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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)
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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%
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
•
8/7/2019 Group 3 WESCO
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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
•
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
•
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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
8/7/2019 Group 3 WESCO
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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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