APC 2002 Annual Report Download - page 14

13
7 - Product distribution and customer
base
Product distribution
Electrical equipment distributors rank among our major
customers. We are a key partner to distributors worldwide,
who account for around 60% of our total sales and offer a
network of 13,000 sales outlets.
This close relationship gives us a real competitive advantage,
as distributors provide a single point of access for customers
and can combine products into packages. In addition, they
use their own sales forces to negotiate individual transactions,
freeing up the Schneider Electric sales team to concentrate on
customers’ general needs.
In addition to local and independent distributors, who
represent some 70% of all locally managed flows, Schneider
Electric works with seven international distribution groups:
Rexel and Sonepar, two French companies that rank among
the world’s largest distributors; Netherlands-based Hagemeyer;
Graybar and Grainer in the United States; Ced-Edmundson in
the United Kingdom and Solar Nordic in the Netherlands. We
also sell products through large home improvement chains
such as Home Depot and Lowes in the US and Kingfisher in
the UK for the non-specialist building renovation market.
We use specialist distribution channels for our highly technical
products such as human machine interface and VDI
transmission equipment, PLCs and industrial software.
The remaining 40% of sales are handled by:
Panelbuilders, OEMs and systems integrators.
Contractors, ranging from large firms specialized in installing
equipment and systems to small specialized and general
electricians.
Specifiers, including design and engineering firms,
consultants and architects, and systems specialists.
Lastly, we also sell directly to end customers.
Customer base
Distributors
Around the world, Schneider Electric is a leading supplier to
distributors. Our main customers in this segment are
distributors of electrical equipment and industrial automation
devices. The diversity of the customer base is a major
strength. Orders placed with distributors by electricians,
contractors and panelbuilders significantly influence demand
for electrical distribution products. Specifiers, such as
architects and building designers, represent an indirect
customer group in that the functionalities in their
recommendations and specifications channel demand towards
our products. We also sell equipment, services and projects
directly to large customers, notably contractors, building
owners, electric utilities and major end users such as public
services and multinational firms.
Contractors
Contractors who install electrical distribution, industrial control
and automation products only switch to a new supplier when
they see an obvious advantage such as quality, ease of
installation or efficiency. To promote new products, we train
and support the people who install them. In all our host
countries, we have help desks that take orders and give
advice by telephone. We also talk regularly with local
associations and professional groups and have set up an
Internet portal to circulate information about new products.
In the front lines, our sales force and marketing teams around
the world keep customers abreast of product innovations
and upgrades and help them get the most utilization value out
of our products. Lastly, we make our new products
or upgrades as easy to install as possible.
Global Strategic Accounts
While distributors are critical to our business, we also sell
directly to a wide range of end users and international OEMs.
Our dedicated Schneider Global Business Development
(SGBD) unit was created to serve these customers. In 2002,
they represented around 7.4% of total sales.
Our top SGBD accounts are DaimlerChrysler, Renault, General
Motors, Procter & Gamble, Bristol-Myers Squibb, Nestlé, IBM,
Motorola, Caterpillar, Emerson, Areva, Faurecia, Chevron
Texaco, Telefonica, Texas Instruments and Thyssen Krupp.
The number of accounts has grown steadily, from 20 in 1999
to 85 in 2002, and we will continue to add new customers to
the list.
To ensure that each global account receives the same quality
of service around the world, we have set up an organization in
which our subsidiaries and regional agencies can cooperate to
standardize the design, production and installation of the
products, equipment, projects and services that our customers
need. In addition, each Executive Committee member