Industrial Distributors Face Integration Challenge

By: 
November 08, 2011

Resellers of industrial, mechanical, automation, and control products that survived the last couple of recessions find the ground shifting under them in more ways than one. I interviewed several recently, and they all agreed that products are changing, buyers are doing things differently, and distributors are trying to adapt to it all.

Industrial products are changing because some mechanical content is being replaced by electronic components. So, just as with electronics products, they're getting smaller and more energy efficient. And, just as in electronics, they're also becoming a lot more interconnected and talking to each other more via industrial versions of Ethernet and open control protocols.

Back in the day I wrote about technologies that now reside under the hood inside a chip. Anyone remember Asynchronous Transfer Mode (ATM), the telecom backbone protocol? How about time-division multiple access (TDMA) and code-division multiple access (CDMA) schemes in early cellphones? These followed a fairly typical lifecycle curve. One month everyone's talking about the technology and debating its pros and cons, and next month someone's figured out how to squash it down into three chips, then two, then merely a few transistors.

At the macro level something similar is happening, at a slower pace, with industrial products as they become more integrated. Instead of a human-machine interface (HMI), a programmable logic controller (PLC), a motion controller, and a safety relay from multiple suppliers, now there's an integrated control system from a single supplier that requires system developers to know and work in only a single integrated development environment (IDE).

Software is another big change. Distributors told me it's getting a lot more important in mechanical and automation products as engineers try to differentiate their designs through performance boosts, get them through manufacturing faster, and make them easier to maintain. Some products also need remote diagnostic capabilities, so they require networking connectivity. The result is OEMs want better machine modeling, simulation, and automatic code generation tools, and they also want better programming support from their distributors.

Therein lies the rub, or one of them, for how distributors are coping.

Many of these distributors are small, regional, and local resellers. They resemble stocking system integrators more than they resemble the larger catalogue and broadline distributors selling mostly electronics that have recently moved into this sector. Some of the smaller regional resellers, which often specialize in particular platforms and serve mostly local customers, didn't make it through the last recession. That gave the bigger ones the opportunity to pick up the slack. Some of these have created divisions where they cluster industrial, automation, and mechanical products under a single sales umbrella. The big question is: Then what?

Larger broadline distributors are used to selling high volumes of lower-cost parts with little to no programming or design support. But low volumes of higher-cost parts that require programming and some level of design support is the basic definition of products in this sector. So how do you accomplish this at a distance?

The solution? One big one has been the Web. And this is also one of the major changes. Buyers are using distributor Websites a lot more than they did in the past, initially to do product and services research, and increasingly, also to purchase. Some distributors focus on e-commerce and provide tutorials, videos, and other training assistance tools online. Others are beginning to add user forums. Since this sector often requires buying several interlinked products, some are also making it easy to find those related items via search engine optimization or other types of database linkage.

Will distributors end up using social media and other social networking tools? Will users pick up on these and start talking to each other more as a result? Some resellers say they are researching these options. My guess is, they all are.

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