Solution to Wesco case

1. Business to Business
Case Submission

2.  Electrical Equipment Supplies (EES) products distributor.
 Value to suppliers : generating demand for their products.
 Value to Customers : Offered one stop solution, inventory
management & cost reduction.
 Manufacturers – Strong ties with 150+ suppliers.
Introduction

3. CUSTOMERS
Electrical Contractors
•Bid & Quote Business
•Shortlisted Distributors
•Offers with lowest
overall price
Industrial Customers
•Ongoing need for EES
Products
•Maintenance,
Operations & Repairs
(MRO) activities
•Several industry
segments (Utility,
Transport etc.)
CIG Customers
•The smaller WESCO’s
business
•Commercial
customers : hotels &
motels
•Institutional customers:
hospitals & universities
•Small, stable & low
potential customers to
WESCO

4. Goal – Annual growth rate of 6% to 8 % in sales and 12% to 16% in profitability over
the next five years.
Premise – Large contracts could mean significant savings for both customers and
WESCO.
Benefits –
Competitive Advantage – Customers & Suppliers
Competitive Prices – Regardless of volumes
Inventory Reduction
Inventory Management – JIT Delivery
Efficiency Improvement – (Price, Reports, IT etc.)
National Account Program

5. NA CLIENTS
Key NA Clients
• 50 Key Clients
• Turnover - $180
Million
• Average $ 3.6
Million per
customer
• Cost Index - $80
Million
Focus NA Clients
• 100 Clients
• Turnover - $ 52
Million
• Average $ 500K
per customer
• Cost Index $ 110
Million
Other NA Clients
• 150 Clients
• Turnover - $ 34
Million
• Average $ 250K
per customer
• Cost Index $ 100
Million

6. SALES DISTRIBUTION
Branch Sales Representatives
Outside Sales Rep
* Served 20 – 40
Customers
* Visiting Customers
Regularly, identifying
new sales opportunities
and developing
solutions together
* Hunter Mentality
Inside Sales Rep.
* For each outside sales
rep there is an inside
one
* Process new orders,
Expedite existing orders,
and provide all
necessary service &
support
NAMs
18 NAMs across the country
Functions :
* Expected to call
prospective customers
* Lead the active selling
and implementation
process with new NA
customers
* Maintain long standing
relationship with existing NA
customers
ACQUIRED RETENTION

7. CAUSES OF FAILURE FOR
NA PROGRAM

8. TOO much burden on NAM
o In case of any service requirement/defects problem/replacement of parts etc.
local plant manager contacts the local branch manager, who in turn contacts
the National Accounts Manager(NAM).
o NAM tries to resolve the problem with his NIT counter part at the local level.
o Every NAM has 10-15 current customers to handle along with 15-20
prospective clients. Also every customer has on an average 5-20 plant
locations across US.

9. TOO much burden on NAM
o If we take on an average of 12 current customer with each having 10 plants(average) across
US, then each NAM is handling (12 x 10) = 120 plants at a time.
o Apart from handling these 120 plants every NAM is responsible for other 15-20 prospective
clients with whom he may be at any stage of active selling, intensive implementation stage
etc.
o If you consider a particular NAM’s total time, he is totally burdened with sheer numbers of
plants locations and the investment of time for the prospective clients. At any given point of
time, he may be handling some current accounts as well as some process of new customers.

10. NO coordination between customer’s
HQ and local plants
o In case of some customers, the local procurement officers are procuring
materials from the local distributors irrespective of being the NA customer of
WESCO.
o The reason for plant’s team still favouring the local distributors is that they
have good relationship with them and thus don’t want to change their
system.

11. NO coordination between customer’s
HQ and local plants
o If the customer’s corporate HQ has done a Rate Contract with WESCO, then
the local plant managers are not ready to procure the materials from them.
o Local procurement is still doing the procurement of EES items in their own
individual capacity despite their plant being included in the Rate Contract.

12. Mentality of sales representatives
o Mentality of sales person needs to be changed. If they are catering to the industrial
customer then they have “farmer” mind-set and when they are searching for
electrical contractors then they have “hunter” mind-set.
o Also, one of the sales rep say that he doesn’t want to serve a NA plant which is
giving $50,000 revenue per year.
o If we see the overall scenario, then that customer is of $5.4 million revenue per year
across all plants.

13. o Considering the fact that it is a NA customer and assuming that this customer is having 10 plants
across US, it is highly inappropriate for this sales rep not to serve that plant.
o Just because a location is generating little revenue doesn’t mean that he will not serve that
location. This phenomena is totally against the arrangement of the nation wide Rate Contract with
WESCO.
o The customer is hugely profitable to WESCO, and however it is unprofitable in a certain location, it
is a source of huge revenue in other 9 locations.
o That sales rep is viewing the scenario in isolation and not as a whole system.
Mentality of sales representatives

14. Possible solutions to correct
NA PROGRAM

15. o Increase the number of NAMs in the long term so as to lessen their burden. In
this way they can devote their time effectively to each current customer as well
as prospective customer.
o Have a dedicated sales team for the major key accounts and assign them to
each NA so as to have better monitoring and coordination with every plant
location.

16. o Grooming of the sales representatives through a training program should be done.
Currently in a particular branch office, each rep is handling 20-40 customers. These will
comprise NA as well as other customers. Hence to that rep, NA customer is just another
customer to serve. He is not giving that due importance to NA customers as he doesn’t
differentiate between NA and others.
o Also through these grooming sessions their mentality shall change from “hunter” to
"farmer”. Farmers must have a long term view to have a strong relationship with the
local procurement team of that plant.

17. o WESCO must ask its local sales rep to improve and strengthen the relationship with local
procurement team. In this way they will generate orders from them which were previously being
given to the local distributors.
o Perhaps WESCO can include the clause of local buying through its branch offices in its Rate
Contract made with the customers. In this way plants will buy through WESCO only.
o Corporate Head Quarter of customer must channelize the information to its local plants procurement
team though circulars etc. This will keep both the parties at the same pace. Also they should clearly
notify the local procurement officials of the items which they can procure locally and which items
they should procure nationally if they are NA customers.

18. Analysis based on Price and Cost Index
-20
-15
-10
-5
0
5
10
15
20
Key NA
Customers
Focus NA
Customers
Other NA
customers
Other
Industrial
Customers
Industrial
Contractors
CIG
Customers
International
Profit base on Price and Cost Index
o The above chart depicts the profit that might be earned from various
customer segments. The assumption that the operating margin is 3% on a
base average selling price of $ 100 is used to calculate the above figures
with the price and cost index (Exhibit 5).

19. Future road map for Industrial NA
customers
 As the growth potential is high and there is a scope of long-term
relationship with NA customers , Wesco should be proactive in
acquiring them.
 Wesco being the third major distributor occupies the “sweet spot” of
the customer list and has the potential to forge long term relationship
with the industrial NA customers who are willing to go beyond
transactional relationships.
 Pitch for Value added services to these customers and convert non-
exclusive to exclusive NA contracts.
 Convert reliable focus NA customers into Key NA customers.

20. Contd…
 To cater to the new trends of Integrated solutions WESCO should for
tier system rather than an alliance because –
 Alliances involve investment in learning about each other’s
businesses.
 Scope of each customer coming up with a different set of suppliers
and distributors.
 Compete with competitors of alliance partners.
 Being proactive will enable WESCO to be in the first tier and hence
earn profits by marking up the prices provided by second tier.
 For example ,in India Blue Star Air Conditioning services provides
Facility Management Services through outsourcing.

21. THANK YOU