W.W. Grainger Value Chain Analysis

By John Dudovskiy
August 20, 2020

W.W. Grainger value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage for global MRO products distributor. Figure below illustrates the essence of Grainger value chain analysis.

W.W. Grainger Value Chain Analysis

W.W. Grainger Value chain analysis


Grainger Primary Activities

Grainger Inbound logistics

Grainger inbound logistics involves receiving and storing MRO products by the global industrial supply company in its distribution centres for subsequent shipment to customers. The worldwide distributor of industrial products purchases approximately 1,7 million types of MRO products from approximately 5000 suppliers worldwide and stores them in distribution centres.

Economies of scale is a major source of value creation in inbound logistics for the global industrial supply company.  Additionally, the B2B distributor benefits from its strategic relationships with its suppliers in general and key suppliers in particular.


Grainger Operations

Grainger operations are divided into the following three segments:

1. United States segment. This segment generated sales of USD 8,6 billion in 2018, 72% of total revenue of the company.[1] The industrial supply company divides its customers in US segment into two categories according to complexity of their needs.

 a) Large customers in the US. Customers in this segment have complex needs and require services at their place of business. Grainger source of value creation in dealing with large customers in the US include adoption of partnership approach and assisting customers to reduce total cost of ownership in MRO spend by helping them to manage their labour, product and inventory costs.

b) Medium customers in the US. This customer segment has less complex needs compared to large customers. Moreover, medium or mid-size customers in the US are mainly concerned with the solutions of their immediate business problems. Ranges and prices of products can be specified as major source of value creation for Grainger to target medium-sized businesses in the US.

2. Canada segment. The worldwide distributor of industrial products targets customers in Canada through its subsidiary Acklands– Grainger Inc. (AGI). Global MRO products distributor introduced two-year program to reset its business in Canada through closing more than 100 branches, optimising sales coverage model and creating North American centres of excellence.

3. Other businesses segment. This segment consists of the endless assortment businesses, Zoro and MontaRO, and smaller international high-touch solutions businesses mainly in Europe and Mexico.

Zoro and MontaRO endless assortment operations benefit from cost-efficiency and these subsidiaries are intended to address growing threat from Amazon Business.


Grainger Outbound Logistics

Grainger outbound logistics involves warehousing and distribution of MRO products by the global industrial supply company to end-users. The worldwide distributor of industrial products has 31 distribution centres (DC) worldwide[2].  Depending on the business model followed on a given region, goods can be shipped directly from a DC to customer, or they can be shipped to one of the 457 branches worldwide for the subsequent shipment to customer.

For example, in Japan, Grainger operates through its MonotaRo subsidiary and follows Endless Assortment business model.  Grainger outbound logistics in Japan involves the shipment of MRO products directly to customer premises.

In North America and Canada, on the other hand, customers can purchase MRO products from one of the B2B distributor branches. Accordingly, in these regions, Grainger outbound logistics involves the shipment of goods to a branch, where customers can purchase them to take to their premises.


Grainger Marketing and Sales

Grainger marketing and sales activities are associated with development and implementation of marketing strategy by the global industrial supply company.  Grainger has more than 4000 outside sales representatives who regularly visit large customers with complex needs.[3]

The Global MRO products distributor has been actively integrating internet-based sales channels in an effective manner. In 2018, 62 percent of Grainger’s revenue in the U.S. came from online channels, making it the 10th largest e-retailer in North America, according to Internet Retailer. Through Grainger.com, eProcurement connections, KeepStock solutions and mobile applications, the company continues to develop online capabilities that promote a personalized, relevant, effortless experience for each customer.[4]

Accordingly, it can be argued that effective integration of internet-enabled technologies is one of the main sources of value creation associated with Grainger marketing and sales activities.


 Grainger Service

Service primary activities within the framework of value chain analysis refer to the level and quality of support provided by the industrial products distributor to customers after the sales of products.  Exceptional customer services, including post-purchase service belong to the list of Grainger competitive advantages. Company’s customer services include live-person support by phone, online chat or in person at over 250 branch locations.

W.W. Grainger Report contains a full version of W.W. Grainger value chain analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Ansoff Matrix and McKinsey 7S Model on W.W. Grainger. Moreover, the report contains analyses of W.W. Grainger leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of W.W. Grainger marketing strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Fact Book 2019 (2020) W.W. Grainger

[2] Fact Book 2019 (2020) W.W. Grainger

[3] Fact Book 2019 (2020) W.W. Grainger

[4] Fact Book 2019 (2020) W.W. Grainger