Grainger announces biggest product expansion in its history
Susan Avery -- Purchasing, 3/2/2006 2:00:00 AM
With the publication of the latest edition of its catalog on April 1, Grainger is launching the biggest product expansion in its 78-year history. On that day, MRO buyers will find that the distributor has increased nine-fold the number of fasteners it offers in the catalog. The 4,007 page catalog has 260 pages on fasteners. Last year, it had just 60 pages on fasteners.
Grainger also plans to display some of the fasteners at its booth at the National Plant Engineering Show in Chicago on March 21.
While it's not unusual for industrial distributors to add products to their offerings, no announcement recently compares to the magnitude of this launch.
The addition of some 30,000 fastener SKUs (stock keeping units) to the line is over and above the 3,500 Grainger already offers customers in its catalog.
The expanded line consists of 20 categories of fasteners—bolts, nuts, washers, screws, rivets, thread inserts, pins, nails, u-bolts, shims, anchors—manufactured by a host of suppliers, both incumbent and new to Grainger.
Some 4,000 SKUs of the expanded line will be readily available at the distributor's 400 branches located across the U.S. Grainger will fill orders for others from its nine distribution centers, shipping them next-day to the majority of its customers.
Grainger also has increased its training efforts so that employees have the necessary expertise to assist customers with technical issues. In addition, the distributor has a central technical support group ready to respond to customer inquiries about fasteners.
Grainger is investing between $5 million and $10 million on the product line expansion in 2006. It expects sales from product expansion this year to represent 1% of its sales growth. For 2005, sales were $5.5 billion, a 9% increase compared to the previous year.
All these efforts are in response to demand from MRO buyers, the distributor says.
"Customers and other purchasing professionals who want to leverage the unplanned MRO buy have told us that we need to add more fasteners to our offering," says Michael A. Pulick, vice president of product management, W.W. Grainger, Lake Forest, Ill. "By expanding our fastener line, we are giving our customers a broad array of products so that they can truly consolidate their purchases which, saves them time and money, and ultimately makes them more productive."
One Grainger customer working for a processing company in Texas welcomes the product line expansion. "It's good for our company," he says. He purchases metric and standard stainless steel fasteners through distribution—nuts, bolts, washers and a variety of screws—to maintain and repair machinery operating in the plants.
Unhappy with the reliability of a previous supplier, he approached Grainger about increasing his company's buying with the distributor. Pooling the fastener purchase with other industrial supplies he routinely buys will help manage inventory levels and reduce process costs, he says. "If there's a part that we can't readily identify and don't have time to research, Grainger will get it for us. We don't have to stock it on our shelf. They've even opened their store on a Sunday for us."
The buyer is typical of Grainger customers, says Pulick, explaining that MRO buyers often are frustrated by the number of different types of fasteners they need to buy. Often, they end up purchasing fasteners in quantities that take up space and have ongoing inventory carrying costs. "We will use our network of 400 branches so that customers have ready access to products close by, eliminating the burden of having to carry that inventory," he says. "They can rely on a Grainger branch locally for their unplanned purchases." Pulick is familiar with purchasing strategy; he's a certified purchasing manager (CPM).
Studied buying habits. The distributor conducted extensive interviews with purchasing professionals on their MRO buying habits as research for developing its new Grainger Value Advantage program. From the research, the company learned 40% of the MRO buy is unplanned. It also learned that 70% of those unplanned buys are not purchased again the following year. Under the Grainger Value Advantage program, the distributor works with customers to consolidate the unplanned buy, treating it as a separate category of spending that can be leveraged to help reduce costs. (For more information on the research findings and the program, please see Purchasing's Sept. 1, 2005 issue.)
Delving deeper in the research, Grainger also found that 86% of its customers make unplanned purchases of fasteners—and fasteners are usually the one item they leave without purchasing when buying industrial supplies at its branches. Until now, these customers and other MRO buyers typically purchased fasteners through other local distributors or fastener specialists. Sixty-eight percent of fasteners are bought through these sources.
Using the research results, Grainger continues to fine tune its strategy for unplanned purchases and is removing some redundancies in its products lines. "This allows us to increase the breadth of our line by adding many more unique types of products so we can help customers solve problems they face every day," says Pulick, noting that the distributor is adding other products across a variety of categories and is exploring other opportunities as well.
Other initiatives also have helped position Grainger for the dramatic boost in its product line. The company is more than halfway through a multiphase market expansion initiative. For it, Grainger is looking at the location and size of its branches, the deployment of inventory, merchandising and sales coverage. As a result, branches in some areas of the country such as Atlanta, Denver and Seattle are now larger and brighter, carry more products and have a larger sales staff. (For more info, please seePurchasing's July 14, 2005 issue.)
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