McMaster Carr

McMaster-Carr Supply
Company
Daniel Lifschitz
Marketing Manager
McMaster-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 McMaster-Carr?
Industrial
Over
Supply Company
100 years old

Specializing in Maintenance Repair and
Operation material (MRO)
Locations in LA, New Jersey, Chicago,
Atlanta, and Cleveland
My Role at McMaster-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
2am
McMaster-Carr Supply Chain

Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
McMaster
Manufacturer
Relating Model to Five Forces
Why Havent I Heard of McMaster?

Private
company
Mainly specializing in business to
business transactions
Theyre expensive
Industries Supplied by McMaster

Can you guess which industries buy from McM?
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 McMaster

Can you guess which industries buy from McM?
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
McMaster Business Model

Preeminent
Publisher
Catalog
(lets take a look)

Web www.mcmaster.com
Branding?
Customer
Service Solutions Company

Carry large and varied inventories
Whats 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
Whats
450,000
the benefit?
products available
Chemical
Light sticks (Glowsticks!)
Velcro
Screws
Raw
Aluminum
Light Bulbs
Bicycles
Gatorade
Chasing Unpredictability
Why
do customers come to McM?

How could customers replace our
services?
Chasing Unpredictability Continued

Customers
have two obvious

alternatives to McMaster
Stock
the material themselves

Create relationships with vendors
themselves

Customers
have two obvious

Stock
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
How
Can you think of an example in your

lives?
do you manage shelf life?

Create
Large
But
Long
relationships with vendors

minimums
I want onsies twosies
lead times
Vendors have contracts to sell through
distributors
Difficult to manage relationships with many
vendors

Customers
have two obvious

Stock
How
do you stock thousands of items when you

dont know which parts youll need tomorrow or
in 5 years?
Create
relationships with vendors
Vendors
have large minimums, long lead times,

contracts to only sell to distributors, etc.

How
does McMaster do it?
McMaster
manages the unpredictability of

each customers 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 McMaster strive to constantly

achieve lower order fulfillment times?
Examples of Operational
Management
Why

Orders
just sit on the truck before being

shipped to the customer
Management
Why

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?
Management
Why

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 YouTube
makes it run better on your computer, but
we arent 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
What
vs Borders
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 McMaster would take? Why

or Why not?

A customer
calls in asking for 400

pounds of aluminum on a yearly basis
for their production line
Is
this an order McMaster would take? Why

or Why not?

McMaster-Carr
has a Will Call (pick up)

at every branch. How does it fit into the
McMaster model?

McMaster Carr

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McMaster-Carr Supply

is everyone here majoring in? (if

How did you choose?

100 years old

supervised 12 product specialists

The Generic Supply Chain

McMaster-Carr Supply Chain

Relating Model to Five Forces

Why Havent I Heard of McMaster?

Industries Supplied by McMaster

Industries Supplied by McMaster

McMaster Business Model

(lets take a look)

Service Solutions Company

Whats the cost of a stock-out?

holding or answering machines,

external correspondence: catalogs

Large and Varied Inventory

of items ship from stock

Light sticks (Glowsticks!)

do customers come to McM?

Chasing Unpredictability Continued

have two obvious

the material themselves

Chasing Unpredictability Continued

have two obvious

the material themselves

you stock for every possibility?

Can you think of an example in your

do you manage shelf life?

Chasing Unpredictability Continued

relationships with vendors

Chasing Unpredictability Continued

have two obvious

the material themselves

do you stock thousands of items when you

relationships with vendors

have large minimums, long lead times,

Chasing Unpredictability Continued

does McMaster do it?

manages the unpredictability of

all our different customers?

Continuous Improvement - Examples of

does McMaster strive to constantly

does McMaster strive to constantly

just sit on the truck before being

does McMaster strive to constantly

just sit on the truck before being

does McMaster strive to constantly

by pushing the system we can

Creating Problem Visibility

Missed Due Dates

Too much paperwork

are the advantages to each business

Making Business Decisions that

decisions that are in-line with

Depot and Grainger

Analyzing the Business Model

calls in asking for 2 packs of

this an order McMaster would take? Why

Analyzing the Business Model

calls in asking for 400

this an order McMaster would take? Why

Analyzing the Business Model