WESCO Distribution, Inc.
Jim Piraino, is a vice president of Vasco Distribution Co., Ltd. (see Figure 1). At the end of June 1997, he was preparing for an annual assessment meeting of Roy Haley. Its primary agenda is a national account (NA). Refers to the national customer account - the translation of the project in the first half of 1997 (see Figure 2). Harley was developed by Wesko's development in the next five years to develop a magnificent planning, and the annual growth rate of sales volume reached 6% to 8%, and more importantly, the annual profit growth rate reached 12% to 16%. Harley said, "In 1996, our company's sales volume has $ 2.2 billion, and the ear-term taxation (eBit) accounts for 3%, I hope that we can reach 3 billion US dollars in 2000, interest tax The previous income has a share of more than 5%. Our goal is fully achievable. In the past few years, our customer's commercial purchase behavior has changed a lot. This provides us with a very important opportunity. It can provide greater value for our customers while improving our market positioning and profitability. I hope that Wasco can reflect its leading position: learning ability, coordination skills, and timely change strategy due to changes in customer demand. Ability."
Although the acquisition plan for other companies can contribute more than half of the earnings growth, many sales are still difficult to exceed their current profitability. As early as 1994, from the response to market changes, Weisco launched the national account project. They want to use the project to get additional profits and get an appropriate amount of profitability.
However, in 1997, the national account project has brought about expected sales and profitability growth. Harley asked Peloreno to check and propose improvements to national account projects. Harley told Pereo: "We need more goals through national account projects. For the current customer base and potential customer base, it is still our best profit growth point, but we need to use the project to get more Good results."
Prepare the National Account Evaluation Conference
As early as early in early May, Pereno referred to a customer of the National Account Project to the National Account Manager (NAM) Mike McKingley. The customer signed a protocol at the end of 1996. In the first five months of 1997, its account completed 40% of the planned sales, while the total profit fell 2% over the previous year.
Pereo reflects at the meeting:
In the account analysis before we sign the agreement, the national account project can establish a reliable, direct, exclusive service channel for our customers with our 28 subsidiaries in the United States. We believe that they can increase their sales of 1.5 million US dollars a year. However, since the implementation of the project since January, we found that the coordination between the customer's interests between the subsidiaries and the head office is unexpected. This is their first national payment agreement, but the result is displayed, although the headquarters bets great enthusiasm, some subsidiaries are reluctant to abandon customers who have established stable relationships with them. We must solve the problem that the project may be generated at the local level, and the management of the headquarters is only half of the tasks.
Pereo is ready for the second conversation, and the talk object is John Whitney. Whitney as the sales representative of Weskco, Has worked in a branch of $ 3 million in the company, and currently he worked in a national account customer's annual sales of $ 5.4 million. In fact, after the national account agreement is signed, the sales volume of the customer factory can only increase 50,000 US dollars a year, and the factory is 2 hours away from the Wesko branch, and the sales representative must once every half a month. visit. Whitney describes his current situation: For the company, they may be a good customer. But from our point of view, they and other national account customers need us to provide a large number of services with current or potential sales. If it is not the company, I am not willing to visit the national account customers I am responsible, even if I don't need to make long exchanges as the customer's request. The opportunity cost of providing services for these customers is too high - this is the case for me and the branch. I would rather spend the time to sell to other customers.
Pereo is also ready for the third conversation, and the talk object is Larry Worthington. Wuteton is a branch manager in Wasco, and he has long sold most of its sales through electrical contractors. In order to serve the current national account customers, his department requested to change the model of its operating sales. Wuteton considers: "In order to serve national account customers, we must put a lot of resources, which may make our customers who have signed contracts with us."
Pereo realized that he must immediately develop a clear plan for the upcoming meeting of Harley.
