1. Value Added Documentation Mission Statement Provide an understanding in the development, implementation and reporting of Graybar’s value added program.

2. Value-Added Documentation Course Objectives and Benefits Understand the cost savings tools Utilize the tools to document our value add Differentiate Graybar from our competitors Enhance our position with our current clients Increase our success in closing new business

3. Value Added Documentation Course Outline What is Value Added? Identifying Value Added Services Determining Total Cost of Ownership Determining Impact to the Customer How to Report the Results Industry Samples and Case Studies Value Added Exercises

4. What is Value Added? Documenting improved profitability for the customer Customer joint activities with the manufacturer and the distributor Real value vs. the “lowest price.”

5. Identifying Value Added Services The Manufacturer’s role The Distributor’s role The Customer’s role Graybar’s Value Added Services

6. Formal Cost Savings Program Consistent Service Platform Consistent Price Platform Price Protection / Cost Avoidance Leveraged Based Pricing Formal Implementation Program Product Standardization Inventory Management Customized Delivery Solutions Electronic Business solutions Training 24/7 Emergency Service Failure Analysis Introduction of New Product Engineering Support Preventative Maintenance Kitting/Pre-Assembly Project Management Customized Reporting Technical Support Electricity / Power Usage Analysis Environmental Cost Reduction Safety Cost Reduction Reduced Insurance Costs Life-Cycle Cost Improvement Material Staging Process Analysis Value Added Services

7. Total Cost of Ownership Categories Revenue Enhancement: The impact Graybar has on the customer’s revenue stream Asset Improvement: Graybar’s ability to reduce the customers’ possession costs. Process Improvement:Graybar’s ability to reduce the customers’ transactional costs. Expenditure Reduction: Reductions in customers’ expected annual purchase costs Special Services: The value of special technical expertise that Graybar provides Other Savings: Savings attributed to Graybar’s efforts that may not impact any of the above categories.

9. Revenue Enhancement Faster part installation Energy Savings Failure Analysis Production Downtime Reduction Efficiencies in Output Introduction of New Product Reduced Turn-around Time

10. Asset Improvement Elimination of Duplicates & Obsolete items Consolidation of Critical items Carrying Cost –Insurance –Handling/Storage –Inventory taxes –Cost of Money Consignment Elimination of Equipment Improved Equipment Efficiency Just-In-Time Delivery Product Standardization Reallocation of Building Space Reallocation of Land Surplus Reduction Vendor-Managed Inventory Warehouse/Storeroom Management

11. Process Improvement Reduced Inspection Costs Improved Product Access Process Analysis Requisitioning Writing Purchase Orders Shrinkage/Obsolescence Check Processing Order Entry Material Receiving Electronic Business Solutions Internet Purchasing Inventory Management Location Trailer New Product Technology Production Efficiencies Reduced Maintenance/Repair Savings from Bar Coding Savings from Procurement Cards Savings from Electronic Data Interchange Savings from Evaluated Receipt Settlement Savings from Electronic Funds Transfer Summary Billing

12. Expenditure Reduction Product Standardization Product Substitution Alliances / Leveraged Purchasing Freight Reduction Integrated Purchasing Reduced Lead-Time Volume Based Pricing Price Protection / Cost Avoidance Tier Pricing

13. Special Services Training Engineering Support Kitting/Pre-Assembly Material Staging WHMS Management Predictive Maintenance On-Time Delivery Product Quality Evaluation Project Clean Up Project Management Reporting Information Supplier Coordination System Design Technical Support Warranty Work 24/7 Service

14. Other Savings Electricity / Power Usage Analysis Environmental Cost Reduction Legal Cost Reduction Life-Cycle Costing Like Product Exchange Safety Cost Reduction Cash Terms

15. Determining the Impact on the Customers Bottom Line Where does the data come from? –Internal Values –Industry Standards –Credible Estimates –Customers’ Numbers

16. Metrics Data Worksheet

17. Carrying Cost Equipment, Storage, Handling Shrinkage, Spoilage, Obsolescence Insurance Property Tax Cost Of Money 3-20% 3-6% 1% 3-6% 7-20% Hard Cost 14-33%

18. How to Report The Results InfoSource/Corporate Accounts/Business Development/Cost Savings/ –Cost Savings Report –Cost Savings Formulas –Cost Savings Categories Definitions –Metrics Data

20. Cost Savings Report- Expenditure Reduction Example

21. Cost Savings Report-Special Services Example

22. Cost Savings Report Example

23. Case Studies and Industry Examples Case Study Fortune 500 Company

24. Graybar Cost Savings for January thru June - 2006 COST SAVINGS CATEGORYPhiladelphiaSt LouisBoiseChicagoAtlantaSeattle Tucson TOTALS REVENUE ENHANCEMENT PROCESS IMPROVEMENT$10,800.00$12,857.15 $23,657.15 EXPENDITURE REDUCTION$1,511.64$25,233.14$1,908.01$25,622.49$76,801.86$4,808.70$3,959.83 $139,845.67 ASSET IMPROVEMENT$20,746.00$8,832.00$12,710.00$34,320.00 $76,608.00 SPECIAL SERVICES$700.00$1,400.00$1,400.00$1,400.00$4,900.00$4,200.00 $14,000.00 OTHER SAVINGS$5,000.00 $5,000.00 TOTAL SAVINGS IMPACT$2,211.64$58,179.14$3,308.01$40,854.49$107,269.01$43,328.70$3,959.83 $259,110.82 $259,110.82 / $2,414,349.55= 10.7% SAVINGS FOR PERIOD

25. Cost Savings Score Cards Developed for those Cost Savings Areas most requested by our customers. Provides a “snapshot” view of potential savings for the customer. A training guide to assist the field in implementing customer cost savings. Provide them directly to the customer or as a way to collect savings quickly for future reporting. InfoSource/Corporate Accounts/Business Development/Cost Savings/Score Cards

26. Getting Started It takes time to develop a cost savings program with a customer. To get started select 1 or 2 existing accounts with the following criteria: You have added value in recent past You have a strong existing relationship The customer wants to learn with you Key Accounts with large dollar spend

27. Exercise ABC Manufacturing has twelve different limit switches on their production line. Each limit switch needs to be replaced five times per year due to product failure. Joe Maintenance Manager asked Bette Seller, Graybar Sales Rep, for a solution. After further research Bette found a single universal limit switch that will replace all twelve individual limit switches and has a contact rating that will solve the failure problem. To document the value added savings use the following assumptions: 1.The old OEM limit switches sell price = $160.00 each 2.The new universal limit switch sell price = $25.00 each 3.Replacement time for old switch = 1 hour 4.Replacement time for new switch = 15 minutes 5.Replacement labor rate per hour = ABC will accept industry standard 6.Production down time due to switch failure = 6 production hours 7.Production revenue lost per hour = $1000.00 8.Average inventory of old switch = 3 per old switch SKU (36) 9.Average inventory of new universal switch = 3 10.Unless otherwise instructed all savings calculations are based on a twelve month (annual) usage Utilize the Cost Savings Reports, formulas, Cost Savings Metrics Table and the information above to document all possible categories for customer savings.

28. Exercise Action Items Complete the exercise within your group. Use your imagination – there are no wrong answers Return the exercise to your Supervisor for review. A solution to the exercise will be provided by Corporate Accounts upon request. (see contact information on the next slide)

29. Contacts Tom Fowler – Tom.Fowler@gbe.com phone 865-540-0844 Gerry Kollar – Gerard.Kollar@gbe.com phone 314-573-5230 Tom Rolland – Thomas.Rolland@gbe.com 314-573-5142