Company Background

About Company:
➢ 3rd largest full-line wholesale EES (Electrical Equipment and supplies) distributor, provides integrated
supply services, OEM direct materials and electrical utility solutions
➢ It has strong ties with 150+ suppliers and creates value for them by generating demand for their
products
➢ Creates value for the customer by being a one stop solution provider for procurement, inventory
management and cost reduction

Goal
To achieve $ 3B in revenue with 5% EBIT keeping average growth rate of revenue at 7% and
average growth in profitability at 14%

Plan
Identify value addition opportunities and being customer centric. Half of the revenue growth will be
driven from acquisitions and half from the National Account (NA) program

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 Case Background
Issue
NA program which was launched in 1994 had not delivered the expected increase in sales and
profitability

Objective
To analyze the NA Program, understand the limitations and make recommendations

Decisions
1) Whether to continue the NA program or not?
2) If yes, whether to develop the NA program to be proactive or reactive?
3) Whether the issue with NA program is internal to company? What could be done to realign the
internal stakeholders to make the NA program fly?

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 Business Model
Traditional Business Model
Aggregate products from different suppliers to help
customers get all EES requirements at one place
WESCO New Business Model
Demand aggregation from different plants of a
customer to offer lower TCO and realize cost
saving potential through value added services

Suppliers Distributor Customer

Customer Segment
Electrical Contractors
Industrial customers
CIG
(Commercial Institutional Government)
Customer
Objectives
• Focus on low price from selected distributors
• Bid and quote business
• MRO (Maintenance, Repair & Operations) activities
• Multiple industry segments with ongoing need for EES products
• Small, stable and low potential customers for WESCO
• Includes hotels, motels, hospitals, universities, etc.

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 NA Sales Organization
Branch Sales Rep
Inside Sales Rep. Outside Sales Rep. NAM (National Accounts Manager)
• One inside sales rep. for each • 4 Outside sales rep in a • 18 NAMs across the country.
outside sales rep. branch, each handling 20- • Each NAM responsible for a particular
• Process new orders, expedite 40 customers. industry Segment
existing orders and provide • Identify sales opportunities • Handles 10-15 customers and 15-20
support to Outside sales Rep. and develop solutions prospects at a time
Customer Retention Customer Acquisition

NA Customer
Key NA Focus NA Other NA

• Top 50 clients by sales volume • Next 100 clients by sales volume • Next 150 clients by sales volume
• EES and non EES product • Partially non-compliant to NA • Focus on hunting licenses, usually
agreements for multiple sites agreements limited to a single product
• $180mn sales revenue • $52mn sales revenue • $32mn sales revenue
• $4mn sales per customer • CVI – 105 • CVI – 100
• CI – 80; PI – 90 • CI – 110; PI – 93 • CI – 110; PI – 95

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*CVI *CI *PI
 Why NA Program?
EES Industry Trends
➢ Stringent supplier/distributor quality programs
➢ Long term collaborative JIT contracts with
suppliers/distributors
➢ Focus on reducing the procurement costs
➢ Looking for one stop solution for all the MRO
requirements
➢ Value added services such as inventory
analysis and reduction program
➢ Substantial investment by distributors to
improve service level and quality
➢ Distributor carries more inventory and
provides components on as-needed basis
➢ Distributor helps in streamlining the
procurement processes
➢ 70% of the customer’s MRO purchase
dollars comes from top 5-10 suppliers

As a response to changing market dynamics, aggressive growth targets and to create a source of
recurring revenue WESCO has initiated the NA Program in 1994

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 National Accounts Program
• WESCO aims to build long-term relationship with large customers, create sources of recurring-
revenue, get additional contracts from the customers and improve profitability
• Under National Accounts program, WESCO seeks contracts of the customers across all their plants
across the US, offering them:
• Significant savings due to the large contracts.
• Year-long competitive pricing and a wide range of value-added services for each of their plants,
reducing TCO

Maintenance or
Active Selling
• Calling potential Development
Stage • Post contract signing
customer • 30-60 days of intensive travel to Stage
• Presentations to understand the needs of each
• 6-9 month phase branch • NAM holds regular NIT
corporates
• Presentations to the • Formation of Local Implementation meetings, sales calls to
• Gets prospects thinking resolve difficulties,
purchasing staff, Plant team at each branch
and explain the • Order received after 90 days present further cost
executives, addressing
potential of the NA • 50% of the NAM’s time for initial saving avenues
concerns
program phase
• 30-40% of NAM’s time Intensive • 15% of NAM’s time
Prospecting Stage Implementation
Stage

Stages in NA program 6
 Challenges: NAM
Issues
➢ NAMs are not able to give enough attention at plant level
➢ Over-burdening on NAMs:
➢ Every NAM has 10-15 NA customers
➢ Each customer has 5-20 plants
➢ Additionally, NAM is responsible15-20 prospective clients in the stage of active selling, intensive
implementation, etc.