We must ignore some of the local reasons that causing insufficient national account projects. If we try to build a new way of doing things, this way does not understand and agree, this requires us to take a difficult decision. How can I bring a bigger benefit, is actively promoting the national account project to the client, or only when the customer shows certain attention, we have negatively launched the national account project. In addition, if we don't work in this regard, you need to stop action as soon as possible to avoid losing some important customers.
Electrical equipment and supplies industry
(Electrical Equipment and Supplies, EES)
Electrical equipment and supplies refer to any product required to transmit and use electrical (Figure 3 provides details of different products that form the EES market, see English appendix). Most EES products manufacturers have specialized product chains, and generally customers must purchase different series of products produced by different manufacturers to meet their electrical needs. Like other EES distributors, Westko is a miniature of many EES distributors that allow customers to meet electrical needs once.
Wesco Distribution Company
Wesco Distribution Company was founded in 1922 as a sales force of WESTINGHOUSE. At the beginning of the 1990s, the company's performance was unable. As a result, in February 1994, the company was sold to Clayton, Dubilier & Rice, from Harley as a CEO. Under the leadership of Harley, the company's annual sales were developed from the original $ 1.2 billion in 1996, and the sales volume of the United States was $ 1.6 billion, and the company became the third of the United States. Large wholesale distributor. (See Figure 4)
client
Weissco has three customers: Electrical Contractors, Industry Customers and Commercial / Institutional / Government (CIG) Institutions. (Figure 5 provides more details of each customer-wide web company characteristic) Electrical contractor
Electrical contractors are installing lighting and electrical systems for buildings, which has been the main customer foundation of Wasco in the past. In 1996, the sales volume of the electrical contractor market was estimated to reach $ 17.9 billion, and its sales brought to Wesco will reach $ 41,500 million. This is generally considered to be bidding bidding (Bid-and-quote). The contractor obtains this sale by the contract bidding, where a very small number of contracts need to list a list of all components of the EES system (shown in Figure 3). After winning, the contractor can get the price list from some EES distributors based on the list of materials. Next, it is limited to the fixedness of the contractual list, and the contractor should choose the distributor who seems to send all materials on time. The contractor will then negotiate with these distributors and orders to the lowest distributor.
Industrial client
Industrial customers accounted for only 1 billion US dollars in the sales volume contributed to Wesco in 1996, but it is expected that their importance will increase. Industrial customers have a long-term requirement for EES product maintenance, repair, and operations (MRO Activities), such as replacing the unencoupped electric gates, the repair industry has been worn, and upgrades the illumination and drive system. Make it more efficiently using energy and cut costs. In order to facilitate MRO activities, industrial customers hold an inventory directory for EES products. Under the leadership of Harley, Wasco attracted customers in different industrial sectors, including utilities, manufacturing, paper industry, logging, petrochemical, mining metallurgy and transportation industries. (Drawing Table, which can see more important industrial sectors through Figure 6) The Weiss National Account project is mainly for industrial customers with high potential.
CIG customer
Wesko's CIG sales is actually small than its electrical contractors and industrial customers. In 1996, the sales volume of this market was estimated to have just over $ 59 billion, while Wesco accounted for 2.5% of them. Business customers such as hotels and motels, public agencies such as hospitals and universities, these are small, stable and potential customers for Wesco. On the other hand, the demand for the government will focus on, and they tend to bring several big orders.
Manage different customer types
Pereo has encountered some difficulties in managing various large customers.
Contradictions are in different sales forms of different customer types. For example, industrial clients require the stability of EES product supply, making it easier to talk about growth contracts. They usually require a high level of service. The electrical contractor is different, and they have a project psychology. Their demand varies with the project, and usually they define this relationship with us according to different transactions. Contractors are generally winning orders by providing customers with low prices, so they want us to provide them with possible optimal quotes, and this will make our profit levels very low. And the enterprises in this field are not guaranteed, so we are difficult to accurately expect in the future.
