Pan-European industrial challenges and opportunities were discussed at the EPTDA All Committees Days meetings organized in Brussels this year. This white paper presents the outcome of these discussions that will give a clearer picture of the trends in the PT/MC end-users markets.
The EPTDA distributor members, responsible since 1998 for promoting and developing best industrial practices and continuing education, shared their market experience and identified major trends in the end-user industries.
In Europe, re-shoring by the OEM (Original Equipment Manufacturer) industry is a frequent practice; as a consequence, this industry has the ability to provide end users with innovative and secure machinery solutions. Mechanical solutions are increasingly linked to motion, actuators, drives and controls. The teams who try to find solutions for end user factories are joint teams of mechanical and electrical engineers who are responsible to steer the factory’s robot generated output.
Technical warehousing is in most cases outsourced to Industrial Distributors, who execute VMI solutions and VOI/ consignment. Typically 300 up to 800 mechanical and electrical articles are stored. Purchasers generally prefer long-term agreements (more than 3 years contracts). Procurement issues for the industry start raising questions around total cost, not only parts pricing but also storage and administration/ transportation cost. The factory output, uptime and meeting regulations are complex issues that a professional and specialized purchaser needs to take into account and analyze carefully. It seems that in the job description of an industrial purchaser, you encounter more and more attributes of a product manager, nowadays in Europe.
Trust in the distributor is a rising trend, as it shows in Italy, where industrial customers reward the added-value provided by distributors. PT manufacturers who try to deliver directly to end-user are often dismissed because of the lack of timely tailored delivery; limited service level and lack of liability.
Customers in general want to reduce their delivery risk as much as possible. Therefore, the approval duration is increasing for new products so time allocation needs to be slightly modified. In addition, new purchasers are younger and more open to change and exploiting new product solutions so in order to keep up with this new trend, manufacturers and distributors need to be flexible and constantly create and prepare new solutions. Customers are liable for their output and welcome EPTDA distributors as qualified advising distributors in the business chain. The most important buying factor remains On-time delivery! Both manufacturers and distributors need to make sure that the product gets to the end customer in time.
Product life cycle management and budget control are also key to remaining competitive in Europe. Western European countries re-invest in the manufacturing sector to stimulate employment. Production is starting to become attractive again because we are now competitive again with the Far East in terms of labor costs vs. quality output. Similarly, sustainability must be measured and guidelines and benchmarks should be given (e.g. minimal 30% energy usage against the same factory output).
Coping with today’s new challenges, one way to survive is to increase the value proposition of the Maintenance and Engineering departments. Technical knowledge and experience is essential. Customers are looking to replace aged processes and machinery so the role of the distributor in providing knowledge and solutions is increasing. Customers require services and added-value – a total solution, not just the products. The role of the distributor in all this is essential.
 Vendor-Managed Inventory (VMI) is a planning and management system that is not directly tied to inventory ownership. Under VMI, instead of the customer monitoring its sales and inventory for the purpose of triggering replenishment orders, the vendor assumes responsibility for these activities.
 The process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold. This is very different from traditional practice whereby a customer pays for goods within a set time period after receiving them (often 30 days). Under consignment, it makes no difference whether product sits in the customer’s warehouse or shelves for two days or two years; the supplier receives nothing until it is used or sold. This could result in a serious cash flow problem for the supplier if goods continue to be produced but money is not collected