Businessmodel of WESCO International

Customer Segments

WESCO provides a broad range of services to customers across multiple sectors. The Company principally serves customers across the following markets, where supply chain and logistics systems play an important role:

• Industrial, including original equipment manufacturers, natural resources companies, and mining firms;
• Construction, including construction and contracting firms, engineering companies, transport infrastructure companies, and repair and maintenance businesses;
• Utility and Commercial, including energy companies, water treatment companies, real estate developers, and transmission companies; and
• Institutional and Government, including various municipal, state, and federal government bodies, public organisations, schools, and healthcare institutions. WESCO states that it has a customer base of more than 80,000 active customers. Its top ten customers accounted for approximately 11% of its sales in 2015, with no one customer accounting for more than 2% of sales for the year.

WESCO principally serves markets across North America, notably its native US, as well as Mexico and Canada. The Company also serves customers in Europe, Asia, and the Middle East, although these operations comprise a small part of the Company’s annual sales.

Value Propositions

WESCO provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as a leading provider of supply chain management and logistics services, particularly in the US, having a track-record for providing efficient and reliable services to customers across multiple sectors;
• Its extensive distribution network, with the Company operating approximately 500 geographically dispersed branch locations, both domestically and internationally, as well as nine distribution centres in the US and Canada, giving the Company extensive distribution capabilities;
• Its broad portfolio of offerings, with the Company offering a range of products, services, and solutions, as well as value-added services, that seek to maximise productivity, minimise waste, and improve efficiencies across its customers’s systems; and
• Its relatively low-cost pricing structure, with the Company having one the lowest operating costs as a percentage of sales in its industry. ### Channels

WESCO operates a website at www.wesco.com, through which it provides information on its various products, services, and geographic operations. The Company does not operate an online sales channel. It does, however, operate an online government partner portal and an online remote project management portal.

WESCO principally serves customers through its sales and service staff, who operate out of the Company’s international network of full-service branches and deal directly with customers. This includes 350 branches in the US, 125 branches in Canada, nine branches in Mexico. The Company also operates branches in Aberdeen, Scotland, Dublin, Ireland and Manchester, England that support sales efforts in Europe and the Middle East, as well as branched in Singapore, China, and Thailand that support the Company’s sales across

Additionally, WESCO operates its own network of distribution centres, including five in the US, and four in Canada, as well as an office in Mexico which performs much of the same distribution functions.

Customer Relationships

WESCO provides some self-service offerings to customers and partners in the form of its online portals, which allow for some account and project management without the need for interacting with members of WESCO’s staff.

The Company, however, principally interacts with its customers directly through its teams of geographically dispersed sales and service teams. These members of staff work closely with customers to establish their individual needs and budgetary requirements, creating detailed service contracts. WESCO seeks to provide localised customer service, technical support and sales coverage, through its branch network, tailoring individual branch products and services to local customer needs, and establish longstanding customer relationships.

New and existing customers are able to contact members of the WESCO sales and support teams over the phone, by post, and through an online contact form, in order to receive a personalized response to queries. The Company also operates several social media accounts – including with Facebook, LinkedIn, and Twitter – through which it can interact directly with customers, and provide timely updates as to its operations.

Key Activities

WESCO operates as a distributor of products across multiple categories, and as a provider of supply chain management and logistics services, principally serving customers across the industrial, construction, utility and commercial, institutional and government sectors.

The Company’s main product categories include general electrical and industrial supplies, wire, cable and conduit, data and broadband communications, power distribution equipment, lighting and lighting control systems, control and automation, motors, and safety.

The Company’s supply chain and value-added services include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as assembly of products and system installation. WESCO serves around 80,000 customers across the its principal markets of the US, Canada, and Mexico, as well as across Europe, Asia, and the Middle East.

Key Partners

WESCO works in conjunction with a range of companies, that assist in enhancing and extending the Company’s own capabilities. These partners include:

• Supplier and Vendor Partners, comprising suppliers of equipment, tools, and materials used in the provision of the Company’s services, as well as suppliers of various services that support, facilitate, or supplement the Company’s own services;
• Government Partners, comprising an international network of strategic government contractors that are qualified to provide services to government customers alongside the Company, organised under the WESCO Government Partner Network; and
• Strategic and Alliance Partners, comprising a range of companies and organisations with which the Company shares resources and collaborates on various joint projects. WESCO has launched a number of partnerships in recent years. This includes a supplier partnership with Ironclad Performance Wear, a distribution deal with AIMS Power, and a provider partnership with Jones Lang Lasalle.

Key Resources

WESCO’s key resources are its intellectual properties, its supply chain and product portfolio, its logistics and distribution infrastructure, its IT and communications infrastructure, its partnerships, and its personnel.

WESCO owns and leases a range of properties. This includes approximately 500 branches, of which around 350 are located in the US and 125 are located in Canada, with the remainder located in Chile, Mexico, the UK and Singapore. Approximately 16% of the Company’s branches are owned facilities, and the remainder are leased. WESCO also operates nine dedicated distribution centres in the US and Canada, that are key to the Company’s logistics operations.

WESCO has trademarks, patents and service marks registered with the US and Canada, and has filed additional trademark, patent, and service mark applications in various foreign jurisdictions, including Mexico, Chile, the UK, Singapore, China, Hong Kong, and Thailand. Searches of records published by the US Patent and Trademark Office identified two patent applications filed by WESCO companies, entitled ‘Knock down drum truck’ and ‘Conduit space recovery system’.

Cost Structure

WESCO incurs costs in relation to the management of its supply chain and procurement of products, the operation and maintenance of its logistics and distribution infrastructure, the maintenance of its IT and communications infrastructure, the management of its partnerships, and the retention of its personnel.

In 2015 WESCO accrued cost of goods sold in the amount of $6.02 billion. Its selling, general and administrative expenses – including the payment of salaries and benefits to its workforce of 9,300 employees, as well as costs associated with advertising, and shipping and handling – totaled $1.06 billion for the year, representing 14% of revenue.

Revenue Streams

WESCO generates revenue through the distribution of products across multiple categories, and the provision of supply chain management and logistics services, which are categorised into the following service lines:

• Technical support for operational and transactional process improvements;
• Inventory optimisation programs, including just-in-time delivery and vendor managed inventory;
• Collaborative, cross-functional, cost savings services;
• Dedicated on-site support services;
• Consultation on energy-efficient product upgrades; and
• Safety and product training for customer employees. In 2015 WESCO generated annual revenue of $7.52 billion, down on the $7.89 billion recorded by the Company in 2014. This decrease was attributed largely to a general decline in sales. The vast majority of the Company’s annual revenue was derived from its United States operating segment, which generated $5.67 billion for the year.