WESCO Distribution Inc

Group 9Apurv GuptaKeshav BajajKriti ChowdharyRohit JainVishal Kumar

WESCO

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

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

Market PositionMarket PositionBackground

WESCO - Customer Analysis

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

Customer No of customers

Customer Needs Total Market Size /Share

Relationship

Electrical contractors

987 Deliver in time at least possible price

$ 17.9 BN/ 2.6% Tender based (Bidding)

Industrial Customers

465 One stop solution for MRO needs

$ 16.7 BN/ 6% Long Term JIT

Commercial, Industrial and Government (CIG)

148 NA $ 5.9 BN/ 2.5% Stable

National Account Program

National Account Program – Customers

Next 100 customers after top 50 clients by sales volume

Under utilize WESCO to satisfy their major needs

Sales – $ 52 Mn CVI - 105 Cost Index - 110 Price Index - 93

Top 50 clients by Sales 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

150 Clients Hunting licenses Sales - $ 32 Mn Product only, non-

exclusive accounts

CVI - 100 Cost Index - 110 Price Index - 95

Key ClientsKey Clients Other ClientsOther ClientsFocus ClientsFocus Clients

Successful NA Development Stages

• Calling high potential EES

• Presentations to get prospects thinking

• 6-9 month Phase

• Presentations to the purchasing staff, Executives in plants, addressing customer concerns

• 30-40% NAM’s time

• Signing of the contract initiates this phase

• Half of NAM’s 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 NAM’s time

30%

12%

2%3%3%

5%20%

2%

20%

1% 1% 1%

Customer Cost Savings

Productivity Improvement Inventory reductionOther SKU deletionsProduct Substitutions Price ImprovementEnergy Savings TrainingTransaction Cost reduction Service ImprovementAdministrative Improvement Application Engineering

Successful NA implementation

Wesco’s Organization Structure

Market Analysis and Opportunity

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

Large, Fragmented MarketLarge, Fragmented Market Value of DistributionValue of Distribution

$40 Billion Construction,

MRO, and OEM Markets

• Procurement

• Warehousing

• Logistics Management

• Scale

• Global sourcing

• Value-creating solutions

• Enhanced interdependence

• Sales

• Marketing

• Delivery

• Service

MRO

Market Trends Benefit WESCO

SUPPLIERS CUSTOMERS

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 NAM’s time Reluctance to abandon local distributors Becoming competitors to electrical contractor’s traditional business

thus threatening their own business

WESCO – A Total Supply Chain Solutions Provider

Present Future

Market-Focused Branches

One WESCO

National Accounts Global Accounts

Integrated SupplyComplete

Supply Chain

North AmericanCentric

Global

Providing Broad Solutions toCustomers

• Extensive products and services

• Broad geographic coverage

• Deep penetration into customer processes

• Difficult to disintermediate

Thank YOU

WESCO Growth Strategy & Financial Objectives

Target sales and marketing initiatives on attractive verticals

Sell complete set of products to all customers and service all their locations

Expand product and service portfolio and capabilities

Expand internationally

1. Grow faster than the market plus acquisitions

2. Maintain industry-leading cost position

3. Expand operating profit

4. Provide superior return on invested capital

5. Generate strong operating cash flow through the cycle

…focus on value creation

Growth StrategyGrowth Strategy Long Term Financial ObjectivesLong Term Financial Objectives

Products & Suppliers

Markets & Customers Geography

WESCO Evolution

• LBO in 1994 by management and Clayton, Dublier & Rice

• ~$1.5 Billion in sales

• ~175 Branches in U.S. and Canada

• ~85% non-residential construction

• Limited supply relationships other than Westinghouse

• Sales grew to $3.7B

• 25 acquisitions− Expanded

geographic footprint

− Diversified end-markets and supplier base

• Launched National Accounts Program

• Launched Integrated Supply

• Leveraged recapitalization 1998

• IPO 1999

• Severe industry downturn

• High financial leverage

• Suspended acquisition program

• Strong free cash flow generation

• Invested in sales and marketing programs

• Launched LEAN

• 11 quarters of double 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

• 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

Captive Distribution Arm of Westinghouse

Captive Distribution Arm of Westinghouse

Recessionand RecoveryRecession

and RecoveryGrowth

AcceleratesGrowth

AcceleratesSevere

RecessionSevere

RecessionGrowth Strategy

DeployedGrowth Strategy

Deployed

1922-1994 1994-2001 2001-2003 2004-2008 2008-2009