In case you hadn’t noticed, life has changed a bit as a result of the COVID-19 pandemic. It’s affected almost every aspect of our personal lives, as well as industry and commerce.
Yes, there have been food and paper-product shortages of certain goods at the supermarket, but additional goods, from replacement electronic parts to building-and-construction materials, have been in short supply and on back order.
Manufacturers can feel those same pains. Transportation and distribution can have a big impact on the supply chain. We’ve become accustomed to the click of a mouse giving us immediate gratification, but moving product requires a bit more finesse and preparation than it used to. Manufacturers and distributors are here to help.
On the move
Supply and transportation difficulties may have affected the ability to deliver automation technology to machine builders and end users during the global pandemic.
“The pandemic did cause a temporary slowdown on receipt of product from a few of our suppliers,” says Eric Wendt, strategic program development director at Digi-Key. “Most of those delays were due to staffing levels, and then there was a lingering slowdown from the raw material shortages that are used to make those products. The supply side recovered fairly well. Most of our customers were able to keep their needs filled.”
The world of industrial automation manufacturers is not only flat, but also small, says Todd Mason-Darnell, Ph.D., marketing manager—services & safety, Omron Automation Americas. All major manufacturers of automation technology now rely on global supply chains to support regional and global customers, and the impact of the global pandemic has highlighted both the fragility and resiliency of this supply chain,” explains Mason-Darnell. “In addition to either shutting down or reducing plant staffing levels due to quarantine restrictions, automation technology suppliers have seen these impacts cascade across their suppliers for subcomponents or raw materials. Depending on the depth of a manufacturer’s supply chain, there can be a significant ripple effect as delays stack up.”
To add insult to injury, with the reduction of international travel due to COVID-19, there has been a corresponding reduction in air cargo capacity, says Mason-Darnell. “So even if there is no issue with the supplier manufacturing the components, it may be impossible to get from one country to another in a time frame that supports the just-in-time inventory levels that everyone had become accustomed to pre-pandemic,” he explains.
“Ironically, the pandemic has highlighted the strengths of the global footprint of the modern supply chain,” notes Mason-Darnell. “Rarely do manufacturers rely on a single manufacturing plant or a single source for components, and they’re therefore unlikely to suffer a single point of failure in their manufacturing chain. With multiple sourcing of suppliers and parallel or multi-parallel manufacturing facilities, manufacturers can shift demand and manufacturing locations for critical automation components to meet the needs of their global customers.”
Having multiple plants and warehouses around the world keeps customers supplied with necessary components.
“While Posital has production and distribution facilities in Europe, America, and the Far East, we have managed to keep our supply chains open with moderate delays,” explains Christian Fell, head of Posital’s North American operations and director of technology development for Fraba.
Supply chains, as a general statement, are in much better shape than they were 10 years ago, due to increased resiliency and more transparency on a global level, all due to increases in technology, explains Rahul Garg, industrial machinery and heavy equipment industry leader for Siemens Digital Industries Software. “COVID has brought additional challenges to the automation industry,” says Garg. “The machine builders and suppliers best equipped to handle such disruptions are those that have started to digitalize engineering and manufacturing processes. The further along companies are in their digitalization journey, the more prepared they will be to immediately adjust to unplanned disruptions. Using these digital tools gives machine builders and suppliers the ability to quickly evaluate and use alternative supply sources. These machine builders have a real strategy for innovation and transformation and have started to implement it. They can handle custom orders for customers willing to pay extra and can ramp up or decrease plant productivity easily.”
Online
Machine builders and end users are more likely to purchase certain components online without guidance.
OEMs are likely to buy commodity items such as incremental encoders online, usually through distributors with an online presence, explains Posital Fraba’s Fell. “We are excited about the potential or online sales to customers in the MRO market,” he says. “Our Encoder Match online tool is designed to help these customers find replacements for older products from any manufacturer, based on a part number or product specification, and to order them online without sales assistance.”