These different types of sales requirements have different management models. For example, our sales representative will express like a "hunter" when encountering contractors. Every day, they are going to search for the contractors who win the bid in the project, propose quotes to them, negotiate on the transaction, and continue to advance. At the same time, you must constantly search for new customers. On the contrary, in order to obtain industrial customers, sales representatives should express like a "farm master". They have to know who their customers, and once they get a contract, this often means a long-term sales relationship. The main interactive mode is to ensure a satisfactory service and introduce new products and services to customers, and these products and services are customer ready. Managing these customers is to create a relationship and have to be a good material manager. In accordance with the practice, we all provide services to contractors. We have some of our sales representatives and branch managers all have a "hunter", to make them transform into a "farm master" but it is not easy, because they are constantly changing new opportunities, actually pursue themselves Remuneration. supplier
On the other side of the distribution, Wesko is in close contact with more than 150 suppliers, including Cutler-Hammer, Tomas & Betts, Philips (Philips) Leviton. Pereno said:
EES suppliers have reasive reasons to enter our distribution companies. First, most suppliers only produce some of the products in the EES list of customers, and customers hope to get all products at one time. Second, each customer is relatively small to make EES suppliers to complete direct transactions from economic perspective considerations. Third, it is also the most important, we have added a lot of added value at different stages of the entire sales process. We call this as the sales story of Wesco. (See Figure 7)
competitor
The operation of Weissco is traditionally focused on three competitive areas: specialization, geographic, equivalent customer groups (see Figure 8). First, like other full-line product distributors, Weisso share the market with product monopoly and multi-product retailers. Product monopoly mainly pays attention to the function of small products (such as alarms and street lights). Multi-product retailers such as hardware malls and home centers, selling simpler products to individual families and lackers. They have links with a wide range of suppliers, but they have not reached the depth of all-line product distributors and suppliers.
Second, as a national supply chain, Wesco also competes with regional supply chains and distributors. Regional distributors are competing for regional sales and Weiss. Perenote pointed out, "Although they don't have our national size and corresponding purchase power, they are often difficult to cope with competitors. They have established excellent long-term relationships with customers in their own market. To seize their market. It is not easy. "
Weisso also faces competition from regional supply chains. Perero explained:
Although regional distributors are much smaller than us, they are more concerned about the regional markets they compete with us. From the profits, this is the best one or two distributors in its regional market.
In the same customer base, Wesko also competes with some major national distributors. In 1996, it ranks third in the middle of these distributors, just lags behind MRO businesses, WWGRAINGER, and the largest electrical, communication and data products and integrated service distributors in the United States. Graybar. These competitors are also chasing the same customer management strategy as Wasco.
Branch Office Organization Structure
Wesco has 279 branches in the United States. Each branch maintains its own inventory, with their own profit and loss responsibility, there is real autonomy in their own area, including the right to find customers. In 1997, one-third of the Westco branch serve a particular industry; these branches hold a certain amount of inventory, the number of inventories adapted to a customer department, but this also affects The ability to serve other customers in this region. Wesco found that the visual narrow illnesses of these branches have been severely aggravated because they only have the ability to serve some specific customers rather than any customer. Now, Westko does not have any plans to change the positioning of these branches. In the other two-thirds of the Wesko branch, the general Wesko branch has 9 million to $ 10 million in sales, including 40% of industrial customers, 40% contractors, The rest is CIG customers. Direct cooperation between branches is very limited, because every branch is only working in its own market. In addition to the manager of the branch, the general Wesko Branch has four external sales representatives, four internal sales representatives, a staff member specializing in the warehouse, an administrative clerk (he is also responsible for inventory) and an office manager - Responsible for branch policies, procedures, training, and office maintenance. External sales representatives are 20 to 40 customer services, and the total market potential value is from $ 1 million to $ 3 million. These representatives are responsible for visiting customers, discover new sales opportunities, and develop new solutions with customers. For each external sales representative, there is an internal sales representative corresponding to it. The responsibility of the internal sales representative is to deal with new orders, speed up existing orders and provide all necessary services and support. Broadly said that the external sales representative won the customer, the internal sales representative retain customers. In the past, the sales representative shuttkened to and from the internal and external sales positions before they became a branch manager. This model is now gradually fade, because each work is increasingly needed to be more professional skills. The salary of the sales representative is a fixed salary plus a variable commission. Regardless of whether sales are facing industrial customers, contractors are also CIG customers, commissions are the same.
