Canadian Electrical Wholesaler

 

August 10, 2018

Rick McCartenBy Rick McCarten

Last month, my article looked at how Walmart’s cross-docking distribution method successfully reduced the supply chain’s overall costs (and increased Walmart’s costs).

In this article, let’s look at the women’s fashion retail market — one of the riskiest manufacturing businesses. What is popular today can quickly change and leave you with a lot of unwanted inventory and lost revenue. The typical process is to determine what is “hot” and produce thousands of items in a factory far, far away to keep costs down.

A typical clothing manufacturer/retailer collects full ticket pricing on about two-thirds of their merchandise. That means 30-40% of the product is sold at discount, at a loss, or simply discarded. On average, unsold items can amount to as much as 10-20% (Harvard Business Review, Nov. 2004). This means higher margins on the initial sales need to cover the losses at the back end.

Zara, a Spanish clothing retailer, thought they could do it differently. Zara not only set up retail outlets, but it also built textile factories in the countries where their stores were. The retailer owns the stores and the factories. So instead of producing huge quantities of goods to keep the average cost down, they produce smaller quantities and then test sales. If particular dresses sell, the factories increase production and ship out more of the popular designs, cashing in on the full price items. With this model, Zara sacrificed the efficiency of their factories, in location and small quantities, to become a “just-in time” retailer to provide better customer value.

Not only can Zara gain a better margin, which makes up for the higher cost of manufacturing, but they can also be quick to adapt to new trends, again leading to more margins. There is a tight loop system between the retailer, manufacturing process and what the customer is looking for.

Shoppers also become familiar with Zara and know that if they like something, they had better buy it because the product will likely not go on sale and might not be there the next time they drop in to the store. They also know that Zara has more of the latest trends and a quick changeover. Traditional women’s stores are consumed by how to get rid of older inventory, while Zara has more of what buyers are looking for. Zara is training their customers with positive reinforcement.

This example is good for the electrical industry, for two reasons.

First, it shows that through cooperation between the manufacturer and the distributor, you can reduce unwanted inventory.

Secondly, it provides the manufacturer a window into the consumers of their product. The producer has a connection the purchaser. Designers can instantly see what customers want; what is most popular, resulting in the faster production of popular products. In turn, more designs can be created that are similar in nature to popular designs. The manufacturer and the distributor working hand-in-hand to better serve the customer. This strategy provides a closer look at how the end customer’s use of electrical products would help manufacturers determine innovation, inventory levels, quantity packaging, prices sensitivity and delivery options.

To get that insight, in the case of Zara, the manufacturing arm had to produce at less than optimum levels. This allowed the supply chain to improve sales, increase the bottom line and improve service. To make sure the manufacturer in this case was compensated for the extra effort, Zara had to own both arms. Channel sacrifices should be recognized and properly compensated for, to ensure we continue to offer the best sales and service to our customer.

The more we recognize an initial sacrifice in a channel as a benefit, and not detriment, the more we will be open to allowing those who do sacrifice, to find a recovery method — leading to the channel’s ability to improve its competitiveness.

In this age of digitalization, of the Internet and artificial intelligence, we cannot leave any stones unturned. With more opportunities to digitize our systems, we need to ensure a strong collaborative channel.

Note: be sure to request the latest EFC research report, “Let’s Get Digital”, which focuses on supply channel digitization – out on June 1st, 2018 and available in both English and French. Go to www.electrofed.com for details.

Rick McCarten is VP, Operations, Electro-Federation Canada. Read Part 1 here: www.canadianelectricalwholesaler.ca/latest-news/2086-the-supply-chain-sacrifice

 

 

Carol McGloganBy Carol McGlogan

We are on the cusp of a major tidal wave hitting our industry; the onslaught of 10,000 new employees are set to replace the current base who are over 55 years of age and are on the horizon of retirement. This talent refresh brings on many opportunities for progress to address evolving customer needs, new product solutions and supply chain digitization. New skills and new ways of thinking will propel us forward. However, the challenge this talent pool will have is to understand the industry that they have settled in. This challenge is further magnified as the time required to absorb industry knowledge is compressed due to the accelerated exit of industry knowledge.

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Swati Vora-PatelBy Swati Vora-Patel

The Electrical industry is facing a runway of crossroads — and digital innovation intersects each one of the crossroads. Digital advancements in technology are transforming everything from product development and manufacturing to supply chain management and customer purchasing behaviours. While all of these changes have digitization at the core, there’s another factor that our industry needs to bring front and centre: People.

 

 

 

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Value of Building Permits - DecemberThe total value of building permits issued by Canadian municipalities increased 7.4% to $8.7 billion in December. Increases were reported in five provinces, led by Ontario (+10.5% to $3.4 billion) and Quebec (+15.8% to $2.2 billion). For 2019 overall, municipalities issued $102.4 billion worth of permits, up 2.6% compared with 2018.

Value of residential permits up

The total value of permits for multi-family dwellings was up 15.9% to $2.9 billion in December, mostly due to large projects in the census metropolitan areas (CMAs) of Montreal and Vancouver.

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Changing Scene

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IDEA Connector LaunchOn January 31,2020, the new IDEA Connector will go live to over 6500 distributor locations with updates being fed daily by the IDW. Distributors will gain access to IDEA Connector’s Production Environment on February 14, 2020 to verify their migrated extracts and custom maps before they are fully cutover in a phased approach from the IDW to IDEA Connector beginning March 22, 2020.

The IDEA Team is working to ensure a smooth launch. If you are a distributor customer, you’ll receive communications on your cutover date and what you’ll need to do to prepare.

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SouthwireSouthwire has appointed Rahila Dhansi to the position of Manager, Human Resources. In her role, Rahila will be responsible for overseeing Southwire Canada’s HR plans in ways that support our mission and strategy.

Rahila holds a Bachelor’s degree in Employment and Industrial Relations from the University of Toronto and is a Certified Human Resources Leader (CHRL) under the Human Resources Association.

 

 

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Graybar TaylorGraybar Canada announced the retirement of Executive Vice President and General Manager, Brian Thomas, effective March 1, 2020. Upon his retirement, Jason Taylor will be appointed Executive Vice President and General Manager, assuming leadership of Graybar Canada.

Thomas started his career with Graybar Canada, and its predecessor Harris & Roome Supply, in 1987. Throughout his 39-year career in the electrical industry, Thomas held a variety of sales and senior management positions before being promoted to Executive Vice President and General Manager in 2016. 

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Peers & Profiles

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Sean Bernard is the Intelligent Controls Manager, Canada for Ideal Industries. Sean resides in ...
Christina Huang is a Senior Contracts Manager for Schneider Electric. She has a varied, technical ...
Jenny Ng is a Business Development Manager for the Power Solutions Division of Schneider Electric. ...
With over 60-years of experience in the lighting industry, CBC Lighting has established itself as a ...

Sean BernardBy Blake Marchand

Sean Bernard is the Intelligent Controls Manager, Canada for Ideal Industries. Sean resides in Whitby with his wife, Melissa and their daughter, Everleigh.

Sean joined Ideal Industries mid-2019 after 13-years in lighting, working for companies like Phillips, Franklin Empire, and Standard Products. Throughout that time, he made his way from inside sales, to outside sales and up into management.

 

 

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