CEO Kathy Mazzarella draws on the distributor’s distinguished track record of being at the forefront of change and technological advancement to promote employee-led innovation efforts that are creating new pathways to strengthen customer connections and business growth.
Over its 150-year history, Graybar, number four on MDM's Top Electrical Distributors list, has not shied away from change and innovation, morphing with the direction of the market from its early days in telephone manufacturing and distribution to supporting the data networking infrastructure needed to fuel the growth of the internet. Since Kathy Mazzarella took over as CEO in 2012, she has led the St. Louis-based industrial and electrical supply distributor to seven consecutive years of sales growth, positioning the company to take advantage of the latest developments in artificial intelligence, IoT, e-commerce, blockchain and more.
“In the wholesale distribution industry, technology is causing unprecedented disruption in the way we think and work. It’s also changing what our customers expect of us and how they want to conduct business. Many of our old assumptions no longer hold true, and the ways of doing business that have served us well in the past may no longer be relevant in a digital future,” says Mazzarella. “As we face increased disruption and new sources of competition, we must tap into the spirit of innovation that has led to Graybar’s success in the past; that’s what I’ve been focused on for the past several years.”
Graybar is implementing a strong data strategy, with the right infrastructure and people to back it up. The company’s digital vision statement — “Graybar will be a leader in digital innovation by building the culture and capabilities to reimagine the value of distribution and transform the supply chain for the future.” — is reinforced by a three-part strategy focused on:
- Delivering an exceptional customer experience
- Boosting efficiency and productivity in the supply chain
- Inspiring a culture that rewards innovation, agility and growth
Words into Action
Mazzarella says developing the vision was an important start, but notes that people “don’t buy into words alone.” In 2017, Graybar launched an Innovation Lab at the University of Illinois to explore new ways of developing the company’s digital capabilities. “By collaborating with both faculty and students, the iLab gives us an environment to test innovative ideas, conduct advanced analytics and research and help us see our business in a whole new light,” she says.
Thirteen students worked in the iLab this past summer as Graybar interns, setting up prototypes and evaluating the effectiveness of ideas. Projects included working on building information management tools to create a digitally capable building, job site and warehouse automation and multiple analytics projects. Randy Harwood, SVP & chief strategy officer, has visited several times. “It’s incredible to sit in the iLab and talk to the kids that are there,” he says. “It’s just amazing how these kids are so smart and they’re not afraid of anything.”
Additionally, Graybar this year launched an Employee Innovation Program to crowdsource internal ideas. The program includes an Innovation Council designed to test and validate ideas, prioritize investments and commercialize solutions, according to Mazzarella.
Even with the digital focus, Mazzarella notes that distribution is still a people-to-people business. Graybar is actively hiring new salespeople to strengthen customer connections and be increasingly in tune with customer needs in order to provide desired solutions. “We believe this is a key to growing our business,” she says. “… Whether a customer wants to do business with us in person, digitally or a combination of the two, we are working hard to serve them well today and meet them where they want to be tomorrow.”
Graybar has done a lot of process analysis, says Harwood, to understand where the pinch points are in the business in order to smooth them out and improve time management. The Shared Services Team, established last year, was charged with mapping out the business process in order to identify tasks that could be automated, improved or discontinued. As a result, the company is in the early stages of using robotic process automation to automate routine human tasks and free up employees to “focus on higher value work,” says Mazzarella. “We are already seeing some significant cost savings and productivity improvements.… Work that used to take hours or days can now be completed in minutes.”
For example, a centralized accounts receivable group uses algorithm-backed software to prioritize daily calls. Clearing a morning queue of calls from the day before used to take the 65-person team at least 30 minutes. Now, a robot clears it for them before they arrive. “Now, when they come in in the morning, they’re fresh and ready to go and get an extra 30 minutes,” says Harwood.
Tax audits were another formerly time-consuming process that is now handled by software that will automatically pull tax certificates, archived invoices and whatever else may be needed. “Any function that’s more a lower-level administrative-type activity, we’re looking at how we can automate those processes to allow those people to spend more time on higher-level activities,” Harwood explains. “How do we use technology to automate processes and focus our people more on emotional tasks, more customer service-type opportunities? We spent a lot of time on that.”
Naturally, more automation can come with concerns about job stability. Graybar did not institute these changes over night, but rather started having conversations with employees several years ago about the intention, Harwood says. “You have to have a good amount of communication,” he adds. “What we’ve found is that as we’ve gone through these processes, the people are finding that their job actually is more interesting and easier for them because these tasks aren’t getting in the way of them doing all of their higher-level tasks.”
Mazzarella holds a company-wide conference call three to four times a year to ensure she is communicating openly with all employees on a consistent basis. “People need to know how we’re doing, where we’re headed and how they can help,” she says.
The calls celebrate positive achievements, but also take an honest, transparent look at areas that can improve. Mazzarella and senior leadership address questions submitted by employees and provide answers either over the calls or separately afterward. “I think this shows that senior leadership cares about employees’ concerns and wants to hear from them. Plus, it helps us understand what’s on employees’ minds,” she says. “Of course, the best part of doing these calls is when we can recognize the exceptional work of our employees or share good news about the company. It gives us a way to celebrate together and shine a spotlight on what makes Graybar a great company.”
Each day, Mazzarella says she is motivated by Graybar’s employees and the employee ownership culture of the company. “I feel a strong sense of responsibility to give my best for the employees who give their best every day, and I’m inspired by the way they go above and beyond,” she adds.
Overall, she’s excited about the opportunities she sees ahead for the future of wholesale distribution, particularly for companies “willing to challenge the status quo and transform themselves to succeed in a digital era.” To ensure Graybar is one of those companies, she notes the business must continually rise to the challenge of organizational inertia — the mentality of “if it’s not broke, don’t fix it.”
Future success, she says, will depend on strategic collaboration with customers, suppliers, other distributors, the technology community and educational institutions. “With the pace of change today, it’s no longer realistic for companies to do everything on their own,” Mazzarella says. “We need to explore new ways of working together and test new business models that will open up opportunities for growth in our industry.”