The trend of EES industry in the 1980s and 1990s
In the late 1980s, the EES industry has witnessed the huge changes in sales form like other products and supplies - there are many major customers to deal with suppliers and distributors. In order to narrow the quality gap to participate in international competition and improve their overall competitive position, US companies have implemented a strict supplier / distributor quality plan while also requiring a reduction in prices. During this plan, the customer cuts their supplier / distributors and signed a long-term contract with the remaining supplier / distributors. These suppliers / distributors feel that real investment should provide high level of service and the required quality 1. At the same time, the redesign of organizational structure has prompted customers to calculate their procurement costs, that is, the cost of orders and orders and the cost of regulatory suppliers / distributors (see Figure 9). In order to improve the effectiveness of the supply chain, customers reduce the inventory, which makes the instant (Just-Time (JIT) procurement policy becomes necessary. According to this policy, suppliers / distributors maintain inventory and maintain the level of inventory according to the situation and provide products to provide products. (See Figure 10)
Customers and selected suppliers and distributors are not very common in JIT contracts that have developed toward long-term collaboration, which makes problems more complicated. Perero explained:
Many of our industrial customers still like to handle sales with old methods - while maintaining and multiple EES distributors, this relationship makes them maintain a certain distance from distributors, and their interaction is based on distributors. Quote. (See Figure 11, the evolution of customer needs) They regularly send "Request for Quotation (RFQ)), including all product information they need to give some EES distributors, then select the minimum distribution of overall prices Business. These customers seem to have not interested with the streamlined procurement processes collaborated with their distributors, and resist various changes. Wesko's National Account Plan
The National Account Plan in Wesko is established in this premise, that is, a large contract means significant savings to customers and Wesco. As a exchange of EES sales to Wesko, the national account customers will receive a competitive, up to one year, and the national pricing, regardless of their sales. At the beginning of the national account plan, many contracts are only limited to individual products. The National Account of Wesko's National Account, Art Hersberger, said:
In the past many years, all major customer agreements are only for a single product before Wesko produces new ownership. In fact, more than 80% of the agreements are just for streetlights. These protocols are essentially product driver and only low value-added services. For each contract, we want to sign such an agreement to purchase the EES products they needed here throughout the country. What we have learned is that customers think of these agreements as non-exclusive. Many customers are even with other national EES distributors to sign the same product contract.
By 1997, there were 300 customers in the National Account Plan. Pereo divides this 300 customers into three categories: Key Customer (FOCUS) and other customers (Others).
Key customers are the heads 50 national account customers in the sales volume list. Among these customers, Wesko's development has exceeded the relationship between single-product, single site, and implemented some form of multi-site agreement (Multi-Site Agreement). In many cases, Wesko will provide a variety of EES products in any of these locations, and some customers even ask Wesco to provide non-EES products. Pereo said: "Although the average sales of each customer is slightly less than $ 4 million, the sales volume of these 50 customers exceeds $ 180 million in 1996. In most cases, we can meet about 60% 90% of customers EES requirement. When we rely on these relationships, we still can't make all customers depend on us. "He continued:
This is completely different from other 250 customers. Our central client consists of 100 accounts below the key account, and they use us to meet their main needs. These customers can bring us $ 500,000 average annual. In addition to some customers and we signed a multi-product or multi-place protocol, most customers are just a single commission, and the protocol is also usually limited to a single area.
