Coronavirus Disrupts Maintenance and Repair Operations Supply Chains, Beroe Analysis
Source: PR Newswire
RALEIGH, North Carolina, Jul 16, 2020 - The coronavirus pandemic has had a medium impact on the Maintenance and Repair Operations (MRO) industry, with the availability of labor resources being severely affected as MRO services depend on excessive labor, according to Beroe Inc, a procurement intelligence firm.
Governments across affected countries have shut down various businesses to curb the spread of coronavirus, thereby affecting the MRO supply chain. There is a high impact on demand and supply and labor costs, while the impact on the labor supply chain is medium.
At a regional level, COVID-19 is causing major risk factors for the MRO industry in India, the U.S., the U.K., Italy, Spain, Germany and the Middle East. There are increases in labor cost, due to high labor shortages across industries and geographies, especially in locked down economies. Major economies that would see rises in labor cost would be the U.S., Europe and India. Chinese labor costs may not increase as predicted, as the situation is slowly returning back to normal as the country is recovering from the COVID-19 outbreak.
Beroe, which is based in North Carolina, further stated that procurement experts can access this report on market intelligence platform Beroe LiVE: live.beroeinc.com
Demand for MRO spares, maintenance services might increase from essential industries such as Pharma, and PPE. The need for manufacturing medicines and safety supplies are on high demand due to the current coronavirus pandemic, with the demand for safety supplies rising by 120 percent as compared to last year. Supply chains are also disrupted and sourcing strategies are affected globally. While global suppliers would be able to supply labor support in emergency situations as they have a planned crisis management structure in place, regional/ local players might not be able to provide the desired support for MRO.
With offline sourcing and procurement getting a hit, B2B suppliers of MRO spare parts have been witnessing a steady demand from customers. For example, Sustainable Supply, a B2B distributor of MRO with a sales of around $25 million, had the highest demand for janitorial and cleaning supplies from customers in the last few weeks. Nevertheless, the revenue index already shows a sharp decline in sales towards the last week of March 2020 due to the pandemic and is expected to continue.
- As a result of the current coronavirus pandemic, MRO suppliers are likely to halt or postpone large scale strategic commitments like acquisitions, and divestments.
- The major low cost sourcing channel for the U.S. is predominantly China for manufacturing and spare parts related sourcing, but now due to the current pandemic, there have been talks about looking ahead and refocusing on sourcing from regions like Canada, and Mexico.
- A sourcing restructuring can help MRO suppliers in multiple ways, by providing an ease from Tariff constraints, supply chain disruption like import duties, and quality and regulatory issues.
- In order to implement a sourcing restructuring, companies will have to build a roadmap after doing a risk assessment and look into things like opportunity analysis, evaluating current state, and implementing Gap analysis.
- Rexel Distribution, which started 2020 on a strong note has been impacted by the crisis especially during mid-March, and hence saw a dip in Q1 sales by 2.7 percent as compared to the same period last year.
- Due to the materially changing market situation due to the virus pandemic, HD supply, who planned to separate its Facilities Management and Construction & Industrial Business Units are deferring the previously announced timelines.
The research methodology adopted for the report included:
- Experts with twenty years of domain experience
- Interaction with buyers
- Inputs from supply chain partners
Amazon has been in the spotlight for its B2B platform currently handling 31 million MRO categories, compared to top MRO distributors that handle around 3 million. The overall Amazon first quarter was up in Sales by 26.4 percent as compared to last year during the same period. Amazon Business has witnessed $15 billion sales and 115 percent CAGR over three years, suggesting that they are growing much faster than predicted. During the current pandemic Amazon has been hiring more than 75,000 employees to support its various businesses including Industrial supplies.
The report also includes:
- Maintenance and Repair Operations
- Industry Risk Factors
- MRO Insights
- COVID-19 Impact Analysis
- Regional Analysis
- Revenue Index
- Sales Analysis
- Industrial Distribution
- Outlook Analysis
- Key Suppliers
- Supplier Update
About Beroe Inc.:
Beroe is the world's leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.
To learn more about Beroe Inc., please visit: http://www.beroeinc.com