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In the customer's eyes, products and services are no longer considered independent of each other, according to Grainger in its presentation this week at the Morgan Keegan Industrial/Transportation Conference. Michael Pulick, president of Grainger's U.S. business, said the distributor has been researching how customers view services. "Customers' view of services is changing," he said.
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But the key to consolidating products and services, and therefore increasing spend with existing customers, is to make sure those services have a "natural adjacency to our product line," Pulick said. "Services push Grainger further into the supply chain," he said. "It makes us sticky with our customers. They also make us a credible solutions provider."
Grainger, No. 3 on MDM's list of the top 40 industrial distributors, sees the consolidation of products and services as a growth opportunity. One example provided by Pulick was the distributor's recent acquisition of Alliance Energy Solutions, Oxford, CT, a lighting retrofit company.
At the time of the acquisition, Grainger CEO James Ryan said: "This transaction is the first service-based acquisition we're adding to our U.S. customer offering and we anticipate it will help us accelerate our strategy to become our customers' indispensable partner in helping them keep their facilities safe, efficient and functional."
Pulick echoed these thoughts in his presentation. He said that Grainger's goal is to provide a "single solution" for customers, and services play a key role in that.
Grainger's priorities for service expansion include:
1. Safety. Pulick said that the distributor's Lab Safety Supply integration into its Industrial Supply operations has expanded its safety product offering. "We know that when we go against small safety specialists, they beat us. They can provide a total solution of products and services. We have a strong desire to build out our services to complement our product offering (in this area)," Pulick said.
2. Sustainability. Pulick called this a "big issue for customers" and that Grainger has a strong foundation for services in managing resource use in Alliance Energy. It will be looking to build out more services in sustainability for customers.
3. Business continuity and emergency preparedness. Grainger wants to help customers be prepared before a disaster hits, Pulick said, including preparing business continuity plans.
4. Inventory management. Pulick said that Grainger has seen a lot of recent success with inventory management services. This includes both on- and off-site services. The distributor has completed 10,000 vendor managed inventory installations in the U.S. "We're just getting started," Pulick said. "We believe there is plenty of runway for more installations."
More on Grainger's presentation from the Morgan Keegan Industrial/Transportation Conference, including its product expansion plans, will be published in the Sept. 25, 2010, issue of MDM Premium.