Half of national account customers in the sales volume list is like a "hunting license" (Hunting Licenses), Herssberg said: "In order to get a very low price in us, these customers allow We use opportunities to sell within their institutions. Generally speaking, these customers have less than $ 250,000 per year. They are generally non-exclusive, single product account. We also need further efforts to develop their potential. "
National Account Manager Sales Organization
In addition to the sales force of the branch, there are 18 national account managers in Wesco nationwide. In all, half of them reported to the National Account Director, and the other half reported to Payrero. Each 18 national account manager is responsible for a particular industrial sector and 10 to 15 customers and 15 to 20 potential customers. The National Account Manager hopes to explore potential customers, leading to the new national account customers to actively sell and implement process, and maintain long-term relationships with existing customers. For existing customers, the National Account Manager is responsible for sales and profit objectives. They hope to meet all the procurement staff of the customer headquarters to ensure that the number of local staff is established in accordance with the number of national account contracts and promoting the local work of the Wiss Branch sales representatives and national account customers. Establish relationships between personnel. Each national account customer has 5 to 20 points across the country. The National Account Manager can't spend too much time in a certain place, but need more to concentrate on the customer headquarters office - the national account agreement is usually Customer headquarters office negotiates and monitors. In this way, the sales representative of branch is responsible for establishing relationships in places.
Most of Weissco's national account manager is a successful branch manager before they engage in this work. Because it takes a long time to establish a relationship with the national account customer, it also requires a wide range of skills, so choosing a national account manager is a very difficult and hard process. Since it is necessary for a national account manager that requires industry expertise, it is necessary to have a deep understanding of Wesko's sales and the ability to support the establishment of local relationships with national account customers from the sales representative. It is difficult to be from the outside. Find the appropriate national account manager candidate.
For all customers' sales, the National Account Manager charges commissions. At the same time, the branch sales representatives assigned to this account also get commissions from the local factory or equipment of the national account customers in their region. Double meter of sales revenue ensures that the branch office staff will not be threatened by the National Account Manager in their local access to national account customers. In fact, the branch urgently requires the national account manager because the sales representative believes that this is the easiest way to promote sales.
Establish a national account agreement
The process of establishing the national account protocol includes many phases. In the beginning of obtaining customers, the National Account Manager invites customers who have the potential for EES. They stated the total cost of all purchasing staff to the customer's headquarters and how to help the company reduce purchasing costs. A National Account Manager Bill Lawry explained:
MRO orders from industrial customers from $ 100 to $ 135 are different. However, customers also need to spend $ 150 to generate and handle each purchase order itself. Even the best procurement agents can only get 3% to 5% price discount. If you are responsible for this, you want to get rid of the $ 150 purchase order at a time. Therefore, it is necessary to reduce the cost generated in the procurement, but it is not necessary to classify various changes in every organization, and this is what our national account plan is required. Many of us is only to think about some thinking of potential customers.
When potential customers express a strong interest in Weissco's recommendations, the account has entered the active sales phase. In this stage of 6 to 9 months, the National Account Manager made statements to all purchasing staff and other executives of each plant, paired the Wesko's branch and potential customer branch, talking about customers concerned. Problems such as employee placement, inventory, emergency services, etc. Centralized sales stages need to spend 30% to 40% of each national account manager.
When the sales efforts are successful, the signing of the national account contract will enter a more concentrated implementation phase. In the beginning of the month, this requires half of the time of the National Account Manager. The National Account Manager began a part of the Weiss National Executive Team (NIT). This team includes directors of national accounts and national sales support services. As part of the team, the National Account Manager works with a colleague of the customer's national executive team. These two representatives visited each customer factory and meets the local executive team to help perform national account instructions and clear any initial stumbling blocks. Herssberg explained: "After the contract is finally set, a national account manager may travel 30 to 60 days with customers' colleagues. This makes them meet all the branch members and anygregated during the meeting. Decided. In 90 days, if the execution is successful, the National Account Manager will provide a list of projects from each branch to Wesco, and will also obtain a detailed management plan and value-added target area. " The main initial work, the account will enter the maintenance and development phase. Maintaining a national account means continuing to convene any difficulties in which the National Executive Team Conference to resolve the place where the local is not resolved and put forward new cost savings. At this stage, there is always at least 15% of the national account manager, and it takes more time for large customers. For example, the National Account Manager Mark Houston estimates that he has spent 75% of the time in 1996 to maintain two key national account customers, one of the annual sales volume is $ 29 million, and the other year is 9 million US dollars.
