The MRO Market slated to be worth $657.23 billion by 2024
Technology-enabled innovation has led to efficient manufacturing processes and diminished MRO supply chain issues making North America the most mature market for the MRO industry. Western Europe holds the number two position in the market. The Asia-pacific region has shown green shoots of expansion in demand and is expected to compete strongly with mature markets in the near future. The growth is driven by a state-of-the-art factory setup, effective logistics, and digital technology.
The industry has been estimated to be worth $616.01 billion in 2021. The MRO forecast is $657.23 billion by the end of 2024. The CAGR is estimated to be around 2-3% year-on-year growth. The core demand is driven by the digital transformation in MRO related business processes. The consolidation in the MRO industry has been due to the significant mergers and acquisitions that have led to sharp growth. The notable M&A in the segment were: Motion Industries purchase of Kaman Distribution; Wesco Anixter, Turtle & Hughes and Amazon Business Merger, and many smaller 50 odd acquisitions that took place in the last quarter of 2021. Atlas, Copco, Ingersoll Rand, Kaman Distribution, Rexel, and Graybar are notable suppliers that forged alliances to strengthen the market.
“The trend of mergers and Acquisitions in the MRO industry will continue in 2022 as the market is fragmented and unorganized. A technology-driven digital transformation like the use of IoT, Big data analytics, Additive manufacturing, Blockchain, and such has led to significant growth and expansion in the industry. Technology has made the supply chain in the MRO sector highly visible. The sector is still taking nano-steps, and 2022 will be the year that will see rapid expansion in both demand and supply across geographies. The digital transformation has seen massive growth due to the Covid-19 pandemic, and the digital era has truly begun,” said Vijith Bhargavan, Senior Analyst at Beroe.
The outsourcing channels in the MRO industry have their unique challenges. Outsourcing has been hampered by low spending delay in implementation of agreements due to mismatched expectations in KPI, SRM, SLA indicators. The need of the hour has been the more prominent players stepping in to facilitate effective utilization of resources such as opportunity assessment, understanding how and where MRO integration can bring optimal results in managing low-value and high-demand spare parts, and so on.
“Cost-saving can be effectively managed by MRO integration. MRO procurement strategy can be effective in creating end-to-end MRO storeroom management. Recent strides in B2B sourcing of tail-end spend in Amazon Business alone has been encouraging. Outsourcing is the key to growing and being effective in the MRO industry,” Vijith Bhargavan, Senior Analyst at Beroe.
The digital transformation has transformed the demand-supply equation. Consolidation and organized business are the keys to growth in this segment. More prominent players with deep pockets will play a significant role in the segment that is highly fragmented at the moment. The MRO forecast is strong and is expected to witness robust Y-O-Y growth till 2024.
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