MSC Industrial Supply is going all-in on adjusting to the new normal of doing business in a virtual format.
The metalworking and MRO products distributor announced Jan. 21 that it is overhauling its customer support model to enhance the in-person and virtual support it provides, centering on a move from a branch office network to virtual customer care hubs that will provide personalized support to customers, regardless of their physical location.
Actions taken to support the new customer support care structure include the closure of 73 branch offices that have been closed temporarily amid the pandemic. MSC said that sales associates who previously worked in those offices will continue to work remotely through virtual customer care hubs to maintain customer relationships and personalized service in local markets. The changes will also result in the reduction of about 115 management and other positions within MSC's commercial sales organization that interact infrequently with customers.
MSC expects the changes to achieve ongoing annual cost savings of $15 million to $18 million beginning in its fiscal 2022, and savings of $7 million to $9 million in fiscal 2021, which began Aug. 30, 2020. A portion of those savings will be reinvested into customer-facing sales roles that support MSC's growth initiatives, while the company will take related costs and charges of about $21 million to $25 million in fiscal 2021.
"Today's announcement is another significant milestone in our Mission Critical program," said Erik Gershwind, MSC president and CEO. "It will support the achievement of our 3-year targets of accelerating market share capture to 400 basis points above the Industrial Production Index and improving ROIC into the high teens by fiscal 2023. We are eliminating significant structural cost in keeping with our commitment to reduce operating expenses by $90 million to $100 million and freeing up capital that will fund the needed investments into our five growth initiatives."
The news follows Melville, NY-based MSC's Dec. 3 announcement that it was relocating and significantly downsizing its Long Island Customer Support Center (CSC) to a smaller facility in Melville, going from a 170,000-square-foot CSC to a 26,000-square-foot facility later this spring. The company said that move was driven by the success it has seen from its associates who are working remotely as a result of the COVID-19 pandemic.
"We are creating a leaner, faster and more agile customer care organization," Gershwind continued. "Our new structure is breaking down geographic barriers, enabling us to recruit technical talent that can serve our customers wherever they need us. It also positions MSC to help solve the manufacturing skills gap that has plagued the industry. Our best-in-class technology platform enables us to create economies of scale through a virtual Customer Care network. Lastly, we are building on the hybrid work model that began with reimagining our Melville, NY office space. Our associates and customers have confirmed that the work from home model is working and will work well into the future."
MSC reported its 2021 first quarter financial results on Jan. 5 for the period ended Nov. 28, while also sharing sales information for the month of December. See our full recap here.
MSC was No. 9 on Industrial Distribution's 2020 Big 50 List. The company had $3.19 billion in fiscal 2020 sales for the year ended Aug. 29, 2020.