Businessmodel of MRC Global

Customer Segments

MRC Global has a niche market business model, with a specialized customer segment. It targets its offerings at firms in the following sectors of the energy industry:

• Upstream (exploration, production, and extraction of underground oil and natural gas)
• Midstream (gathering and transmission of oil and natural gas, natural gas utilities, and the storage and distribution of oil and natural gas)
• Downstream (petrochemical processing, crude oil refining, and general industrials) In 2015, its 25 largest clients accounted for 51% of total sales, with its largest one accounting for 9%.

Value Proposition

MRC Global offers three primary value propositions: accessibility, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It has one of the largest PVF inventories worldwide, stocking over 230,000 SKUs throughout its service locations. They fall into the following categories:

• Products – Carbon Steel Pipe, Stainless Steel Pipe, Carbon Steel Fittings & Flanges, Stainless Steel Fittings & Flanges, Gas Products, Valves & Automation, Specialty Products, Mill Supplies & Safety, and Oilfield Products
• Materials – Carbon Steel, Low Temperature Carbon Steel, High Yield Carbon Steel, Stainless Steel, Duplex, Super Duplex, High Nickel Alloy, Titanium, Polyethylene, Brass, Iron, Copper, and Fiberglass The company reduces risk by maintaining high quality standards. It maintains an in-depth qualification process for its suppliers, which includes the following key components:

Supplier Qualification – Includes the following features:

• On-site assessment by MRC Global’s team of experienced auditors (60-80 per year)
• Thorough review of quality system, process capability, and product conformity

• 1-5 days to complete depending on complexity and scope of operations including sub-suppliers Routine Inspections – Includes the following features:

• Material Test Reports (MTR) Review
• Visual and dimensional inspection
• Positive Material Identification (PMI) for alloy materials

• Independent mechanical and chemical analysis, and pressure testing and x-ray of valves Non-Conformance Management – Includes the following features:

• Real-time, electronic reporting
• Identification of problem and cause, typically through independent third party analysis The company has established a strong brand due to its success. It bills itself as the largest industrial distributor of PVF and related products and services to the energy market based on sales, and it holds the leading position across each of the upstream, midstream, and downstream sectors of the energy industry. It serves over 21,000 customers through 400+ service locations in over 100 countries throughout North America, Europe, Asia, and Australia. Its service locations have more than $1 billion worth of inventory. Lastly, it has strong customer loyalty, with an average relationship of more than 25 years with its 25 largest clients.

Channels

MRC Global’s main channel is its sales team, which include both inside and outside sales personnel. The company promotes its offerings through its website and social media pages.

Customer Relationships

MRC Global’s customer relationship is primarily of a self-service, automated nature. Customers use its products while having limited interaction with employees. The company establishes interfaces that directly tie clients’ IT systems into its proprietary information systems, enabling it to provide an integrated supply service. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

MRC Global’s business model entails distributing PVF products and related services to its customers.

Key Partners

MRC Global’s key partners are the 21,000 suppliers in 45 countries that provide it with the materials and equipment necessary for the manufacture of some of its products. These firms can create an account on its website to view invoices and manage various activities. The rest of its suppliers are sourced from trading companies, manufacturer representatives, and other distributors.

The company depends on third-party manufacturers to produce the products it sells. Lastly, MRC Global relies heavily on third-party carriers to ship its items from suppliers and on freight carriers for delivery.

Key Resources

MRC Global’s main resources are its physical resources, which include its over 400 service locations in 100+ countries, its 33 valve automation centers, and its 17 regional distribution centers (RDCs). The company also has important human resources in the form of its sales force, which promotes its offerings and includes many engineers that can answer complex technical questions.

Cost Structure

MRC Global has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

MRC Global has one revenue stream: revenues it generates from sales of its PVF products and associated services, as well as other oilfield and industrial supplies for the energy sector.