WESCO DISTRIBUTION,INC.

Presented by: Group 3 Abhishek Birmaan Mayank Jain Rajesh Agarwal Saket Agarwal

Introduction
Jim Piraino, VP of marketing for WESCO Distribution, Inc., is preparing for a yearly review meeting with WESCO CEO Roy Haley Haley wants the firm to reach annual growth goals of 6% to 8% in revenues and 12% to 16% in profitability over the next five years. The centerpiece of this growth strategy is the National Accounts program, which WESCO has developed to serve its major industrial. However, as of June 1997, the NA program has not delivered the expected increases in sales and profitability.

Need for NA program

Large industrial customers are demanding it, and they are important to WESCO It offers national distributors, like WESCO, an opportunity to create a unique and sustainable competitive advantage with its customers and suppliers Roy Haley sees it as an opportunity to increase the scope of WESCO's business with each of its major customers WESCO needs it to meet Haley's ambitious growth plans.

Problem faced with the NA program

Vendors are learning the hard way that not all of their customers are interested in getting into these agreements Customers who get into such agreements are only interested in getting lower prices Customers are not willing (or not able) to work with the vendor in a mutually beneficial mode

Proactive approach to NA
Haley's aggressive growth plans for WESCO depend upon substantially increased revenue from the NA program. Key NA customers can ramp up revenues very quickly. Key NA customers allow us the best margins when including costs to serve in the calculation. The NA program has a lot to offer customers in heavy process industries Larger and more predictable orders are more economical for suppliers and allow WESCO to obtain better prices. Consolidation in the EES industry has made competition fiercer. We need to get as many customers as we can to sign on. Being proactive gives us more control over the profile of the customers we choose to work with. Actively pursuing customers improves our chances of becoming a first-tier supplier to our customers, which should, in turn, improve our margins. Taking a reactive stance could cause us to lose out on the business of potential key customers being pursued by our competition.

Reactive approach to NA
The NA program is only highly profitable when fully implemented. In the middle stages, the costs to serve are very high. The NA program is pitched to headquarters. Local branches uninterested in the corporate bottom line can sink implementation. Pushing the NA program could alienate contractor customers by ignoring them or even competing against them. If the prospecting and selling phases of the NA process could be cut substantially, NAMs would have more time to work on implementation and maintenance. The selling process could be directed at consultants in order to increase demand for the program. Including only those customers who demonstrate a strong interest in the NA program will improve the return on WESCOs investments in the early stages of the program. PirainoStrong individual partnerships have brought us to where we are now and they may even be able to keep us going for some time.

Sales forecasted for the year 1997

Key : 89*12/5 = 213.6 (213.6 -180)180 = 18.7% Focus : 25 * 12/5 = 60 (60 - 52)52 = 15.4% Other : 14*12/5 = 33.6 (33.6 - 34)34 = -1.2 %

Suppliers and customers

Suppliers: WESCO allows EES suppliers to sell to customers too small to purchase directly from them. By offering customers products from numerous EES suppliers, WESCO increases the probability of a good product-customer fit by helping the customer to find the product that most exactly fits their requirements.

Why NA program not delivering the result?

WESCO needs to be more selective in choosing NA prospects. Currently, WESCO does not have a process for segmenting its customer base. It has tried to use a shotgun approach to select customers as partners in its NA program. After having chosen the right customer, WESCO needs to ensure proper implementation. Implementation should be easier when customers are chosen in part on the basis of how easy or difficult it would be to implement an NA program with them. Nevertheless, the process needs to be streamlined and responsibility reapportioned.

 Customers: WESCO adds value to its customers both in general and in the particular features of the services it provides. As a distributor, WESCO can offer customers a one-stop solution to their EES needs that allows them to purchase the products they want from EES suppliers of their choice, in volumes appropriate to their size.

 WESCO currently has 18 NAMs managing an NA program that involves, 50 key customers, 100 focus customers, and 150 other N customers. This works out to an average of slightly und three key customers, 6 focus, and 8 other NA customers per NAM. Stage Prospecting Active Selling Implementation Maintenan NAM Flexible 30-40% up to 50% 15%+ Time Varies 6-9 months 2-3 months Indefinite frame

Is NAM Capacity an issue?

Things Wesco can do

WESCO cannot control a customer's purchase profile. However, this information can be used by WESCO to segment customers. WESCO should selectively pursue customers whose profile looks like that of the customer in case Exhibit 16. WESCO can work with the customer's senior management and convince them about the benefits of the NA program. The reality, however, is that CEOs might not be interested or have the time to get into looking at cost savings from light bulbs and switches. WESCO can develop good relationships with consultants and gain access to their customers. The issue here is that consultants, especially those that focus on re-engineering and supply chain management initiatives, might view WESCO as a competitor rather than as a collaborator.

Recommendation
One way to handle the NAM capacity issue is to hire executives to take over some or all of the maintenance functions that the NAMs currently do. Changing the growth profile of the NA program becomes a key factor in achieving success. It is possible that WESCO could use a segmentation process to find a group of 28 new customers who come close to fitting the ideal profile for an NA customer and whose total EES purchases fall between $12 and $15 million per customer per year

THANK YOU