That's the question distributors may ask when they look inside their warehouses if John Myers' concept for the virtual warehousing of wire and cable pays off.
In his 42 years in the wire business, John Myers has seen the market evolve to where the services attached to the products sold by a master wire distributor like 23-year-old Houston Wire & Cable, Inc. (HWC), Houston, Texas, are valued above the product itself.
That's why he believes electrical distributors need a master distributor like HWC to offer a package of cost-reducing services with the product. Myers recently spent four years purchasing wire and cable for Graybar Electric Co., St. Louis, Mo., after 38 years with wire companies such as Anixter, Boston Insulated Wire, Brand-Rex, General Cable and HWC (during his first tour of duty with the company). So when he and a group of Houston Wire & Cable's managers purchased the company from Alltel in 1997, he began developing the services that would set the company apart from the competition. Working with Graybar showed him what distributors really needed in a wire supplier.
"I found out that the biggest thing was a logistical problem," he says. "Distributors have to stock material, take it off the floor, package it, ship it and put that reel back into stock. They are looking for someone to help reduce transaction costs. I have spent most of my time since I came back to HWC on the service side of the business."
HWC, now a 234-employee, 10-location company, got its start in 1975 by providing timely and reliable delivery of wire and cable to service the requests of electrical distributors for unusual wire and cable requests. Myers now has a much broader vision for the company. He retooled HWC to not only service oddball wire requests from electrical distributors, but totally eliminate warehousing wire for them.
His quest is to service electrical distributors' wire and cable needs out of HWC's nationwide warehouses. In essence, he has spun a web of virtual warehouses around the U.S. that distributors can use as their own. They don't have to stock the cable in their own facilities. When they get a call from a customer for it, they work out a delivery timetable with HWC. The distributor's customer never knows that the wire and cable hasn't been waiting on the distributor's shelves, that it's just a phone call away at a HWC warehouse. Taken to its logical extreme, this eliminates the warehouse space a distributor must allocate to wire and cable, and allows him or her to invest resources elsewhere in the company. That's the key value-added service that Myers offers electrical distributors.
He knows many distributors use inventory as a security blanket and aren't comfortable outsourcing one of their core responsibilities. To sell distributors on the concept, HWC analyzes a wholesaler's cost of possession of wire and cable, including costs of insurance, security, warehouse space, equipment and manpower to stock it themselves versus paying HWC to do it. "We are in that business, and we try to convince them that it costs less to have us do it," says Myers.
To date, the program has proved most popular with national chains such as Graybar and GE Supply, Inc., Shelton, Conn., and some large regional chains, says Myers. "The larger distributors like it because they are the ones that have the bigger logistical problems. They can't have the same material stocked in 200-plus locations. They are looking at zone or regional warehouses, and we fit into that program. The small distributor with one or two locations probably doesn't have a need for that because he probably stocks what he needs right there."
HWC offers other stocking options, too. Its Early Advantage service guarantees that if a customer places an order by 4 p.m., it's delivered the next morning. HWC will also buy short lengths and oddball cuts of wire and then either release it back when the distributor needs it, or if a piece is unsalable, HWC will sell it for scrap for the distributor.
HWC also offers distributors assistance in working with their customers. At large factories or construction projects where a lot of wire may sit waiting for installation and risk being stolen or damaged, HWC works with the distributor and offers to warehouse the wire for the customer. This may mean renting a local warehouse, storing the wire in a container or holding it in the nearest HWC warehouse. "We manage the job as the contractor or distributor wants it to be managed," says Myers. "The customer doesn't really care where the shipment comes from. It's, 'Can I get it tomorrow morning?'" he says. Myers is so convinced that distributors will get comfortable with the concept of outsourcing their wire and cable inventories that he's considering the expansion of HWC's warehouse network to include four or five new strategically located facilities in locations such as Charlotte, N.C.; Chicago, Ill.; Houston, Texas; Los Angeles, Calif.; and the Northeast. He is also moving HWC into electronic commerce to link his company closer to distributors. For now, he wants to get distributors to rethink how they handle wire and cable. "I am trying to get them to outsource," he says. "I am not selling wire and cable. I am selling value-added services. No one has really looked at it like that."