Posted by John Delligatti on Wed, 12/04/2019
Cyber Monday closed with US consumers spending a record-breaking $9.4 billion in online sales, according to Adobe Analytics. While spending $12 million per minute seems unfathomable to me, it’s not really that surprising given the rise of consumerism and ever-growing customer expectations.
Thanks in part to on-demand services like Uber and Lyft and the incredibly high bar that Amazon has set in instant gratification, consumers have grown accustomed to availability, transparency and visibility in the supply chain as a matter of course. Walmart and Amazon are the world’s largest logistics companies for a reason. Because they’ve got it down to a science. Centrally locate distribution centers based on demand, and product is never more than a day away from the consumer. But advancements in logistics and automation have taken it to new heights and essentially enable $9.4 billion dollars of product to get where it needs to go. The massive amounts of sales data that is collected, analyzed and fed into physical automation systems in large scale distribution plants means that product can be fulfilled, shipped, and delivered near terminal velocity. And we’re seeing this trend in the industrial space as well, the MRO supply chain in particular.
The purchasing patterns in MRO are similar to consumer behaviors in B2C. Rather than buying volume for the year, as with direct materials, MRO purchasers and planners have a bit more of a challenge. An SDI study found that companies order only 27% of their stock MRO items for three consecutive years. When taking into account all MRO items (stock and nonstock), that number shrinks to 12%. With only a quarter of their MRO supplies remaining in consistent use for more than two years, industrial buyers tend to behave more like consumers, buying on demand.
In an estimated $650 billion global market for MRO, the needs are the same: friction-free procurement, visibility, control, and the Amazon user experience. Advancements in physical automation and logistics are quickly making this a reality in MRO. We may not see an MRO Cyber Monday event soon because of the reactive nature of maintenance, but we are at the point where the supply chain is managed very much the same as direct material and B2C supply chains.