Wesco case

download Wesco case

of 14

  • date post

    15-Jul-2015
  • Category

    Education

  • view

    315
  • download

    3

Embed Size (px)

Transcript of Wesco case

  • WESCO Distribution IncPresented By -Group 7

  • WESCO ProfileFounded in 1992, distribution arm of Westinghouse & was sold to investment company in 1994$ 2.2 Billion company in 19963rd largest full-line wholesale Electrical Equipment & Supplies (EES) distributer in USA279 branches in USLeading Provider of:National Account ProgramsIntegrated Supply ServicesOEM Direct Materials and ServicesElectric Utility Distribution Grid SolutionsConsistent strategy of market share growth:Local market penetration with national programsAcquisitionsOperational excellence

    Company ProfileMarket Position

  • WESCO - Customer AnalysisIndustry requirements Supply chain improvement- JIT, Long term contract with few suppliersFocus on quality and reducing overall cost (Including Procurement)Recently, customers want non competing supplier to form alliances in order to reduce cost

    CustomerNo of customersCustomer NeedsTotal Market Size /ShareRelationshipElectrical contractors987Deliver in time at least possible price$ 17.9 BN/ 2.6%Tender based (Bidding)Industrial Customers465One stop solution for MRO needs$ 16.7 BN/ 6%Long Term JITCommercial, Industrial and Government (CIG)148NA $ 5.9 BN/ 2.5%Stable

  • National Account Program

  • National Account Program CustomersKey ClientsOther ClientsFocus ClientsNext 100 customers after top 50 clients by sales volume Under utilize WESCO to satisfy their major needsSales $ 52 MnCVI - 105Cost Index - 110Price Index - 93

    Top 50 clients by Sales VolumeMultisite Agreements supplying EES as well as non-EES productsSales - $180 MnAverage - $4 Mn per customerCVI - 120Cost Index - 80Price Index - 90

    150 ClientsHunting licensesSales - $ 32 MnProduct only, non-exclusive accountsCVI - 100Cost Index - 110Price Index - 95

  • Successful NA Development Stages Calling high potential EES Presentations to get prospects thinking

    6-9 month PhasePresentations to the purchasing staff, Executives in plants, addressing customer concerns30-40% NAMs time

    Signing of the contract initiates this phaseHalf of NAMs time for the initial months30-60 days of travel to understand all the branches and their individual needs well After 90 days -> Order is received

    NAM holds NIT meetings to resolve difficulties , presents new cost saving initiatives15% of NAMs time

  • Successful NA implementation

    Chart1

    30

    12

    2

    3

    3

    5

    20

    2

    20

    1

    1

    1

    Customer Cost Savings

    Sheet1

    Customer Cost Savings

    Productivity Improvement30

    Inventory reduction12

    Other2

    SKU deletions3

    Product Substitutions3

    Price Improvement5

    Energy Savings20

    Training2

    Transaction Cost reduction20

    Service Improvement1

    Administrative Improvement1

    Application Engineering1

  • Wescos Organization Structure

  • Market Analysis and OpportunityThousands of electrical and industrial product manufacturersDistribution to 150 suppliersCompetitive arenas:Specialization, Geography, PeerCompetition with Product Specialist, Retail Generalist, Regional & Local distributorsLarge, Fragmented MarketValue of Distribution$40 Billion Construction, MRO, and OEM MarketsProcurementWarehousingLogistics ManagementScaleGlobal sourcingValue-creating solutionsEnhanced interdependenceSales MarketingDeliveryServiceMROMarket Trends Benefit WESCOSUPPLIERSCUSTOMERS

  • Future of NA Program ?The Issues:Below expected Sales and ProfitsSupplier/Distributor tiering and alliancesProactive pitching to NA customers or reaction to demand Account generated only 40% of target in first 5 months and margin fell by 2%High service demand not withstanding the sales volumeExcessive demand of NAMs timeReluctance to abandon local distributorsBecoming competitors to electrical contractors traditional business thus threatening their own business

  • WESCO A Total Supply Chain Solutions Provider

    PresentFutureMarket-Focused BranchesOne WESCONational AccountsGlobal AccountsIntegrated SupplyComplete Supply ChainNorth American CentricGlobal

    Providing Broad Solutions to CustomersExtensive products and servicesBroad geographic coverageDeep penetration into customer processesDifficult to disintermediate

  • THANK YOU

  • WESCO Growth Strategy & Financial ObjectivesTarget sales and marketing initiatives on attractive verticalsSell complete set of products to all customers and service all their locationsExpand product and service portfolio and capabilitiesExpand internationallyGrow faster than the market plus acquisitionsMaintain industry-leading cost positionExpand operating profitProvide superior return on invested capitalGenerate strong operating cash flow through the cyclefocus on value creationGrowth StrategyLong Term Financial ObjectivesProducts & SuppliersMarkets & CustomersGeography

  • WESCO EvolutionLBO in 1994 by management and Clayton, Dublier & Rice~$1.5 Billion in sales~175 Branches in U.S. and Canada~85% non-residential constructionLimited supply relationships other than WestinghouseSales grew to $3.7B25 acquisitionsExpanded geographic footprintDiversified end-markets and supplier baseLaunched National Accounts ProgramLaunched Integrated Supply Leveraged recapitalization 1998IPO 1999Severe industry downturnHigh financial leverageSuspended acquisition programStrong free cash flow generationInvested in sales and marketing programsLaunched LEAN11 quarters of double digit sales growthSales grew to $6.1BInvested in sales capacity expansionRestarted acquisition program 7 acquisitions with $1.1 B salesProduct category expansionImproved capital structureExpanded marketing programsExpanded LEANSignificant cost reduction actions takenRecord free cash flow generationStrengthened capital structureAccelerating LEAN and extending to customersInternational expansionInvesting in attractive growth verticals and geographiesCaptive Distribution Arm of WestinghouseRecession and RecoveryGrowth AcceleratesSevere RecessionGrowth StrategyDeployed1922-19941994-20012001-20032004-20082008-2009

    *Priyanka*Rohan Arora*Jindal*Manjusha*Dipin*Pramod*Pramod*Bajaj*Bajaj*Harman*