Canadian Electrical Wholesaler

Sept 13, 2019

Rick McCartenBy Rick McCarten

How much does the electrical industry have to improve to compete with upcoming disruptions in the supply chain?

In May of this year, the delegates at Electro-Federation Canada (EFC)’s annual conference voted on when our industry would be hit with supply chain disruption. The group collectively agreed that our industry in Canada has only three years to prepare for major disruption. We need to act fast!

The graph below on digitization is adapted from a study by Peter Diamandis of Singular University. His study finds that digitization has a pattern that affects both products and services.

Diamandis states: “Anything that becomes digitized, enters the same exponential growth we see in computing." The result is that digital exponential growth (yellow line) starts growing at a much slower pace then traditional linear growth (red line). If digitization grows exponentially on a yearly basis, the first 10 years of digitization are what Diamandis calls “deceptive”. It is a great opportunity for denial, to argue against it, to fight it off. Meanwhile, as the numbers on the right side of the graph show, digitization is compounded year after year. 

At year 10, the compounding gets serious; it begins to grow faster than the linear model. It enters the disruptive stage. Three things happen at this stage:

  • De-materialize: things start to literally disappear. Examples: CD players, cameras, video stores, printed maps, incandescent bulbs.
  • De-monetize: software costs nothing to reproduce. Any form of physical product cannot compete with software. Prices fall.
  • Democratize: once-held monopolies can no longer hold their position. Customers have multiple sources. 

The gray bars on the graph show the vote our industry took on where we are on this graph. Individuals answered independently via a mobile app. The results varied from year 2 to year 12. The concentration was around the 7-and 8-year mark, with the average coming in close to the 7-year mark. If we were to take the average at seven, it means we have a three-year window to improve our industry to compete with potential disruption. 

Wholesale Graph

How much do we have to improve?

In the July 13th edition of The Economist, McKinsey and Company estimated that “40% of all procurement tasks (vendor managed inventory, order placement and invoice processing) can be automated today, and 80% will soon [be automated]; this could produce annual cost savings of 3-10%. All told, it reckons applications and manufacturing could create US$2trn of value.“

This year’s Pathfinder report has our industry sales pegged at $11.5 billion (includes non-full-line distributors).

If we assume 25% of that is cost incurred in the supply chain (across manufacturer, distributor and rep functions, shipping, warehouse, credit, freight, commissions, etc., from place of origin), multiply that by 10% savings, we come up with $290 million.

Best guess of what we need to do to prepare for the disruption is to improve our efficiencies to in the tune of $290 million in the next three years.

Recognizing this is spit-balling, it provides a target of something to aim towards, as well as points to the challenges in both dollars and time needed.

How do you begin to accomplish this?

The solution comes down to talent. Not just one at the top, but throughout your entire organization. The right people need to be in the right spots to make it happen.

At Electro-Federation Canada, we are hosting our first-ever Supply Chain Conference this November to help our members take on these tasks. Delegates will be receiving roadmaps for electronic data exchange, data sharing and vendor managed inventory, see the event ad in this publication in the coming weeks for details and to register.

EFC Supply Chain Conference: November 25-26, Pearson Convention Center, Toronto
www.electrofed.com

Rick McCarten is VP, Operations, Electro-Federation Canada.

 

SignifyThe electrical and lighting industries were shocked this week with the announcement that Signify purchased the recently renamed Cooper Lighting Solutions from Eaton.

The former Eaton Lighting division was scheduled to be spun off from Eaton via an IPO late this year / early next year.  While rumored earlier this year to be up for sale, rather than being spun off, there were no takers for the business. Although, it was reportedly considered by some.  According to Signify, discussions with Cooper Lighting, and Eaton, began a month ago. The interest could have been provoked by the Q3 slowdown in the lighting market with Signify sensing an opportunity to make an acquisition, perhaps at a discount.

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Rick McCartenBy Rick McCarten

For a long time now, many experts have been pointing out how companies should be expanding their service offerings beyond their product sales. Companies are wrapping services around their product and packaging — everything from special deliveries, warranties, repair and technical assistance to 24-hour service. This “servic-ization” helps differentiate companies from their competitors. How big is this going to get? Some reports have this trend becoming the core of our future economy.