When entering the maintenance phase, Westko can reduce the cost of customer service, thus increase the total yield to more than 20% compared to the contractor account. At this time the contractor account has a yield of 11% to 18%. In addition, Wesko provides the lowest price for these customers, and Perero explained: "Because we participate in the plan, we can get better prices and have a lot of savings." On the contrary, if the execution process stops The Westco will find it will be in high cost and low yield state.
A successful example
A success of the National Account Plan is that Wasco and an industrial client have established partnerships through signing contracts, which is responsible for Walter Thigpen, Walter Thigpen, by the National Account Manager. This customer has taken a wide range of exchanges and training programs at all management levels, as a first step in cost management, from the first day to reduce the burden on the supplier and support in advanced management operations. West Sig.com explained:
Although we didn't sell any sales before and this customer, in 1995 they invited us to compete for their EES sales. In the selection process, we use the questionnaire to understand the details of the reducing customer inventory and energy cost plan. We decided to serve only for three factories. In order to serve the three plants, we feel that it is best to acquire existing local distributors in two factories, and open a new branch near the third factory. I made a statement to the Choice Board and won the account in June 1996. We will have a good idea for the implementation.
Once the agreement is signed, we set up a national account executive team and held a national publisher to the beginning of our implementation task. In the next few months, we have received each customer factory response, and agreed to hold a national executive team meeting to propose a LIT problem in various factories. According to the plan, we acquired two distribution agencies and set a new institution. We have a complete energy review and recommend a more effective energy system to all plants. We also reduce inventory and execute EDI purchase 3. In addition to the establishment of a difficult difficulty in the establishment of the information system, the entire process works in our plan. Everyone in their organization seems to be accurately knowing what will happen in the process and how to manage these changes.
By June 1997, the centralized implementation phase was over. Sales increased ten times from last year, reaching 1 million US dollars per month (see Figure 12). In the reduction in transaction cost, energy savings and inventory reduction, Wasco can prove to save more than 20% of the cost, which is far beyond expected (see Figure 13). General characteristics of successful national account relationship
Pereo summed up the results of the in-depth analysis of all major national account customers. He said:
There are a few points that should be aware of the development of a successful relationship with national account customers. First, we must understand our customer's procurement strategy. For most customers, more than 70% of the annual procurement budget is mainly occupied by 5 to 10 suppliers. Therefore, customers are very interested in developing the relationship between these suppliers / distributors based on the value over the price or more (see Figure 14 - customer procurement). The number of dollars and efforts required for the procurement involved in these relationships make customers no longer pay attention to trading prices, and mainly focus on total procurement costs and ownership. They also welcome recommendations for inventory management, warehouse maintenance and co-ordination.
"That's just part of the whole process,", Pereo continued:
The advanced management of the customer headquarters is also important to promote these processes. We often find that when a customer hires a consultant, this situation occurs on how to develop a problem in the operation, manufacturing and service to develop more effective direction. Some very successful national accounts often start from the customer's request, and the above research is followed. Once the superiors have a request, weak resistance from other aspects of organization is relatively easy to overcome. Even in the advanced management of the customer, there is also differences, such as the vice president responsible for procurement hopes to complete their procurement tasks through us, while the CEOs advocate contact with retailers to complete their procurement tasks. .
