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Is Your Company Ready for The New Reality?

Is Your Company Ready for The New Reality?

Since August, 2015, when VMA’s 201...

Offshore Oil Extraction and Transportation

Offshore Oil Extraction and Transportation

Offshore oil facilities come to the fore...

Back to Basics: Pressure Relief Devices, Part 2

Back to Basics: Pressure Relief Devices, Part 2

In Part 1 of Pressure Relief Devices, wh...

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Industry Headlines

Watson Valve Announces Watson Valve Services, Australia

2 DAYS AGO

Watson Valve Services Inc. announces Watson Valve Services, Australia. Watson Valve will now have the ability to support the supply of its severe service valve products to non-U.S. domestic sites from its Australian based service agent, Process Plants International (PPi) under the name, Watson Valve...

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Velan Makes Changes to Management Team

2 DAYS AGO

Velan recently announced that Executive Vice-President (EVP) Ivan Velan has decided to reduce his work scope, but will remain with the company as Special Advisor to the President, Yves Leduc. Ivan will lead key projects and continue to support the management team.

Martin Allen joined Velan’s ...

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U.S. Oil Inventories Now at Record High

2 DAYS AGO

Several factors have played a part in pushing U.S. crude oil prices below $30 per barrel, including high inventory levels of crude oil, uncertainty about global economic growth, volatility in equity and non-energy commodity markets, and the potential for additional crude oil supply to enter the mark...

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FERC Approves $3.2B Sabal Trail Pipeline Project

2 DAYS AGO

Sabal Trail Transmission, LLC, a joint venture of Spectra Energy Partners, LP, NextEra Energy, Inc. and Duke Energy, received a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (FERC) to construct and operate the Sabal Trail interstate natural gas pipelin...

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U.S. Adds 151,000 Jobs, Unemployment Rate Down to 4.9%

1 DAY AGO

Total nonfarm payroll employment rose by 151,000 in January, and the unemployment rate dropped 0.1% to 4.9%, the lowest since Feb. 2008. Job gains occurred in several industries, led by retail trade, food services and drinking places, health care and manufacturing. Employment declined in private edu...

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U.S. Factory Orders Down 2.9% in December

2 DAYS AGO

New orders for manufactured goods in December, down four of the last five months, decreased $13.5 billion or 2.9% to $456.5 billion, the U.S. Census Bureau reported today. This followed a 0.7% November decrease. Overall, December orders were 6.6% below where they were one year ago.

Machinery orders...

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The Challenges of Distribution in Today’s Valve World

Warehouse_Worker_iStock_000008027878MediumValve and actuator end users are operating with tighter budgets and deadlines than ever before, which means increasing challenges in the distribution channels.

The last time a panel of distributors spoke before the Valve Manufacturers Association board (in 2005), the worldwide recession had not yet hit. However, the next few years were rough ones, and the need for tighter purse strings has since created a new set of challenges for distribution channels, according to a panel of experts from leading distributors who spoke at VMA’s annual meeting in October 2011.

 

The immediate effect of the economic recession was that “people pulled back—no one was stocking much,” explained Shelly White, division president of Baro Companies, a division of FCX Performance. When business picked back up, it was more difficult to fulfill orders. That situation will quickly right itself, but new pressures have arisen on the distribution channels that may stay around for awhile, panelists pointed out.

White, along with fellow panelists Andy Brown, president and owner of Mid States Supply, and his colleague, Ben Hurst, vice president for Mid States, as well as Gary Ittner, executive vice president for McJunkin Red Man Corporation (MRC), explained what their companies do today, how that has changed over the years, and the current challenges in the distribution field. (See sidebar, last page.)


DISTRIBUTOR AS BRIDGE

White said that one of the main trends she sees today in the distribution channel is that lead times “are really compressed.” The recession created a situation in which end-user customers have to do more with less resources, she pointed out.

These users remain under a lot more pressure, and as a result, they want distributors to do more of the work of finding the right product while taking on more of the risks inherent in that situation. At the same time, they have new sources of information such as what can be found on the Web.

Today, end-user customers “often pull out numbers for what they think a product should cost,” White said, which can be completely unrealistic or misunderstood.

End users also want a much wider range of products from a distributor than in the past.

“For example, a distributor may have just sold ball valves [in the past], but now the customer wants every possible thing that could go on that ball valve,” White says. More than ever before, end users also expect their distributors to be knowledgeable about the latest technology and to take responsibility for specifications and selecting the right equipment for applications while enabling those users to maintain a competitive edge.

Many users today require a distributor to manage the sub-vendors of the manufacturer such as foundries and companies that do the testing or provide machining, welding, assembly or packing.

Meanwhile, on the manufacturing side, a main trend is that the companies that make the products are increasingly asked for more severe service products, White said. This requires the distributors to keep up with what’s available.


FOR THE FUTURE

The calls for quicker delivery and reduced lead times are only going to increase going forward, according to White, and this situation will continue to be the main challenge for distribution channels.

Additional future challenges include:

  • Competitive pressure from lower-end manufacturers will increase.
  • Customers are getting more tech savvy, using e-sourcing and shopping online for products, which creates an uncertain situation for distributors of engineered, sourced products.
  • Contract orders are getting larger and larger as big end users such as the giant oil companies want broader supply agreements.
  • End users want to pass on more of the risk. “Whether it’s in the form of a letter of credit, performance guarantee or extended warranty through the startup period, the end user is applying more pressure on all sub vendors to perform until the plant starts up. There is more and more risk for suppliers with reduced reward. This has been happening for about five years, but it’s really coming to a head,” White said.
  • There will be higher demands for response at all levels of the sales cycle, which is hampered by reductions in people and resources from within the manufacturing industry.
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