MSC Industrial’s Mission Critical Initiative Is Bearing Fruit
We live in an era of almost continuous flux and brands are finding it necessary to constantly adapt and evolve to keep step with the rapid pace of change.
In the world of B2B ecommerce this means never taking your eye off the ball and making sure your organization is always searching for new markets to take advantage of and new ways to market and sell your brand. We live and work in a global marketplace these days which means, regardless of your geographical location, you need to always be thinking and strategizing from a global perspective.
This is exactly what MSC Industrial was doing when it first announced its Mission Critical initiative – a strategy which is now seeing significant impact in the company’s financials.
MSC Industrial
Mission Critical came about when MSC was searching for a way to move from its position as a leading spot buyer – An alternative to strategic sourcing and long-term procurement commitments, where there is an immediate requirement and a purchase must be made, quite literally, "on the spot." These purchases are usually unplanned, made up of small orders, and often paid for immediately – to a more in-depth partner.
"We made significant investments across the organization to transition from a leading spot-buy provider to a ‘mission critical’ partner on the plant floor, augmented by our spot-buy capabilities," said MSC Industrial CEO, Erik Gershwind. "With the bulk of the less visible changes completed, we outlined our plan to return to historic levels of revenue and earnings growth, consistent with the legacy of our company."
Mission Critical therefore was designed to take those investments and translate them into superior financial performance through MSC Industrial’s various markets and operations.
"First, to accelerate market share capture with a target growth rate of at least 400 basis points above IP by the end of our fiscal 2023," continued Gershwind. "Second, to return ROIC into the high teens, powered not only by leveraging growth but also by structural cost take out of $90 million to $100 million also by the end of fiscal 2023. This year, our fiscal 2021 began our proof of concept, with our fiscal third quarter serving as the latest encouraging data point."
Digital Transformation
Mission Critical also involved a massive restructuring of the entire MSC Industrial operation. 73 branch offices were shuttered in order to move to model involving virtual customer care hubs and, while the office closures did mean slashing 115 jobs, MSC immediately created 135 new roles for those impacted by the cuts.
A cultural reform was also initiated which was designed to make the company better aligned with market transformations happening outside of its own four walls as well as enabling new levels of agility and flexibility, and make it better equipped to embrace and adapt to change.
The virtual customer care hubs have been created with the latest communications technology in mind. MSC Industrial has integrated a smartphone system which allows customer service representatives to connect with their colleagues and customers from anywhere in the country instead of being restricted to physical locations.
This transformation holds particular relevance in the wake of the COVID-19 crisis as an increasing number of people and organizations are shifting to remote working models and customer preferences for communication become ever more digital centric.
With data becoming an increasingly critical component of every business – especially with the imminent changes to third-party cookies being brought in by Google – the new communications technology being introduced by MSC Industrial will also provide a rich seam of first-party digital information which can then be leveraged by the company for more intelligence driven decision making further down the line.
"We invested heavily in technology, and in particular digital technology as opposed to legacy technology," Gershwind said. "When it came to technology, and to our customers, that allowed us to be more agile, move more quickly, to be more cloud-based, and to bring insights through mining data that’s sitting inside of our company. I was really proud of the team and in the way we made this happen because it’s a move about growth, but we did it in a way that goes back to my grandfather’s values and the way we treat people."
Final Thoughts
MSC Industrial’s Mission Critical initiative is transforming the company into a more digitally capable and agile organization and helping it to build deeper relationships with its partners than would have been possible under its previous modus operandi. The results evident in the company financials suggest this course was well justified.
Digital Transformation and adaptive strategy are sure to be hot topics at B2B Online Orlando 2022, taking place in November at the JW Marriott Orlando Bonnet Creek Resort & Spa, FL.
Download the agenda today for more information and insights.