps
4/27/12 1997, there were 300 customers

Customers

Major

By

Why was it failing ?

Customers did not regard it as an exclusive contract Poor alignment corporate needs between customers local and

Cost of serving customers was very high The contract clients were being neglected Difficult implementation

Unanticipated purchases

differences and local

in plants

procedures supply not

and in

NA agreement agreement

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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

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What we Recommend
Customer

Improve the analysis of Value Added Services Go Online for Customers Understand the local resource and goal of Customer Customers with good prospect should be approached proactively Collaborate with Electrical Contractors Develop expertise to provide integrated solution for different business vertical. Inventory buy back option to customer Checkontheprocurementlist of thecustomersso as to avoid differences in procedures and purchases Standard products to make initial contracts with the
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What we Recommend

Integrated IT system keep a check on branch offices for NA Deals Integrated Inventory management across all branches

Stress on e-procurement

In vogue with emerging industrial practices (LEAN/JIT) Electronic Procurement with suppliers for reduced transaction costs

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Thank You

4/27/12