Businessmodel of Graybar Electric

Customer Segments

Graybar provides products and services to large commercial and institutional clients across multiple sectors. The Company reports its customers in the following categories:

• Construction, principally comprising contractors and installers that perform new construction and renovation of commercial and industrial facilities and utility infrastructure;
• Commercial, Institutional and Government, comprising commercial office, warehouse, and retail facilities; federal, state, and local governmental agencies; and education and health care bodies;
• Industrial and Utility, comprising facility maintenance and repair businesses, original equipment manufacturers, broadband utility and electrical transmission companies, and distribution infrastructure. Graybar typically supports new construction projects, infrastructure updates, building renovations, facility maintenance and repair operations. The Construction industry accounted for 56.2% of the Company’s sales in 2015, with the Commercial, Institutional and Government and Industrial and Utility accounting respectively for 22.4% and 21.4%.

The majority of Graybar’s sales are made in the US. The Company also serves customers in Canada and Puerto Rico.

Value Propositions

Graybar provides value to its customers in the following ways:

• Its reputation and track record, with the Company established as a reliable wholesale distributor, having a track record for successful delivery of products;
• Its expertise and experience, with the Company employing a team of highly-trained specialist personnel across its network of facilities, led by an experienced executive leadership team;
• Its extensive and efficient distribution network, with the Company operating extensive physical distribution infrastructure, enabling the Company to reach customers quickly and efficiently; and
• Its broad portfolio of products and services, with the Company offering a range of products and services that support operations and projects across multiple business sectors. ### Channels

Graybar operates a website at www.graybar.com, through which it provides information on its various products, services, and activities. The Company also operates an online store, where customers can browse the Company’s catalogue of products, make purchases, and schedule deliveries. This online platform is supported by a mobile application, which is available on iOS and Android devices.

Graybar primarily sells its products – which are manufactured or provided by third-parties – through a network of sales offices and distribution facilities distributed across thirteen geographical districts in the US. The Company operates multiple distribution facilities in each district, each of which carries an inventory of products and operates as a wholesale distributor for the territory in which it is located. Some districts have sales offices that do not carry inventory, where specialist sales teams serve clients directly. Graybar also has seven national distribution centres and ten regional distribution centres, which replenish inventories carried at the Company’s other US distribution facilities and make shipments directly to customers.

Graybar’s foreign sales are made principally through subsidiary operations in Canada and Puerto Rico, which includes sales offices and distribution centres.

Customer Relationships

Graybar offers many of its products to customers on a self-service basis through its online store, which enables customers to browse the company’s products, make purchase orders, arrange deliveries, and manage account details without interacting directly with members of the Company’s sales and support teams.

Graybar’s in-house sales and support teams consult directly with customers, providing a more personalised service. The Company works with its customers to establish the details of sales and distribution contracts, in order to fully fulfil the requirements of each individual customer. Graybar has temporary and recurring employee relationships.

Customers are able to contact Graybar’s support teams over the phone, via email, or through online contact forms, enabling them to receive personalised responses to queries and complaints. The Company also provides information on its attendance at various industry events, and publishes various articles on its website covering industry and company developments.

Additionally, customers are able to interact directly with Graybar through its social media accounts, including with LinkedIn, Facebook, Twitter, Instagram, and Google+.

Key Activities

Graybar is an employee-owned wholesale distributor of electrical, communications, and data networking products. The Company distributes approximately one million products purchased from more than 4,600 manufacturers and suppliers to customers operating across three customer segments: Construction, including contractors and installers; Commercial, Institutional, and Government, including educational and healthcare institutions, government agencies, and commercial offices and retail facilities. Graybar’s product portfolio includes distribution equipment, building and industrial wire, incandescent lighting, telecommunications equipment, data cables and cords, wiring devices, fasteners, and maintenance and repair supplies. Graybar serves customers across the US, as well as in Puerto Rico and Canada, through its own extensive network of distribution and sales infrastructure.

Key Partners

Graybar collaborates with various companies throughout its procurement and distribution of merchandise. These partners include:

• Supplier and Sourcing Partners, comprising suppliers of merchandise and products, which account for the Company’s catalogue f products, as well as suppliers of services, tools, and technologies;
• Academic and Educational Partners, comprising various academic and educational institutions, with which the Company collaborates on tuition programs and employee training schemes;
• Institutional Partners, comprising various regulatory bodies and trade organisations, with which the Company cooperates on industry projects and schemes; and
• Strategic and Alliance Partners, comprising various companies and organisations with which the Company shares resources and collaborates on joint projects. Graybar’s industry affiliates include the National Association of Electrical Distributors, Independent Electrical Contractors, and the Communications, Cable and Connectivity Association. Graybar also recently launched a partnership with energy management company BOSS Controls.

Key Resources

Graybar’s key resources are its supply chain network and catalogue of products, its online and mobile platforms, its IT and communications infrastructure, its distribution and sales infrastructure, its partnerships, and its personnel.

Graybar owns and leases a number of properties across the US, Canada, and Puerto Rico, including regional and national distribution centres and various sales offices, comprising a total of more than 200 facilities.

Cost Structure

Graybar incurs costs in relation to the management of its supply chain and the procurement of products and materials, the development and maintenance of its online and mobile platforms, the maintenance of its IT and communications infrastructure, the operation and maintenance of its distribution and sales infrastructure, the management of its partnerships, and the retention of its personnel.

In 2015 Graybar accrued $965.13 million in selling, general and administrative costs, which included the payment of certain outgoing freight expenses and the payment of salaries and benefits to the Company’s workforce of 8,300 employees. The Company’s largest expense, however, related to costs associated with merchandise sold, which totaled $4.96 billion for the year.

Revenue Streams

Graybar generates revenue primarily through the sale and distribution of various electrical products – including distribution equipment, building and industrial wire, lighting products, data cables and cords, wiring devices, telecommunications equipment, fasteners, and maintenance and repair supplies.

The Company makes these sales through distribution contracts with its clients, as well as through sales made via its online store. Graybar additionally derives a small portion of its revenue from the provision of supply chain management and logistics services.

In 2015 Graybar generated net sales of $6.11 billion, up on the $5.98 billion recorded by the Company in 2014. The vast majority of the Company’s sales revenue is attributed to sales of its merchandise and products, with service revenue representing less than 1% of net sales for the year.