Most common purchases will be of standard replacement parts needed in common service environments, which are parts that can be purchased with limited risk to overall machine performance if they exist, says Siemens’ Garg. “In many cases these may be parts sold to the machine builders by their suppliers,” he notes. “However, some components may need to be purchased directly from the manufacturer, depending on the level of customization involved in the end-customer’s specifications. In those instances, end users will benefit from working with machine manufacturers that have fully merged their digital and physical processes to create a continuous, digitalized communication and data repository to help take advantage of advanced production technologies including additive manufacturing where standard parts are not available.”
Machine builders and end users are moving to online purchasing for simple automation components such as relays, both safety and non-safety, timers, pushbuttons and power supplies, agrees Omron’s Mason-Darnell. What is unique about these components is that:
- the machine builder or end user has a very clearly defined set of requirements for the application
- the product has well-defined specifications that are commonly accepted across the industry
- the product does not require a complicated configuration or programing for product selection or use.
“When you have the combination of these three, both machine builders and end users feel confident in selecting the right product online,” explains Mason-Darnell. “Product selection essentially becomes a datasheet exercise, with the customer looking to select a product that correctly fits a set of known and well-defined criteria and offers a plug-and-play implementation.”
The only variance to this formula is for end users who engage in maintenance, repair and overhaul (MRO) activities, explains Mason-Darnell. “If an end user is searching for an exact match—part number for part number—for an existing product, there is a greater level of confidence of purchasing more complex products, such as light curtains or even basic PLCs, online without the guidance of a technical specialist.”
Online access to buy products and services has become a natural way of purchasing, notes Daniel Weiss, senior product manager at Newark. “In today’s environment, engineers and purchasing teams want to be able to research the different products they need on their own time,” he says (Figure 1). “It’s important for them that, being able to compare different options and sites is quick and easy. With well-designed e-commerce sites, machine builders can search for the products they need, verify a particular part is the exact product they’re looking for and buy the product right then and there. Click a button and move on to the next task.”
Figure 1: Online access to buy products and services has become a natural way of purchasing. (Source: Newark)
There’s no limit to the types of products machine builders will buy online, says Weiss (Figure 2). “PLCs, operator interfaces such as pushbuttons and HMI products, sensors, power supplies, circuit breakers, interconnect products, wire and cable, wire management, Internet switches, routers, edge computers, enclosures, racks and fans are all available online with complete data and videos, making the machine builder’s job easier and saving time. Bundling and package deals allow for machine builders to get the parts in when they need them, eliminating the need to hold stock,” explains Weiss.
Figure 2: There’s no limit to the types of products machine builders will buy online. (Source: Newark)
“E-commerce covers many aspects of the business relationship between two parties,” continues Weiss, who identifies product information research, technical learning, product ordering, payments, delivery and tracking as a few of those aspects (Figure 3). “It also allows for the exchange of documents, such as technical datasheets or user guides, after-sales support, training and customer service that is quick and efficient.”
Figure 3: E-commerce covers product information research, technical learning, product ordering, payments, delivery and tracking. (Source: Newark)
The number of products that people feel comfortable buying without guidance from a salesperson or engineer has been expanding, says Digi-Key’s Wendt. “In the past, most things specified without support were replacement parts or simple products such as relays, meters, power or switches,” he notes. “More recently, it’s common for products that need programming, such as PLCs and industrial PCs, to be chosen without support. A year ago, we began expanding our offering into more advanced products in vision, motion and robotics.”
Digi-Key has seen incredible growth in all these areas, including the very high-ticket industrial robots (Figure 4). “Most of these purchases have happened after research on our site,” notes Wendt. “There’s an ever-growing community of engineers and technical people who are comfortable buying even the most advanced products by doing their own due diligence instead of standard sales practices.”
Figure 4: Online purchases have continued to grow in all areas, including the very high-ticket industrial robots. (Source: Digi-Key)
With the habit of online purchasing at home and availability of technical content online, many are able to make their own decisions on choosing the correct product. “This often is a first or second step into automation, and as needs expand they will then involve system integrators for more complex systems.”