Labori added:
In some national account relationships that are not very successful, the difference in the programs and procurement have not been expected to implement it very difficult. In some cases, the list of supplies in the local factory and the list included in the National Account Agreement are completely different. Local Wesko branchever finally resolved all issues in the ground, and customers usually do not provide any cooperation. In these cases, you can try our best to try, but this is often inappropriate. All staff of the Customer Company accuse us not work enough to work. The local purchasing staff and materials management personnel do not cooperate because it needs to change their system. Our members have encountered blocked, and they lived in the implementation of this headache and faced with weak potential sales. Even if the National Account Manager will pay attention to easy-to-manage accounts. No success, there is almost no way to restore the national account agreement.
"Regional relationship can have a lot of impact," Pereno explained:
In all our successful examples, our branch of the manager and regional representative has a ready-made relationship with the local staff, which makes local factory services relatively simple. It is very interesting. Our main weapons of local and regional EES distributors provide standardized procurement and cost-effective opportunities for national account customers. This is quite attractive for all the procurement staff of our customers. But this is not what all purchasing staff of the factory level. Their strong cornerstone is based on the management of their own suppliers and development of the local factory. When you enter these accounts with the national account contract unless they know you, their first reaction is to throw you out. The contract contract has eroded their power and affects their status. According to rational ideas, who wants this kind of thing?
The next millennium national account customer
Comprehensive supply and "new era of procurement"
As part of their efforts to win a single source (Sole-Source) protocol, Wesko provides customers with value-added services, such as inventory analysis and inventory reduction. Although this is required to be high and need to intensively work hard, these programs have brought substantive savings for national account customers again. These conservation prove that the yield of Wesco is correct. of. However, recent situation has changed, and some of the major national account customers in Wesko require more service commission. The Comprehensive Supply of Weskko explains Bill Cenk explained:
We have found that national account customers have reached a new stage in 2 to 3 years after successfully and their 5 to 10 suppliers / distributors build partnerships. At this stage, the cost of supervising these upper suppliers / distributors declines to 10% -20% of their total purchasing costs. 4 In fact, 10 suppliers of suppliers / distributors account for more than 70% of customers MRO purchase, but only 20% of customer procurement costs.
These customers who purchase hundreds of other suppliers / distributors only account for 30% of customers, but more than 80% of purchasing costs. These customers will manage and monitor small suppliers / distributors through one of the top 5 to 10 suppliers / distributors, reducing their procurement costs. In fact, these customers are creating the Supplier Tie (see Figure 15). The highest level of suppliers are called "primary" or "first tier" supplier. They profit through the price of high products and services, and these products and services are provided by the "Second Tier" supplier / distributor. Customers don't mind paying a quite high price, because the price increase can be made up of the price of procurement costs.
As early as 1994, shortly after Harley came, he expects the development trend of external procurement and use this method internally and in the main customers of Weskco. In fact, one of the main reasons for Harley established the Weiss National Account Plan is to develop a new path to provide a comprehensive solution (IS) to customers.
Shenke added:
Now, when the national account customers and potential customers are required to bear the sales of different from our traditional activities, they decide to do or do decide in Pittsburgh. We have a detailed process to analyze the cost and potential benefits obtained from these relationships. First, we use public availability related products and discount structural information 5, from additional sales. Second, according to the past experience, we estimate how much cost is serving this customer. If the product / service is not processed before, then as a reference or benchmark, we look for existing products / services in the combination. We also consider the time available to the relevant national account manager. Overall, in Pittsburgh, we are doing well in estimating the benefits and costs in every case.
But for many people in our company, this is still a special process. For example, in the past six months, we were asked for a customer to shoot snow, a worker agent for another customer management office and a natural gas demand for the third customer managing enterprises. This is not to say that these things are in principle. If the yield is good, then it makes sense. In particular, in Harley to the definition of integrated supply, this is what we can't avoid. We value added for our customers' MRO procurement process, which is the bottom line. The problem is whether we should make it compliance, that is, every customer has come to us, what we need to do. We need some fast answers because every major EES sales competitor has begun to discuss the need to use IS philosophy to manage their customers.
