WESCO Distribution Inc
Presented By Group 7
WESCO Profile
Company
Company Profile
Profile
Founded in 1992, distribution arm of
Westinghouse & was sold to investment company
in 1994
$ 2.2 Billion company in 1996
3rd largest full-line wholesale Electrical Equipment
& Supplies (EES) distributer in USA
279 branches in US
Market
Market Position
Position
Leading Provider of:
National Account Programs
Integrated Supply Services
OEM Direct Materials and
Services
Electric Utility Distribution Grid
Solutions
Consistent strategy of market
share growth:
Local market penetration with
national programs
Acquisitions
Operational excellence
WESCO - Customer Analysis
Customer
No of
customers
Customer Needs
Electrical
contractors
987
Deliver in time at least
possible price
Industrial
Customers
465
Commercial,
Industrial and
Government (CIG)
148
Total Market
Size /Share
Relationship
$ 17.9 BN/ 2.6%
Tender based
(Bidding)
One stop solution for
MRO needs
$ 16.7 BN/ 6%
Long Term JIT
NA
$ 5.9 BN/ 2.5%
Stable
Industry requirements
Supply chain improvement- JIT, Long term contract with few suppliers
Focus on quality and reducing overall cost (Including Procurement)
Recently, customers want non competing supplier to form alliances in order to reduce
cost
National Account Program
National Account Program Customers
Key
Key Clients
Clients
Top 50 clients by Sales
Next 100 customers
after top 50 clients by
sales volume
Volume
Multisite Agreements
supplying EES as well
as non-EES products
Sales - $180 Mn
Average - $4 Mn per
customer
CVI - 120
Cost Index - 80
Price Index - 90
Other
Other Clients
Clients
Focus
Focus Clients
Clients
Under utilize WESCO
to satisfy their major
needs
Sales $ 52 Mn
CVI - 105
Cost Index - 110
Price Index - 93
150 Clients
Hunting licenses
Sales - $ 32 Mn
Product only, nonexclusive accounts
CVI - 100
Cost Index - 110
Price Index - 95
Successful NA Development Stages
Calling high
potential
EES
Presentation
s to get
prospects
thinking
6-9 month
Phase
Presentations to
the purchasing
staff, Executives
in plants,
addressing
customer
concerns
30-40% NAMs
time
Signing of the
contract initiates
this phase
Half of NAMs
time for the initial
months
30-60 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
initiatives
15% of
NAMs time
Successful NA implementation
Wescos Organization Structure
Market Analysis and Opportunity
Large,
Large, Fragmented
Fragmented Market
Market
Value
Value of
of Distribution
Distribution
$40 Billion
Construction,
MRO, and OEM
Markets
SUPPLIERS
Sales
CUSTOMERS
Delivery
Procurement
Warehousing
Logistics
Service
Management
Marketing
MRO
Thousands of electrical and industrial
product manufacturers
Distribution to 150 suppliers
Competitive arenas:
Specialization, Geography, Peer
Competition with Product Specialist,
Retail Generalist, Regional & Local
distributors
Market Trends Benefit WESCO
Scale
Global sourcing
Value-creating solutions
Enhanced interdependence
Future of NA Program ?
The Issues:
Below expected Sales and Profits
Supplier/Distributor tiering and alliances
Proactive 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 volume
Excessive demand of NAMs time
Reluctance to abandon local distributors
Becoming competitors to electrical contractors traditional business thus threatening
their own business
WESCO A Total Supply Chain Solutions Provider
Providing Broad Solutions to
Customers
Extensive products and services
Broad geographic coverage
Deep penetration into customer processes
Difficult to disintermediate
Present
Future
Market-Focused
Branches
One WESCO
National Accounts
Global Accounts
Integrated Supply
Complete
Supply Chain
North American
Centric
Global
THANK YOU
WESCO Growth Strategy & Financial Objectives
Growth
Growth Strategy
Strategy
Markets &
Customers
Geography
Long
Long Term
Term Financial
Financial Objectives
Objectives
1. Grow faster than the market plus
acquisitions
2. Maintain industry-leading cost position
Products &
Suppliers
3. Expand operating profit
4. Provide superior return on invested
Target sales and marketing initiatives on
attractive verticals
Sell complete set of products to all
customers and service all their locations
capital
5. Generate strong operating cash flow
through the cycle
Expand product and service portfolio and
capabilities
Expand internationally
focus on value creation
WESCO Evolution
Captive
Captive
Distribution
Distribution Arm
Arm
of
of Westinghouse
Westinghouse
1922-1994
Growth
Growth Strategy
Strategy
Deployed
Deployed
1994-2001
Sales grew to $3.7B
management and
25 acquisitions
Clayton, Dublier & Rice
Expanded
LBO in 1994 by
~$1.5 Billion in sales
~175 Branches in U.S.
and Canada
~85% non-residential
construction
Limited supply
relationships other than
Westinghouse
geographic
footprint
Diversified endmarkets and
supplier base
Launched National
Accounts Program
Launched
Integrated Supply
Leveraged
recapitalization
1998
IPO 1999
Recession
Recession
and
and Recovery
Recovery
Growth
Growth
Accelerates
Accelerates
2001-2003
Severe industry
2004-2008
11 quarters of double
downturn
High financial
leverage
Suspended
acquisition program
Strong free cash
flow generation
Invested in sales
and marketing
programs
Launched LEAN
digit sales growth
Sales grew to $6.1B
Invested in sales
capacity expansion
Restarted acquisition
program
7 acquisitions
with $1.1 B sales
Product category
expansion
Improved capital
structure
Expanded marketing
programs
Expanded LEAN
Severe
Severe
Recession
Recession
2008-2009
Significant cost
reduction actions
taken
Record free cash
flow generation
Strengthened
capital structure
Accelerating LEAN
and extending to
customers
International
expansion
Investing in
attractive growth
verticals and
geographies
