Industryweek 11509 Gap

Lost in Translation: Bridging the Gap Between Industrial MRO Buyers and Sellers

July 20, 2016
The needs of MRO buyers are changing quickly, and it’s a challenge for sellers to keep up. Case in point: 72% of industrial products buyers would switch suppliers for a better website.

In the hyper-competitive industrial maintenance, repair and operations (MRO) environment, suppliers go the extra mile for their customers to win and retain business. But that also can lead to unanticipated expenses and suppressed margins. Business strategies that were once tried-and-true for sellers may keep them from thriving today.

Further complicating the landscape are disconnects between capabilities that MRO sellers think buyers want and what buyers actually want. Those disconnects often drive sellers to direct scarce resources toward enhancing a laundry list of capabilities that may – or may not – be important to their customers.  

A 2016 UPS study, Growing MRO Business: Closing the Gaps, compares buyer and seller perceptions across a range of measures. The study explores how buyers and sellers interact, what each think are the most important capabilities of sellers and even the use of 3D printing. 

One example of buyer-seller misalignment is that 28% of industrial MRO sellers feel that real-time product visibility is important compared with just 15% of buyers. Conversely, 21% of buyers think that always having products in stock is important compared with only 11% of sellers.

Overall, the study showed that today’s MRO buyers make purchases using all available suppliers and channels, but their spending is increasing the most via online marketplaces and consumer retailers, followed by traditional distributors.

As for sellers, the study reveals a long list of concerns about their competitors’ capabilities.  Nearly one-quarter say 24/7 ordering is among their top worries, as is offering a consistent experiences across channels.

These are legitimate concerns when buyers today have direct access to more supplier options than ever before. The MRO landscape, like nearly every industry, has changed in just a few short years as a new generation of millennial buyers has begun rising through the ranks. The needs of MRO buyers are changing quickly, and it’s a challenge for sellers to keep up.

According to the 2015 UPS Industrial Buying Dynamics study, 72% of industrial products buyers would switch suppliers for a better website. In addition, 38% say they have gone outside their supply base to buy online from someone for the first time.

It’s clear that buyer preference is increasingly influenced by how easy and convenient it is to work with a supplier. One could argue that in MRO, there are times that coming through for a buyer quickly is all that matters. The rest of the time, sellers have to deliver across the board.

Future trends in MRO

The future of MRO can be promising for sellers who realize growth potential and embrace new technology. Emerging technologies, for example, can disrupt the status quo, but they also can present unique opportunities for businesses to enhance operations to meet and even anticipate the needs of buyers. Moving forward, the industry must:

  • Use a smart mix of channels. Online marketplaces present an interesting dilemma for sellers since they can be both a competitor and a new revenue stream. Having a carefully considered strategy for selling through multiple channels is vital to protecting margins and achieving revenue objectives.
  • Provide convenience and consistency. Buyers of all ages may be gravitating toward online channels, but they are not abandoning other channels. Sellers should focus on making sure all information is available through any channel a buyer prefers and providing a consistent experience across channels.
  • Provide great service. This is easier said than done since service expectations are evolving. For some buyers, good service means having a knowledgeable person answer a question via online chat or phone. Other buyers consider order response time or ease of ordering as their most important service metric. 
  • Harness the power of partnership. One way to gain new perspective and drive change is to leverage the resources of business partnerships such as technology and third-party logistics providers (3PLs). Technology providers can help businesses adapt quickly to increasing demand for better inventory management, real-time visibility and an enhanced e-commerce user experience. With 3PLs, businesses can improve customer service and reach new markets faster, often with less investment and risk.
  • Embrace 3D printing. 3D printing may be the most transformative force on the future of MRO. The vast majority of buyers and sellers agree that 3D printing will play a role in the future of MRO. Buyers are already using 3D printing for either prototyping, simple components or parts (55%) with 32% of buyers using the technology extensively within MRO. Both sellers and buyers looking to increase order response time may consider more aggressive implementation of 3D printing as a competitive advantage.  

It's All About the Experience

No one-size-fits-all solution exists that will align channels and service features to satisfy all buyers. It’s important to remember that buyers are more loyal to an experience than a supplier relationship and that no two buyers’ needs are the same. Focusing on the overall experience is crucial. Some places to start:

  • The customer. Maintain a thorough and objective repository of customer feedback, wants and needs — ideally through professionally-produced market research. Even for sellers with decades of experience and longstanding customer relationships, research brings surprises that can reshape the future.
  • The competition. The types and numbers of competitors in the MRO space are expanding almost daily. Sellers should assess their capabilities against existing and emerging competitors to find their own points of strength and differentiation. If there aren’t any obvious ones, they must be created quickly. 
  • Change management. All MRO sellers, even those with the greatest momentum, must evolve. Online marketplaces are on the rise today, but what about in five or 10 years? For example, what impact will push-button reordering have on ordering habits, and MRO specifically? 

In a marketplace where the largest competitor has only 7% share, it’s tough for MRO sellers. Some companies adapt and thrive. Others flounder and fail. Those who understand their markets and customers best will adapt faster.

No matter the business, success requires the knowledge, will and flexibility to evolve alongside shifting market and channel forces — even if evolution requires educated, leap-of-faith investments and the reimagining of longstanding business models.

Kelly Brock works as marketing director overseeing the industrial distribution industry solution for UPS. She has more than 15 years of experience with UPS and has held positions in e-commerce, high-tech, international customer technology and business planning, and has worked for UPS in both Singapore and Hong Kong leading business, revenue and integrated marketing strategies for the Asia Pacific region before returning to the Atlanta headquarters.

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