Another area of Shenke care is another new trend in the big national account customer:
Some national account customers have taken cost reduction routes, which is a bit different from the division level. These customers discuss the formation of alliances and non-competition distributors (see Figure 15). They want to partnership with MRO vendors and distributors and provide a one-stop (see Figure 16) about the nature of MRO purchases of this type of customer). They hope that we can share warehouse facilities with other distributors, create sub-order formats, develop comprehensive product / service solutions, and more. What we face is how to make a plan for these migration paths. Without the benefits of consolidation with level, each competitor will have to learn the sales and integrated logistics functions and systems of other companies. What should I do if every customer gives them a set of different suppliers and distributors? Developing these systems is quite expensive unless we can copy this process in these customers. However, if Weskco has established a league with other companies, it is in the leadership, so even if the solution is proposed before the customer requests, and if the customer does not agree with our partners, we may lose their trust. We also have the risk of adopting new forms of competition, because we have to compete with our alliance.
Recently, Pereo believes that the comprehensive supply solution will compete with some traditional customers found the electrical contractors. A Weiss Branch Manager Donald Mitchell believes this happens during the implementation of the branch level.
In our national account plan, we tell Industrial customers we can achieve significant value increases by auditing their electrical systems and recommendations that can improve the quality and efficiency of these systems. These customers now want us to apply the same technique on a new project. Therefore, if we want to get their MRO sales, we also need to involve the detailed description of the new system and the traditional sales of electrical contractors. In these cases, the electrical contractor regards us as a competitor and decides to stop from us to buy the EES products they need.
Preview: What should Weskco do?
Pereo has to solve some problems. Based on the budget of $ 1,2 million in 1998, it is important to decide whether to continue the national account plan. Pereno said: "If we decide to give up this plan, this one thousand 2 million budgets will be turned to him. If we want to continue, we must make a successful case. Now is a metrics account Is the planned time? Westco should take a positive attitude in developing national account customers, or only meets the customer's clear needs? If you decide a positive gesture, then West Wesco should define this How does the supplier / distributor level and supplier / distributor alliance, what should the company do? How do they manage their traditional customer base during this period?
Pereno said that takes a positive attitude requires substantial investment:
The efforts to pick out new national accounts are futile unless we know how to optimize our existing national account relationship. The strong relationship with customers has brought us great benefits, which may even bring us more benefits in the future. Do we need a better way to manage our current national account customers? Do we need a better model to expect our customers' needs? Can we manage the migration path of a national account customer? When we realize that every customer is different, how will this help us make reasonable decisions, that is, what kind of service we really need to provide our national account customers? How should we plan to deal with new trends in national account customers? Do we need to recombine our company's structure?
Reactive Model can only help attract customers with sufficient interest to choose from Wesco service. The issue of the only concern for this Pereo is that Weskco will soon lose its potential key customers. There are some cases here that they have already happened. One of us and our best customers have established a second level of relationships, which in the past often purchased the EES products they actually needed here. This customer should have become our "key" national account. Although we have traveled directly with our customers in the past 12 months, this situation has changed. Now we have some products to sell to Smith industries, a strong distributor. And this company is high for our price and then sell it to this customer. And we have lost contact with this customer.
Note:
1 Do not carry out these investments means losing the risk of sales provided by these major customers. More importantly, once a chance is missing, in the process of trading with that customer, the distributor will take many years to find another opportunity.
2 A national account customer who purchases a street lamp completely from Wesko is an example of a single product, a single location relationship.
3 Electronic Data Exchange (EDI) is a standardized system for information exchange between electronic procurement and company.
4 The procurement cost is the cost of the order and the cost of supervising suppliers / distributors. This is different from the product cost and service itself.
5 In many consumer and consumer industries, third-party organizations publish the product detailed description, price information, quantity discounts of different manufacturers' special conditions. This information is disclosed, it is easy to use. For example, in EES sales, the International Electrical Manufacturing Association Publications and Materials Table of International Electrical Manufacturing Association published as an industrial reference book.