Root Cause
➢ Most of NAM’s time is spent on NA customer’s corporate offices
➢ Limited number of NAMs due to stringent NAM selection process being a bottleneck
➢ Every NAM needs to do active selling, implementation and maintenance requiring
different expertise (Conflicting Hunter & Farmer mindset)

Potential Solutions
➢ Increase the number of NAMs by considering external hiring and training them with on field
practices
➢ Selling & implementation (Hunter) and maintenance (Farmer) to be handled by separate NAMs

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 Challenges: Sales Organization
Issues
➢ Demands from few small accounts do not commensurate with their sales volume
➢ Opportunity cost to serve more valuable customers
➢ Problems in maintaining long term relationship with NA customers

Root Cause
➢ Some local branches received more business from non-NA customers
➢ Existing sales professional have hunter mindset (to acquire new customers)

Potential Solutions
➢ Business calls to be taken on NA customer prioritization
➢ KPIs alignment required to push NA program. Separate sales team or even
separate branches for major NA accounts to be explored

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 Challenges: Customer Compliance
Issues
➢ Customers treated NA agreements to be non-exclusive
➢ Poor alignment between customer’s local and corporate interests
➢ Reluctance at plant level to drop local distributors despite corporate mandate

Root Cause
➢ Contracts are not robust with regards to exclusivity
➢ Customer’s local branches had strong long-term relationship with local distributors
➢ Lack of communication and organization wide awareness about benefits of NA program
➢ Limited awareness on cost management at different levels of customer organization

Potential Solutions
➢ Ensuring alignment of customer’s corporate and local interests by forming standard homologation
roadmaps (visits to key plants prior to contract finalization will help in assessing their needs)
➢ Robust contracts to ensure minimum purchase commitment from customers
➢ Use value added services to create indirect exclusivity
➢ Partner with customers to provide workshops related to cost management for better alignment at
different management levels

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 Decision 1
Whether to continue the NA program?

➢ The EES industry trends and customer expectations are moving in the direction of integrated supply
➢ Ignoring this trend and going back to traditional ways may leave us lagging behind the competition
➢ NA Program provides WESCO with a unique opportunity to provide greater value to the existing
customers and acquire new customers, while improving the market position and profitability

Therefore, we must continue the NA program

➢ However, while the NA program looks good on paper, there have been roadblocks in implementing it
➢ These issues must be resolved by adopting the suggested solutions

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Proactive v/s Reactive Strategy
Reactive Strategy
Customer gets to know the benefits of IS through
research study or consultants

Customer approaches WESCO to understand the NA

program

NAM evaluates the prospect for potential savings and

Proactive value-added solutions
Strategy
Top management gives the mandate for the NA
program

Customer/WESCO/Supplier act – Value is created,

demonstrated and documented

Customer works with WESCO on next value creation

opportunity

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 Decision 2
Whether to develop the NA program to be proactive or reactive?

Proactive Reactive
➢ Low conversion rate but higher number of ➢ Low resistance, better adoption and higher
customers compliance to NA program
➢ Higher margins in initial years ➢ Higher conversion rate
➢ Lower compliance ➢ May not achieve the set revenue targets
➢ Higher marketing budget ➢ Lower burden on NAMs

➢ Considering that NA program is in nascent stage and majority of the potential customers are
unaware of its benefits, a proactive approach should be preferred
➢ Company’s target growth are more likely to be achieved with proactive approach

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 Other Recommendations
➢ Involvement of preferred suppliers early in the implementation process, where they can contribute
expertise and product knowledge to accelerate program implementation and the achievement of cost
savings and process improvements
➢ Extending established and successfully implemented National Account relationships to include Integrated
Supply by collaborating with other distributors to develop integrated product as service solutions
➢ Clearly outline the scope of NA program to areas where we have expertise and for customer demands
like managing janitorial supplies, collaborate with other solution providers in that area if it makes
business sense.
➢ Extend the same skills to new projects, catering to the customer's demand. While this might put us in
competition with electrical contractors but the relationship with contractors has been largely transactional
and are likely to continue with us as long as we have superior offering than other distributors.

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Thank You

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