Mc Master-Carr Supply Company Daniel Lifschitz Marketing Manager

Mc. Master-Carr Supply Company Daniel Lifschitz Marketing Manager Mc. Master-Carr Supply Co. Los Angeles, CA

Your Backgrounds What is everyone here majoring in? (if you know) – How did you choose?

About Me Studied abroad at NUS Worked at the IC computer labs on campus Did undergraduate research Took Chinese, sailing, and the stand-up comedy class Member of AEPi (does it still exist? )

What is Mc. Master-Carr? Industrial Supply Company Over 100 years old Specializing in Maintenance Repair and Operation material (MRO) Locations in LA, New Jersey, Chicago, Atlanta, and Cleveland

My Role at Mc. Master-Carr Started in Marketing Moved to supervise Product Help Directly supervised 12 product specialists Promoted to Assembly Operations Projects (sort-of like internal operational consulting) No set path! My current position

The Generic Supply Chain Example: Krispy Kreme Supplier Manufacturer C&H Sugar Krispy Kreme Customer Disoriented Santa Cruz student at 2 am

Mc. Master-Carr Supply Chain Supplier Supplier Supplier Mc. Master Manufacturer

Relating Model to Five Forces

Why Haven’t I Heard of Mc. Master? Private company Mainly specializing in business to business transactions They’re expensive

Industries Supplied by Mc. Master Can you guess which industries buy from Mc. M? TV/Movies Aerospace / Defense Wineries Retail Distribution Centers Bakeries Machine Shops Biotech Hospitals Software Companies Hotels Automotive Manufacturing * Probe Story Chip Makers Robotics Oil, Gas, and Electric Alternative Energy Meat Packing Citys, DWPs, and Waste Management Prisons Cruise Ships Automotive Repair

Industries Supplied by Mc. Master Can you guess which industries buy from Mc. M? TV/Movies Aerospace / Defense Wineries Retail Distribution Centers Bakeries Machine Shops Biotech Hospitals Software Companies Hotels (generally upscale) Automotive Manufacturing Chip Makers Robotics Oil, Gas, and Electric Alternative Energy Meat Packing Citys, DWPs, and Waste Management Prisons Cruise Ships Automotive Repair

Mc. Master Business Model Preeminent Publisher Catalog (let’s take a look) Web www. mcmaster. com Branding? Customer Service – Solutions Company Carry large and varied inventories What’s the cost of a stock-out? Chasing Unpredictability Continuous Process Improvement * Probe Story

Customer Service No holding or answering machines, warm transfers No sales force (we never call customers unless they call us!) Only 24/7 external correspondence: catalogs Support Solutions oriented, not product

Large and Varied Inventory 98% of items ship from stock What’s the benefit? 450, 000 products available Chemical Light sticks (Glowsticks!) Velcro Screws Raw Aluminum Light Bulbs Bicycles Gatorade

Chasing Unpredictability Why do customers come to Mc. M? How could customers replace our services?

Chasing Unpredictability Continued Customers have two obvious alternatives to Mc. Master Stock the material themselves Create relationships with vendors themselves

Chasing Unpredictability Continued Customers have two obvious alternatives to Mc. Master Stock the material themselves Do you stock for every possibility? How far in advance can you plan for? The farther advance you plan, the less predictable your stock will become – Can you think of an example in your lives? How do you manage shelf life?

Chasing Unpredictability Continued Create relationships with vendors Large minimums But I want onsies twosies Long lead times Vendors have contracts to sell through distributors Difficult to manage relationships with many vendors

Chasing Unpredictability Continued Customers have two obvious alternatives to Mc. Master Stock the material themselves How do you stock thousands of items when you don’t know which parts you’ll need tomorrow or in 5 years? Create relationships with vendors Vendors have large minimums, long lead times, contracts to only sell to distributors, etc.

Chasing Unpredictability Continued How does Mc. Master do it? Mc. Master manages the unpredictability of each customer’s needs Difficult for companies to manage inventories necessary to meet unpredictability In the aggregate, the unpredictable because predictable! Remember all our different customers?

Continuous Improvement - Examples of Operational Management Why does Mc. Master strive to constantly achieve lower order fulfillment times?

Examples of Operational Management Why does Mc. Master strive to constantly achieve lower order fulfillment times? Orders just sit on the truck before being shipped to the customer

Examples of Operational Management Why does Mc. Master strive to constantly achieve lower order fulfillment times? Orders just sit on the truck before being shipped to the customer… Batching orders together makes it easier to fill them; why not let them build up?

Examples of Operational Management Why does Mc. Master strive to constantly achieve lower order fulfillment times? Because by pushing the system we can learn how to make it better! (see next slide) Batching hides weaknesses! Think of how buffering a video on You. Tube makes it run better on your computer, but we aren’t solving the issue of a slow network

Creating Problem Visibility (shamelessly stolen from another presentation) Inventory Missed Due Dates Late Deliveries Too Much Space Too much paperwork Engineering Change Orders Scrap & Rework Poor Quality 100% inspection Long queues Machine Downtime

Familiar Comparison Amazon vs Borders What are the advantages to each business model? Where does the Amazon model fail and the Borders model succeed?

Making Business Decisions that Make Sense Business decisions that are in-line with our model Public companies are often forced to focus on revenue growth Home Depot and Grainger

Analyzing the Business Model A customer calls in asking for 2 packs of screws to fix a broken machine used for production Is this an order Mc. Master would take? Why or Why not?

Analyzing the Business Model A customer calls in asking for 400 pounds of aluminum on a yearly basis for their production line Is this an order Mc. Master would take? Why or Why not?

Analyzing the Business Model Mc. Master-Carr has a Will Call (pick up) at every branch. How does it fit into the Mc. Master model?