Anixter International Inc. Financial Statement Analysis
For more information concerning our business segments, foreign and domestic operations and export sales, see Note 7.
"Income Taxes" and Note 10. "Business Segments" in the Notes to the Consolidated Financial Statements.
Suppliers
We source products from thousands of suppliers, with approximately one-quarter of our annual dollar volume purchases
sourced from our five largest suppliers. An important element of our overall business strategy is to develop and maintain close
relationships with our key suppliers, which include the world's leading manufacturers of communication cabling, connectivity,
support and supply products, electrical wire and cable, and utility products. Such relationships emphasize joint product
planning, inventory management, technical support, advertising and marketing. In support of this strategy, we generally do not
compete with our suppliers in product design or manufacturing activities. We do, however, sell a small amount of private label
products that carry a brand name exclusive to us.
Our typical distribution agreement generally includes the following significant terms:
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a non-exclusive right to resell products to any customer in a geographical area (typically defined as a country,
with the exception of our UPS business which is typically defined as a county or state);
cancelable upon 60 to 90 days notice by either party for any reason;
no minimum purchase requirements, although pricing may change with volume on a prospective basis; and
the right to pass through the manufacturer's warranty to our customers.
Distribution and Service Platform
We cost-effectively serve our customers' needs through our computer systems, which connect the majority of our
warehouses and sales offices throughout the world. The systems are designed for sales support, order entry, inventory status,
order tracking, credit review and material management. Customers may also conduct business through our e-commerce
platform.
We operate a series of large, modern, regional distribution centers in key geographic locations in North America, EMEA
and Emerging Markets that provide for cost-effective, reliable storage and delivery of products to our customers. We have
designated 20 warehouses as regional distribution centers. Collectively, these facilities store approximately 35% of our
inventory. In certain cities, some smaller warehouses are also maintained to maximize transportation efficiency and to provide
for the local needs of customers. Our network of regional distribution centers, local distribution centers, service centers, branch
locations and sales offices consists of 245 locations in the United States, 30 in Canada, 24 in the United Kingdom, 23 in
Continental Europe and the Middle East, 28 in Latin America, 12 in Asia and 18 in Australia and New Zealand.
We have developed close relationships with certain freight, package delivery and courier services to minimize transit
times between our facilities and customer locations, as well as a dedicated delivery fleet of over 500 vehicles in our UPS
segment. The combination of our information systems, distribution network and delivery partnerships allows us to provide a
high level of customer service while maintaining a reasonable level of investment in inventory and facilities.
Employees
At January 3, 2020, we employed over 9,400 people. Approximately 50% of the employees are engaged in sales or sales-
related activities, approximately 35% are engaged in warehousing and distribution operations, and approximately 15% are
engaged in support activities, including inventory management, information services, finance, human resources and general
management. We do not have any significant concentrations of employees subject to collective bargaining agreements within
any of our segments.
Competition
Given our role as an aggregator of many different types of products from many different sources and because these
products are sold to many different industry groups, there is no well-defined industry group against which we compete. We
view the competitive environment as highly fragmented with hundreds of distributors and manufacturers that sell products
directly or through multiple distribution channels to end users or other resellers. There is significant competition within each
end market and geography served that creates pricing pressure and the need for excellent service. Competition is based
primarily on breadth of products, quality, services, relationships, price and geographic proximity. We believe that we have a
significant competitive advantage due to our comprehensive product and service offerings, global distribution network,
technically-trained sales team and customized supply chain solutions. We believe our global distribution platform provides a
competitive advantage to serving multinational customers' needs. Our operations and logistics platform gives us the ability to
ship orders from inventory for delivery within 24 to 48 hours to all major global markets.
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