1. What is your action plan? Do you recommend that WESCO be proactive in Managing its NA program or would you prefer that WESCO adopt a passive approach?
Action Plan: WESCO should definitely adopt a proactive approach in managing its NA program. A proactive approach in managing the NA program would definitely fulfill the company’s visions of becoming a $ 3 billion company with an average EBIT of over 5% by the year 2000 (from its 1996 figures of $ 2.2 billion company with an EBIT of around 3%.) Though the current position was not conducive to continue the program further, because the company was already at a loss of complete 2% in their revenue as compared in the previous year, still looking towards a long term prospective this program can gain higher margins if a planned strategy and proper segmentation of customers is created by the management. This would require the management to look in to the technicalities of the various segments of customers and the values provided by the company to cater them.
Key customer segment should be focused by the NA managers and the values provided to them should be effective and the customer should acknowledge them.
In segments like focus and others were the company is providing values more than the actual profits should be redesigned .Emphasis should be given on serving this base of customers in the bracket so that an overall profit is gained in the deal. A reorientation of values provided by the company is essential.
Effectively managing the sales team is also essential for the management because a substantial amount of cost is incurred in maintaining this force. Local sales representatives who are responsible for a particular territory should focus on their individual sales not the sales that were brought by the NA managers.
2. Where and how does WESCO add value to its suppliers? Its customers?
WESCO is the leader in providing a wide range of services and procurement solutions that draw on its product knowledge, supply and logistics expertise and systems capabilities, enabling its customers to reduce supply chain costs and improve efficiency. These programs include: • National Accounts – They coordinate product supply and materials management activities for MRO supplies project needs and direct material for customers with multiple locations who seek purchasing leverage through a single electrical products provider; • Integrated Supply – They design and implement programs that enable its customers to significantly reduce the number of MRO suppliers they use through services that include highly automated, proprietary electronic procurement and inventory replenishment systems and on-site materials management and logistics services; and • Construction National Accounts – They have a dedicated team of experienced construction sales management personnel to service the needs of the regional and national contractors. Top engineering and construction firms which specialize in major projects such as airport expansions, power plants and oil and gas facilities are also a focus group. Value added to suppliers
Three reasons behind EES suppliers went to distributors like WESCO: •
Most suppliers made only a part of the customers EES (Electrical equipment and supplies) requirements and the customers preferred a complete one-stop solution.
Relatively small volume of business from each customer can make direct sales economically unfeasible for the EES supplier.
Sales were also a cost effective vertical for the company and the company wanted to get away with that in order to increase its overall margin.
From Exhibit 7 it is clear that by “WESCO Selling story”, it adds value to its suppliers as below:
WESCO recognizes customer need or opportunity
WESCO ensures that customer identifies WESCO/Supplier as potential solution
When customer commits to WESCO/Supplier; through the Customer/WESCO/Supplier act—Value is created, demonstrated, and documented.
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