Several factors drive online shopping behavior, explains Gary Frigyes, national sales manager, FA Division, at Pepperl+Fuchs. “For end users, this is MRO business where they are looking to replace a product currently used in the facility,” he notes. “The 24-hour availability of online shopping, coupled with the ease of ordering a few parts with a credit card, drives the majority of this business. For machine builders, online orders are typically for testing and prototyping a new piece of equipment or when adding new functionality on an existing machine.”
Also read: Designed to deliver
During this proof-of-concept phase, ease of ordering product and flexibility are most important to customers, says Frigyes. “Engineers can order products online without involving purchasing or local sales contacts,” he explains. “When the project moves into the production phase, purchasing will begin searching for the best method to source the product.”
Added value
Automation distributors have affected the way component manufacturers deliver solutions to machine builders and end users.
“Distributors don’t just sell products,” emphasizes Newark’s Weiss. “They provide engineering support and aftermarket services, reduce costs and optimize processes, as well as manage inventories, all of which creates value for manufacturers and customers. Distributors play a vital role in smoothly connecting manufacturers and customers. They can expedite response times, enhance a company’s reach and even create value-added packages that complement a company’s product offering or scope. Without distributors, either the buyer or seller would have to perform these functions, adversely affecting the bottom line.”
Because distributors handle multiple products from various companies, they can bundle components into turnkey systems, points out Weiss. “If they’re selling PLCs, HMI, sensors, switches, power supplies, circuit protection, wire, cable, connectors, wire management, Internet switches, routers, enclosures, racks and fans, they can design a complete package from these building blocks that works better, streamlines delivery and often lowers costs.”
One of the most resounding arguments for a solid distributor network is that they can respond quickly to customer demands, which is crucial in today’s highly competitive environment, notes Weiss. “Whether e-commerce or local and nimble, distributors can service customers on a level that would be difficult or even impossible from the component manufacturers,” he explains. Being close to customers also lets them spot market trends and pass this intelligence back to the machine builders and end users.
“Industrial distribution brings a lot of value to manufacturers,” says Pepperl+Fuchs’ Frigyes. “First, they provide additional feet-on-the-street for finding opportunities and servicing accounts,” he notes. “In many instances, they carry multiple complementary lines so they can offer complete solutions and one-stop shopping to machine builders and end users. In addition, distribution is able to provide value and services to customers to meet their needs.”
Some customers value having local or consigned stock, regular onsite visits, special terms or product kitting, which can be challenging for many manufacturers, says Frigyes.
“The ability of distributors to stock and deliver a wide variety of products to the end customers has helped machine builders and end users to be more flexible in their design and reduce their time to market,” says Digi-Key’s Wendt. Most solutions involve products from a variety of different manufacturers, he explains, so the ability of a distributor to service the entire scope of the project rapidly is critical.
“With a small direct sales force and an enormous product portfolio, we have had very productive relationships with our value-added distributors,” explains Posital Fraba’s Fell. “These companies understand our product portfolio and can recommend the best choices for customers. Our leading distributors have also developed the skills to work with our programmable products to fine-tune the performance characteristics in line with their customers’ requirements.”
Figure 5: Deciding to embrace digitalization facilitates optimizing both products and processes, which results in the creation of new business models and true differentiation. (Source: Siemens)
Driven by thin product margins, aging fleets of factory assets and fast-changing customer choices, companies are creating a comprehensive digital twin to optimize products and processes, explains Siemens’ Garg (Figure 5). “Distributors will have to determine the incremental value-add they will provide beyond stocking and reselling parts, ultimately, to increase profits and stay in front of the innovation curve,” he advises. “One way to create innovation that is not easily duplicated is by using superior distribution and service business models. But service as a strategy cannot become a competitive advantage when considered at the end of the production life cycle. It is achieved by digitally connecting data from products when first conceived through delivery. Deciding to embrace digitalization facilitates optimizing both products and processes. This results in the creation of new business models and true differentiation that is not easily duplicated, and distributors will need to determine their new role in this new business model.”