 

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Carol McGloganBy Line Goyette

With Industry 4.0 on our doorstep, we are facing significant technological and resource changes, some of which question our industry’s core values. Artificial intelligence, the Internet of Things, digitization, transport electrification, diversity and inclusion are among the inescapable changes that will affect our industry head on, both in its best practices and its business models. We have several advantages to help us deal with the changes, including an unwavering advocate for our industry: Carol McGlogan. She is the first woman to hold the position of Electro-Federation Canada’s (EFC) President and CEO. 

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CEW IDEAL Nationals 400

The IDEAL Nationals are underway with an 18 member Canadian Team supported by the IDEAL Industries Canada crew. This year over 55,000 electrical contractors and electricians competed worldwide so this is the cream of the crop competing here in Orlando .

The 2019 IDEAL National Championship is a highly charged, no-holds barred competition to determine the best electrician in North America and includes teams from China, Australia and Mexico.

To make it to Orlando, contractors have to qualify first and numerous qualifying events were held throughout Canada.

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GDP Rose 0.1 PercentReal gross domestic product edged up 0.1% in August, following no change in July. Goods-producing industries were up 0.2% after two months of declines, led by a rebound in manufacturing, while services-producing industries edged up 0.1%. Overall, there were gains in 14 out of 20 industrial sectors.

On a three-month rolling average basis, real gross domestic product rose 0.5% in August, compared with a 0.8% increase in July.

 

 

 

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Changing Scene

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ImarkDuring the recently held IMARK Canada 2019 meeting in Niagara Falls, executives from 14 of the leading manufacturers in the Canadian electrical and lighting industry participated in the IMARK Canada Product Stampede on September 13th.

Select manufacturer executives had precisely five minutes to present a key product with superior growth potential to the members of IMARK Canada. Distributor member executives then rated each supplier based on the quality of the presentation and the perceived sales potential of the product being demonstrated.

 

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OmnicableOmniCable would like to thank the electrical distributors and industry partners who attended OmniCable Toronto’s open house on October 23, 2019. OmniCable opened its Toronto branch back in April 2019. Toronto is OmniCable’s first branch outside of the United States. The Toronto facility, which is approximately 50,000 square feet, is OmniCable’s 13th branch and services electrical distributors throughout Canada.

During the open house, attendees toured the facility, met OmniCable Canada and US teams, enjoyed light refreshments, and walked away with giveaways.

 

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Ilsco and Adanac SalesILSCO Canada has announced the appointment of Adanac Sales as agency of representation for the ILSCO brand in the province of British Columbia.

This partnership exemplifies ILSCO’s dedication to collaborate with companies that share ILSCO’s commitment to providing excellent products and service to the electrical industry in British Columbia.

 

 

 

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ABBTotal orders -1%1, order backlog +3%

  • Steady revenues and book-to-bill2
  • Operational EBITA margin2 11.7%, +20 basis points; impacted 70 basis points by stranded costs
  • Income from continuing operations, net of tax $422 million, -1%
  • Net income $515 million, -15%
  • Operational EPS2 $0.33, -7%3
  • Cash flow from operating activities $670 million, +19%, solid cash delivery expected for the full year
  • Björn Rosengren appointed Chief Executive Officer, effective March 1, 2020

 

 

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Peers & Profiles

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Stephanie MedeirosBy Blake Marchand

For Stephanie Medeiros, this is an exciting time for Canada’s electric vehicle industry because it is approaching a tipping point. “One or two percent of vehicles in Canada are electric, but you’re going to see this change rapidly. There are different factors that come with that, but to make it a reality you need to have a charging infrastructure in place. One of the factors involved with that is establishing standards for charging, as well as settling on a uniform method for charging — ultimately, constructing a landscape that closely resembles that of internal combustion.”

 

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City Electric Supply - Jon LlewellynJon Llewellyn is the Branch Manager City Electric Supply’s Nanaimo, BC location. “I've worn many hats within this great organization,” Llewellyn told Canadian Electrical Wholesaler. Beginning as a Van Driver, Jon worked his way through several different positions at City Electric Supply after a 10-year career in the trades as a Drywaller. Starting as a driver, Llewellyn would move into the warehouse, and on into Inside Sales, which would turn into an Account Manager position before he would land in his current role as Branch Manager. The ability to learn on the job is an essential skill in an evolving industry, particularly one that is heavily technical. Something Llewellyn has certainly embraced.

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Looking Back

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