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In its recent analyst meeting, Grainger says its product line expansion strategy has been successful and, more importantly, will continue to be a "core part of its foundation." But the distributor recognizes that while product line expansion has been a key growth driver, it has to continually rethink its supply chain to accommodate the growth.
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Macpherson offered an example of how Grainger chooses which products to add.
About 18 months ago, Macpherson said, Grainger added ceiling tiles in response to a suggestion from its U.S. sales force. Instead of asking for ceiling tiles in standard full-pallet quantities, customers were asking for tiles in small lot shipments. "If one or two broke, they wanted to replace it," Macpherson said. When researching whether this product line would draw enough demand to warrant adding the product, Macpherson said Grainger corroborated field data with online data that showed customers had searched at grainger.com for the product previously, but found nothing.
Grainger sold more than it expected after adding ceiling tiles. And while the original request for the product came from health care, only half of the initial sales went to that sector, Macpherson said. "There was a pent-up need for small batches of ceiling tiles," he said.
Another approach the distributor has taken to optimize its product lines: line reviews. Macpherson said the distributor will examine a single product line and the assortment, cost, quality and service that Grainger offers related to that product line. For example, Grainger looked at striking tools, which includes hammers. As a result of the review, the distributor added 200 SKUs and private label product, and found several hundred thousand in cost savings.
"We're really excited about the results we're getting from these line reviews," Macpherson said.
For more on Grainger's recent analyst meeting, read this article: Grainger Leverages Global Network