A Customer-Focused Approach to Safety EquipmentMon, 10/21/2013 - 10:42
Q: What is Mexico’s position in Grainger’s global operations?
A: At the moment we have 120,000 unique products that we sell in Mexico, with more than 500,000 in the US and more than 1 million in the rest of the world. Grainger has some specific strategic segments; one is mining, but we also serve oil and gas, hospitality and manufacturing, for example. These have been the focus segments for Grainger because they have seen growth over the past 10 years. Mexico is the third biggest market for Grainger, after the US and Canada.
Q: How does your safety equipment protect workers, prevent downtime, and improve your customers’ financial performance?
A: We offer thousands of different products, but what we really deliver to our customers is service. We are focused first and foremost on service and solutions, and as a consequence of that we generate revenue. We are very focused on generating savings for our customers, and we also have a lot of solutions and services that are designed to help them.
We offer KeepStock and KeepSecure vending machines and on site branches, which allow our customers to control and manage their own inventory and consumption. The benefits of the vending machines are that they can handle different lines of products, they work 24/7, and the customer can also control the consumption. This means that they do not have to buy what they will not use, since we provide the inventory and offer a flexible system.
We also have SWAT teams, which are cross-functional teams that go to our customers’ facilities and spend one day, one week or one month with the customer, then make a summary of what the company needs. Our SWAT team goes directly into our customers’ operations in order to understand and map the processes, and we then create an integrated solution. Grainger’s SWAT teams are cross-functional, but we also need our customers to have a cross-functional team so that we can create a combined team made up 50% by Grainger and 50% by the customer. Within that team we decide the reach of the project and how long it will last.
Our SWAT teams have been in place for over five years, and it all started as a result of feedback from one of our customers. This customer complained that they did not just need a company to provide products, but to actually help them define their exact needs in the first place. Based on that feedback we decided to form these SWAT teams. We have one specific vendor dedicated to attending each established customer’s needs for commercial equipment. When we have decided on the right products for them it is then part of our strategic mining plan for all orders in a specific period of time to go through the Green Channel, meaning that there is no credit call, price call, delivery or logistics call. For these customers we have the inventory in place and if they need something urgently they do not need to wait even 24 hours for it to be delivered. We set a commercial agreement with our customers and freeze the prices for one year. Our products fall into two categories: Customer Special Price (CSP) and Spot. For CSP, once we agree on the prices of all of the products the customer needs to sign the contract and those prices will be frozen for one year. Spot products are the ones that the company did not plan to buy – they are urgent, or outside of their daily consumption needs. We also have a special price for those products. For example, we will give a discount of 20% on national products and 15% on international products.
They then have a CSP contract, and well defined cost for SPOT products. This brings our customers more than 30% in savings. Once they start buying from Grainger they tend to reduce their spending on security equipment to less than 70% of what they had originally planned to invest. In order to go to different vendors and compare all the different prices you need a big procurement structure, and the process requires many approvals. That process costs a lot of money, and the time that we save our customers can also be converted into money.
In terms of inventory, we determine what CSP products our customers will require in a given year and we can hold that inventory for them, which we can deliver nationwide in 24 hours through our distribution centers in Monterrey, Mexico City, Guadalajara, and Villahermosa. These are more than retail centers, they also have a showroom and handle inventory for local customers.
Q: What are Grainger’s growth objectives, and what will be the company’s strategy to achieving them in the coming years?
A: We are currently duplicating our specific mining sales force in Mexico and we are duplicating the number of vehicles for attending the mining industry. We just opened a branch in Cananea, and we are focusing on the specific regions where mining is biggest: Sonora, Chihuahua, Durango, and Zacatecas. We are expanding our sales force, our clients, our services, and our range of solutions for mining.