Report: Integrated supply on the rise
Industrial Distribution staff -- Industrial Distribution, 7/22/2008 9:39:00 AM
More than 80 percent of distributors provide some type of integrated supply service to their customers, according to a report by consulting firm Frank Lynn & Associates.
That's up from the roughly 40 percent of distributors polled for INDUSTRIAL DISTRIBUTION’s 2007 61st Annual Survey of Distributor Operations, who attributed nearly 20 percent of total 2006 revenues to those agreements, according to a report in ID’s April issue.
And about $14 billion of the roughly $125 billion annual MRO spend by manufacturers is made through integrated supply contracts, according to Bob Ashby, manager and leader of Frank Lynn & Associates’ industrial practice.
Ashby’s report, Integrated Supply and Emerging Hybrid Channels in Industrial Markets, indicates that developments in information technology and the constant demand to take costs out of the supply chain have forced the traditional integrated supply model to evolve into so-called “hybrid” models.
The report, compiled from interviews with more than 200 sales, purchasing, product and marketing managers and business owners, shows that traditional contracts account for roughly half of the $14 billion spent annually on integrated supply. Limited on-site contracts account for about $3 billion more, with the remainder, about $4 billion, going to third-party logistics and other outsourcing providers.
For more of INDUSTRIAL DISTRIBUTION’s coverage of integrated supply, click here. To purchase Integrated Supply and Emerging Hybrid Channels in Industrial Markets from Frank Lynn & Associates ($295), click here.
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