The global MRO market is currently growing at a Compound Annual Growth Rate (CAGR) of 1.72 percent and it is expected to sustain the growth rate and attain a market value of $660 billion by 2020. North America and Europe are highly mature markets and these regions also have the highest penetration of global distributors. On the other hand, APAC and MEA are the markets with medium and low maturity levels respectively. Similarly, both the North American and European markets also possess high growth potential in terms of adoption of modern business models, e-procurement, increased outsourcing levels, and vendor consolidation.
The report covers crucial aspects of the global MRO market and provides insights on key market trends such as global mineral output, innovations in stock optimization, focus on cost reduction, and increase in industrial production. Insights on some growth constraints are also explained in the report that consist of volatility in the oil & gas industry, technological barriers, and lack of awareness regarding MRO outsourcing. The report also discusses some of the emerging engagement strategies in the industry including MRO Integration, industrial supply e-commerce, and VMI along with a detailed analysis on market leaders on a global level.
Trends & Insights:
Actions & Recommendations:
Note: These are estimates and forecasts.
Mining companies are expected to spend more on MRO activities to improve the operational efficiency of the equipment by reducing the downtime and lower the spend on new capital equipment.
Global MRO Industry Trends
The MRO industry is propelled by industrial production. While the global industrial output is gradually increasing, so is the MRO market. The cost of products is primarily driven by fluctuations in raw material and oil prices. The cost drivers for manufactures are labor cost, raw material, oil price fluctuation, proprietary vs. non-proprietary and complexity of design.
The major cost components include:
Raw Material (Costs associated with the various materials used for manufacturing the parts), Labor (Prevalent market wage rates for labor), Administrative costs & overheads (Costs associated with the office supplies, sales office cost, accounting fees, MRO marketing, insurance, interest, legal fees, rent, repairs, supplies, taxes, etc.)
MRO buyers relish the online experience of e-procurement, mainly from tier-1 MRO B2B suppliers. Moreover, e-commerce enables them to focus more on tail spend and ensures that c-part sourcing is streamlined into Spend Under Management (SUM). This eventually helps them to save cost.
What is MRO? MRO stands for maintenance, repair, and operations and it refers to the supplies consumed such as industrial equipment, consumables, furniture, and plant supplies required for upkeep. The MRO market was valued at over $600 billion in 2018 and by the end of 2020, it will grow to more than $660 billion. The high maturity markets include the UK, US, France, Belgium. The Netherlands, and Germany. The medium maturity markets include Canada, India, Japan, China, Africa, Brazil, and some parts of Western Europe. The major end-use industries include food and beverages, CPG, mining, automotive, technology, pharmaceutical, and oil and gas.
According to the MRO industry trends, a trade war is predicted which can cause inflation of up to 12 percent in MRO spare parts. The categories that make use of raw material will be affected as a result. If measures are taken to avoid this then they can lower the impact by a high level. Experts have recommended that those products which are OEM driven or critical ones should focus on long-term contracts. This can help provide big discounts and can save from tariff effects to a certain level. One of the expert recommendations is to focus on locally sourced spare parts.
The global MRO trends include global suppliers focusing on developed regions and making an impact there with the help of mergers and acquisitions. This has given an opportunity for global buyers. Buyers are more aware and so they require high transparency from MRO suppliers. Buyers are expecting customized solutions and they require information access and timely delivery of products and services. Due to the fragmented market, integrators and distributors have lots of opportunities. The MRO spend analysis shows that some KPIs include lead-time for product delivery, innovation for potential, inventory turnover ratio, and service level improvements. The MRO stock is important to understand too.
Experts state that industrial production is leading to an expansion of the MRO market. In Asia, one of the trends is e-procurement. India and China are particularly focused on this. Some companies in India such as PepsiCo and TATA Steel are engaged in MRO consolidation with the help of MRO distributors. The benefit of e-procurement is enjoyed by B2B suppliers who are in the Tier-1 category. E-commerce has many benefits and one of them is that it enables buyers to focus on tail spend. This helps in streamlining the C-part sourcing into the Spend Under Management also known as the SUM. This can help cut down on costs.
MRO Market analysis shows that there are various drivers and constraints. MRO outsourcing is on the rise whereby high-cost savings and lower need for labor are some of the benefits. At present medium and low maturity markets such as LATAM, APAC, and the MEA are not aware of this and so haven’t used this opportunity. There is potential in the shale gas processing equipment market for MRO. There are many cost drivers for products including oil prices and raw materials. The main cost drivers for manufacturers include design, labor cost, oil price fluctuation, and raw materials.
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