Electrocomponents: Industrial Procurement & Supplier Development

Former Global Category Manager, Electrocomponents

Why is this interview interesting?

  • How Lindsley changed the business after taking over
  • The differentiation ECM could offer a large client like Black and Decker
  • How pricing works with large accounts
  • Differences sourcing industrial MRO vs electronic products
  • The biggest challenges meeting availability demands
  • Differences in gross margin between private label and 3P industrial products

Electrocomponents PLC

Why is this company interesting?

Founded in 1937, Electrocomponents (ECM) is a UK-listed industrial and electronics distributor that provides MRO components, automation and control, and technical electronics products to businesses globally. The company is a high-service distributor that aims to provide value-added service beyond simply selling components that an Arrow Electronics would focus on.

Over the last 10 years, the company has faced gross margin pressure and lower conversion of gross to operating profit that has dampened FCF growth. Lindsley Ruth, ECM's CEO, joined in 2015 and has reorganised the business to focus on value-add services to drive organic growth in addition to multiple acquisitions. ECM has compounded FCF per share at over 10% for 20 years and still has opportunity to expand globally.

ECM is part of our global B2B distributor coverage to understand what drives a sustainable competitive advantage in this business.

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Executive Bio

Emma Briggs

Former Global Category Manager, Electrocomponents

Emma has nearly 12 years experience at Electrocomponents where she was responsible for global procurement and supplier development for RS Components, Electrocomponents' largest division. She was responsible for running large accounts like Stanley Black & Decker in the tools division before being promoted to the Global Account Manager for RS Pro, ECM's private label offering.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Emma, can you share some context to your role and responsibilities at RS?

I was at RS Components for 13 years in total, starting in 2007 and leaving amicably in 2019, and I did a number of different roles. I started in HR as a recruitment manager and worked into buying functionality so in product management and as a global sourcing buyer. I spent some time as a supplier relationship manager looking after Eastern Europe and liaising with the Taiwanese and Indian teams. I then moved to a senior category manager for tools and storage and left the company when I was global account manager looking after RS Pro which is their private label, again for tools, consumables and test. Most of my time was spent in tools and consumables or the MRO space.

How did the business change when Lindsley took over?

When Lindsley took over, it was night and day. For those of us who were happy with the change, it was a welcome change we experienced. Lindsley came in with an entirely different view on the expectations of our customers and suppliers, especially private label which was close to my heart. He and David Egan, the FD, worked very much in partnership and moved from a comfortable slow-paced B2B environment, to something far more fast-paced. For any of us who had worked in any retail buying environment, it felt very familiar and much more cut-throat and fast-paced. Risks were higher but so were the rewards, for everyone involved, including suppliers and customers.

What did he change about the way he treated the customers and suppliers?

Customers became the heart of everything we did. Lindsley Ruth gave it much more focus and resourced and recruited within customer-facing roles, like the sales teams. He invested heavily in our online abilities and ecommerce functionality. He removed blockers and issues which had been outstanding for years, especially to do with our website and everything which was customer facing. He invested in added value such as DesignSpark for electronic design engineers, which RS still offer today.

For our customers, he encouraged and mandated the business to talk to our customers in a way that meant something to them, as they were experts in their chosen fields. He effectively segregated those customers based on their buying behaviors and job roles. For electronic design engineers, we had a strategy for the first time for that type of person, so you can get a feel for what he did from a customer point of view. It was very deliberate and focused and recruitment and resourcing ensured we were best-positioned to support what the customers needed. Suppliers were similar and we made several attempts at organizing ourselves within the product management function, both in the UK, which was the bulk of the global business, but also globally.

On the receiving end of what Lindsley did, there were no more excuses for why it wasn't working or being more harmonious across all the global functions and regions. There was an expectation to step up how we managed our suppliers, specifically focusing and prioritizing on strategic key relationships. The way we identified them was far more deliberate and robust and felt that there was more of a method behind what was going on. We communicated internally about our strategics and let them know they were our strategics, which sounds simple but it is a really important step. We started to build true collaborative plans with them which, in hindsight, is a wonderful thing. We implemented a supplier relationship management approach or SRM methodology around how to prioritize our strategics, keys, preferred and other suppliers, what that meant for us.

How did that make a difference to your relationships with the strategics?

It was massive, but several strategics had already been receiving high touch with RS. I was the company lead for the global Stanley Black & Decker account which had never been identified as a key supplier, but we saw huge potential with them as they held industrial grade tool brands under them which were also globally spread. For the first time, Stanley Black & Decker also appointed a global lead for us who would help remove geographical barriers. There were other examples of supplier relationships which were less close to home for me, where we made them feel part of our customer promise. We made them understand that if they let us down by not supplying, incorrect pricing, not offering exclusives or innovative product solutions or not helping with marketing and content collateral and translation services then they were ultimately letting our customer down. We tried to create that link between the suppliers and customers and the brands they upheld.

From reading the earnings calls and the stuff Lindsley puts out, he seems to be quite a character and there has been a significant change in both the culture and character of the company. How did he change the way people behaved or performed?

People were truly held to account. I wasn't senior for most of my tenure within Lindsley's control, but in my last role, I started to see the top level of what was going on. To the middle management tier, it was such a welcome breath of fresh air when Lindsley came in. We could instantly see that all the stuff we had been challenging and moaning about for years, finally Lindsley found solutions to remove these blockers and to make these things happen. He truly put the customer at the heart of everything we do, to help us manage our suppliers. He gave us the confidence in our own abilities to do that.

He created an environment where those of us who wanted to, could and did excel. I was promoted several times within the three years he was there, and I had the most personal success and job satisfaction during that time. With that kind of reward culture comes the risk and holding individuals to account comes with responsibility and a need for those individuals to change. Some people couldn't, didn't want to or know how to, and would be stopped short in meetings if they had not delivered to expectations.

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Electrocomponents: Industrial Procurement & Supplier Development(April 13, 2022)

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