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.
MRO Market Trends
Trends & Insights:
Based on the Beroe survey conducted with Top 5 Global MRO Distributors/Integrators, Trade war is forecasted to inflate the MRO spare part categories anywhere from 8-12%
MRO Distributors/Integrators predict that no specific MRO category will be targeted completely, but based on raw material usage specific categories like power transmission, Tools, Fasteners etc. may feel the brunt more than the other categories do
They predict the increase to really kick in towards the end of 2019 and beginning of 2020 unless some measures are taken to curtail this impact
Actions & Recommendations:
Focus on local sourcing for non-critical/non-OEM (Original Equipment Manufacturer) spare parts to offset tariff impacts
For OEM driven/ critical products the focus should be more on fixing long term contracts with suppliers along to leverage volume based discounts to offset tariff impacts.
Note: These are estimates and forecasts.
Table of Contents
MRO Industry Executive Summary
Global MRO Industry Outlook
Supply Market Outlook
MRO Industry Market Analysis
Global MRO Market Maturity
Global Mining Industry Outlook
Global MRO Industry Trends
Global MRO Drivers and Constraints
Regional Market Outlook
Industry Outlook: MRO Affecting Factors
Porter's Five Forces Analysis: Developed Markets
Porter's Five Forces Analysis: Emerging Markets
Trending News in MRO(2017)
MRO Industry Supply Analysis
Supply Market Outlook: Supply Trends and Insights
Key Global MRO Suppliers
Key Regional Suppliers: Service Portfolio
Key Global Supplier Profile
Supplier SWOT Analysis
Cost Structure Analysis
Cost Analysis and Expected Savings
Cost Break up: Should Cost Model
Pricing Analysis: Distributors' Margins by Product Category and Annual Spend
Pricing Analysis: Price Forecast
MRO Industry Procurement Best Practices
Sourcing Models for MRO Services
Sourcing Models: Comparative Analysis
Sourcing Models: Pros and Cons
Pricing Models: Comparative Analysis
Engagement Model: Cross Industry Value Creation
Engagement Model: Mining Industry
Contract Management and Strategic Service Level Agreements
KPIs for MRO Distributors and Integrators
MRO Industry Upcoming Technology and Innovation
MRO Industry Upcoming Technology and Innovation
Internet of Things (IoT)
3D Printing
Industrial Vending Machine
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Industry Outlook & Drivers
The global Maintenance Repair & Operations (MRO) market is valued at $ 605 billion
The global MRO market size is forecasted to grow at a CAGR of 1.72 percent and reach $660 billion by the end of 2020
Mature Markets: North America, Western Europe
Fast Maturing Markets: APAC, LATAM, and Australia
APAC accounts for ~37 percent of the global MRO market, and it is expected to remain in the similar range (34 percent-38 percent) until 2020
Major End-user Industries include Mining, Pharmaceutical, Chemical, CPG, Oil and Gas, Automotive, Food and Beverages, and Technology
MRO industry analysis shows that the KPIs IN MRO are inventory turnover ratio, lead-time for product delivery, improvement of service levels, potential for innovation that results in cost saving.
High MRO market maturity regions are: US, UK, Germany, France, Netherlands, and Belgium
Medium MRO Market maturity regions are: Japan, China, India, Australia, South Africa, Canada, Brazil.
MRO in Mining Industry: Global Outlook
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.
The global mineral output was at 11.37 billion metric tons in 2014 and expected to grow at a CAGR of 1.8 percent and reach 12.01 billion tons billion by the end of 2017. The slow growth of mineral output is due to low commodity prices and low demand from China, and this trend is expected to continue until 2017
Coal accounts for ~74 percent of the total mineral output and is expected to remain in the similar range (73 – 75 percent) until 2017
The APAC contributes to two third of the mineral output and is expected to grow lesser than the global average, due to the slow economic growth of China. Although Latin America and Africa contribute to around 14 percent of the mineral output currently, it is expected to witness maximum growth compared to other regions, owing to the participation of global players and changing local regulations
Global exploration spend declined by about 31 percent to $20 billion in 2014, as major miners cut short their exploration spend, due to the falling commodity prices
The Key Market Trends
Due to slowdown in the mining industry and the falling commodity prices, mining companies have been compelled to refrain from high capital expenditures and resort to technologically intensive investments, such as mine technology products, which enable them to enhance the production level by improving the equipment performance and reducing the downtime
Global MRO Industry Trends
Increasing levels of MRO outsourcing and adoption of Integrator model for MRO sourcing in developed regions like North America and Western Europe signal increasing buyer maturity and willingness to partner with suppliers
Global suppliers are entering new geographies in developed regions through mergers and acquisitions, thus offering multi-location solutions to global buyers
Customers expect MRO integrated suppliers to provide highly tailored solution, with real-time access to information and just-in-time delivery for products and services
Additionally, due to increased information access, the demand for transparency is consequently increasing
The fragmented MRO market in APAC and the MEA has produced a big opportunity for global distributors and integrators to tap this market
These regions are considered to be developing regions, in terms of MRO Sourcing maturity, with OEM and Distributors being the preferred souring channels E-procurement is gaining popularity in Asian regions, like India and China. Increased purchase of low-value, high-volume spend is driving the B2B platform in these regions
MRO consolidation is steadily being implemented by mature Indian buyers. Companies, such as, TATA Steel, BASF, Shell, PepsiCo, etc., engage in consolidation activities through established MRO distributors, like Rexel India
Global MRO Industry Drivers and Constraints
MRO sourcing not being a core competency of most buyers, mature markets are increasingly seeing adoption of MRO outsourcing and integrated supply solutions and are reaping the benefits in terms of hard cash savings and manpower reduction. The awareness of the same is low in maturing/less mature markets, such as APAC, the MEA and LATAM
Large scope for MRO market lies in the shale gas processing equipment market, by component type, which includes compressors and pumps, internal combustion engine, heat exchangers, electrical machinery, and measuring and controlling devices
Market Overview
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.
Author
Beroe category specialist who created this report
Vijith Bharghavan
Industry experts who worked on the report
We work with a network of 2800+ industry experts to vet every data point and validate every hypothesis our reports
The MRO market share was valued at $605 billion as of 2018.
Who are the major players in the MRO industry?
The MRO industry overview by Beroe shows that the high maturity market regions are US, UK, Germany, France, Netherlands, and Belgium. The medium market maturity regions are Japan, China, India, Australia, South Africa, Canada, and Brazil.
What are the latest trends in the MRO market?
The current MRO trends based on Beroe’s analysis are inflation of MRO spare part categories from 8-12% due to trade war and lack of target of any specific MRO category with dependence on raw material usage specific categories such as power transmission, tools, and fasteners. These changes are expected to kick in by 2020.
What will be the expected growth of the MRO industry?
As per Beroe’s MRO market analysis, the MRO market share is expected to increase at a CAGR of 1.72 percent and reach $660 billion by the end of 2020.
What are the key drivers of the MRO market?
One of the key drivers of the MRO market is the fact that MRO outsourcing is not a core competency for many buyers which is increasing adoption of MRO outsourcing in mature markets. This awareness is found to be low in less mature markets such as APAC, MEA, and LATAM. A huge scope for the MRO market lies in the shale gas processing equipment market.
