MRO purchasing habits

We love surveys. They always contain surprises. This month’s survey of MRO purchasing habits is no exception. We knew you are too busy to answer a ton of question so we just asked big ones, such as:

• Which is more powerful, low prices or sales and service?

• Is the value added proposition still adding value or is it losing steam?

• What makes you switch distributors and how often do you do it?

• Does have a strong local distributor matter in the age of national accounts?

Many industry practitioners and observers are keenly interested in who buys what from whom and why. Regardless of the title on your business cards, and there were many of them, you clearly buy a lot of stuff.

The range of products you are authorized to buy is also impressive and not a few of you are charged with procuring nearly every tool and supply category your facility consumes. Now that’s buying power!

Price vs. service
Perhaps the biggest question is, what drives the purchasing decision? Is there a trend? The simple answer is yes, there is a trend and price is the driver. A solid 50 percent of our respondents have switched distributors in the last year. Of these, half switched to obtain lower pricing. Another 14 percent switched to broader line card distributors that allowed you to consolidate vendors. (An interesting aside: more than 47 percent of respondents have more than seven primary distributors.)

However, more than 30 percent of you switched because your new distributors offer better sales and service support. So, while price is the major driving force in why you are switching distributors, sales and service support comes in a respectable second.

Local vs. national
In contrast to the lowest price at all costs model is the answer to where you buy. Local relationships still carry the day: 52 percent of you buy from local providers “whenever we can.” About 21 percent of you buy regionally or nationally, but depending on how you look at it, “only” 27 percent of you buy based on lowest cost.

The value of value-added
So if you prefer local providers, do you prefer their value-added services? Customer loyalty has its price. Nearly 61 percent of you say those services earn high or moderate levels of your loyalty. However, 34 percent rarely take advantage of the distributor services offered.

What do you buy, anyway?
Finally, exactly what do you buy? The short answer here is “everything.” From the highest percentage products, lubrication (80 percent) and power transmission equipment (79 percent), the weights gradually decline to a low of 55 percent who purchase testing and measuring tools.

Here are the numbers on how many of you buy which products:

The clearest and most encouraging lesson for us from this survey is the fact that it gives further credence to our belief that the true purchasing power in most organizations lives on the plant floor, not in a corner office.

This article appeared in the August/September 2007 issue of MRO Today magazine. Copyright 2007.

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