In 2016, distributors and manufacturers will need to show versatility both in their product offerings as well as their menu of value-added servicesâand being able to adapt on the fly has become essential.
â[Customers] are increasingly expecting distributors they buy from to adapt to their needs. Those distributors who just continue to offer a mass production, assembly-line model are going to lose out,â explains Sagar Jethani, global head of content at electronic components distributor element14. âThe ones who are able to offer custom services at a good price and in a scalable manner are going to gain market share.â
As an example, element 14 customers have benefitted from its online community of engineers, says Chris Breslin, chief product officer at Premier Farnell, the Britain-based distributor of which element 14 is a subsidiary.
âMany distributors end up competing on price and delivery in the production space. We really feel that we provide a competitive advantage at the front end of the customer design cycle,â Breslin says. âWe have great access to information and technical sales support, supported by the largest online community [of engineers] in the industry.â
Jethani notes that element14 can tap into that community of nearly 400,000 engineers.
âBy engaging with thousands of peers around the world, engineers can stay sharp across a wide array of disciplines and discover new applications and ways of doing things they might not necessarily get in their day jobs,â he says.
Breslin adds that customers will justifiably expect other comparable value-added services for 2016. âToday, you need to provide customers with real-time product content and data to enable faster decisions,â he says.
Product Knowledge and the IoT
Product expertise will be more essential than ever in 2016, due to the many new and growing technologies, including the Internet of Things (IoT).
Hans Landin, vice president of power transmission products at bearing manufacturer Timken, says he views the impact and influence of the IoT on two levels.
âOn one hand, we are seeing growth in online interactionsâeverything from downloading CAD models, getting technical support, and purchasing more bearings from our stores, where users can check availability and track delivery,â Landin says. âTo that end, we are doing a lot to leverage our ERP system, such as integrating our engineering tools and CRM to put the information customers need literally at their fingertips.â
This, in turn, gives Landin and his colleagues at Timken instant and more detailed customer information.
âThe data we collect from these tools helps us anticipate customer needs and serve them better. We continue to work face-to-face with our customers, collaborating to solve their problems,â he says.
Also in 2016, Landin says he expects the IoT to enable a part as fundamentally common as a bearing to become more sophisticated. â[That] touches on âsmartâ bearings and the potential for them to be equipped with sensors and transmitters that relay data to improve the performance of industrial machines,â he explains.
The increasing sophistication, and resulting customer demand, is something many will watch in the New Year. âWhile most heavy industrial markets are in the early stages of exploration and adoption, we anticipate growing interest in intelligent solutions,â Landin says. As a result, distributors and other suppliers will need to be on top of emerging trends, Jethani says.
âIf an engineer needs assistance coming up with a good IoT framework or automobile application, they should be able to get that assistance from the distributor theyâre buying from,â Jethani explains. âItâs no longer enough to sell product. You really have to support that product with deep expertiseâ¦Thereâs one side to the IoT that involves consumer-facing applications. But thereâs also the side of the IoT that will affect engineers as customers.â
In an analysis, âThe Internet of Things: Industrie 4.0 vs. the Industrial Internet,â written for the Manufacturers Alliance for Productivity and Innovation (MAPI), director of economic studies Kris Bledowski looked at the IoT and its global impact.
âIndustry worldwide is waking up to the importance of Internet integration, big data, and ever-faster processing,â Bledowski wrote. âAll of these innovations are shaking up standardized production and distribution techniquesâ¦A fast pace of innovation is instilling some fear among market participantsâthe fear of being left behind the competition.â
Product Availability Rules
Inventory also will be an issue in 2016.
â[We are] a high-service distributor. One of the things we do differently is provide a large number of SKUs at smaller volumes,â says Matt Clark, global head of e-commerce, Newark element14, also a Premier Farnell company. âOthers are doing the opposite, providing a smaller number of SKUs at larger volumes.â
Timken has taken a similar approach, Landin says.
âOur customers are looking for solutions beyond bearings to ensure they have reliable and productive operations. That is why we are investing in a broadened product portfolio to serve them better,â he says.
Customer expectations can be more challenging than everâbut potentially more profitableâfor 2016.
âEveryone in the industry needs to significantly elevate the customer experience. The bar is being set and will continue to be set at a higher level than B2B merchants are used to,â says Clark. âThe B2C momentum is not going to stop in 2016. Solving problems that go beyond filling an order is critical to becoming a high-service distributor.â
Some concerns came up when discussing the New Year ahead. At Timken, Landin and his colleagues have cast a watchful eye on energy sectors, especially oil and gas and what those markets may hold.
âThe health of the energy sector is reflected in the drop in the level of drilling activity, and itâs having a downstream impact because more land-based rigs are sitting idle,â says Landin. âOperators are cannibalizing these idle rigs to rebuild and repair their active rigs rather than purchase new parts. [But] we remain confident in the long-term value Timken brings to these market sectors.â With more product lines and relevant technologies in 2016, a degree of specialization can emerge. Jethani expresses concern that too much specialization could result.
âThe complexity of emerging technologies is forcing engineers to choose a hyper-specialization. The danger is that, if theyâre not careful, they will find themselves learning more and more about less and less,â he explains.
Overall, though, there is an enthusiastic outlook for 2016.
âIt will fall on distributors to offer new kinds of transparency to engineers and buyers about the orders they place,â says Jethani. âThe market is getting more competitive for their business, and the existing players will need to do more than ever before to win that customerâs loyalty. Itâs a great time to be an electronics purchaser.â