THE EVOLUTION OF VALVE DISTRIBUTION MRC's Gary Ittner Outlined The Many Changes

THE EVOLUTION OF VALVE DISTRIBUTION MRC's Gary Ittner outlined the many changes that have occurred in the manufacturing/distribution systems for valves over the years. Back in the 1970s, for example, the industry was much more complex, more regional and local with many sales going straight from the multitude of manufacturers that existed to end users. Over the years—as international sourcing occurred; the number and types of products available grew; and manufacturers began outsourcing over borders—distribution began to consolidate regionally, and then expand nationally as companies grew. In the 2000s, rapid consolidation of both manufacturing and distribution occurred and many new brands entered the market before the economic crash. Later, after that crash, North America saw oversupply. Today, manufacturers are looking to expand their integration chains, acquire additional lines of products and expand distribution channels. To grow their markets and capture larger projects, many manufacturers are "looking at higher-end products to help offset the commodity-type products," Ittner said. Meanwhile, "the buy-direct model, which has been very prevalent in Europe, is starting to find its way into a broader North American project market." All of this affects distribution channels and means that "we all need to work together to ensure we are not duplicating what we do to one another," Ittner said. While the industry has seen many changes since the depth of our economic woes, many of the challenges remain the same, he pointed out. For example, a main challenge for manufacturers remains finding ways to: improve core competencies in manufacturing, services and solution selling; improve key processes such as raw materials, production and managing subcontractors; and measure value over a product's lifecycle. Meanwhile, distributors are also looking to improve their own core competencies, add value for their customers, deliver end-user cost savings and improve performance measures. And end users are seeking ways to consolidate what they spend through smaller bases of suppliers, balance technical needs and commercial pressures, and find leveraging opportunities. What has changed the most over the years for end users is that they are migrating away from standard valves and toward customer specific solutions. What that means for manufacturers and distributors are new challenges in service requirements from both the commercial and technical ends. "There are many changes and additions being made to specific end-user valve specifications, thus requiring additional dedicated inventory to support these requirements," Ittner said. It also means new information requirements. For example, "As far as price updates, we're getting beaten with a stick with constant requests for industry indices to support price changes," Ittner said. Meanwhile, product quality issues are getting far more challenging, and distributors and manufacturers are asked to take on more financial risk, he added. Going forward, ongoing challenges for distribution will include: Continued pressure to provide low-cost premium products. As quality differences narrow, low-cost sourcing will continue to gain influence, Ittner said. A reduction in the knowledgeable workforce at distribution, manufacturing and end-user levels. Increased demand for value-added products and services, which translates into more documentation and inspection requests, extended warranties, shipping advantages and other demands. As far as how manufacturers can help meet these new demands, Ittner said they can look for better ways to ship on time and to communicate any changes in lead times. They also can challenge end users on unique inventory and standards requirements, be involved in developing price adjustment indices, and look at ways to deliver the quality customers expect to receive. He also urged manufacturers to see their distributors as partners by looking at the value of distribution and future maintenance, repair and operation (MRO) requirements when developing positions on major projects and involving distributors in the sales channel. Source: valvemagazine.com