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No, Virginia, integrated supply is not dead, but it looks different than what people thought it might five years ago. It has developed and matured into a fragmented market, with about as many models as providers out there. A select group of companies, diverse in size and shape, is growing the integrated supply business. Those are a few preliminary indications from MDM research for an upcoming update on the integrated supply market.
That may change in the next five years, with some recent shifts as reported in these pages. There are a few national and large regional players with a decade or more under their belts, and those few have figured out how to create a distinct and profitable business. There are still a lot of smaller regional distributors who participate in some ...
No, Virginia, integrated supply is not dead, but it looks different than what people thought it might five years ago. It has developed and matured into a fragmented market, with about as many models as providers out there. A select group of companies, diverse in size and shape, is growing the integrated supply business. Those are a few preliminary indications from MDM research for an upcoming update on the integrated supply market.
That may change in the next five years, with some recent shifts as reported in these pages. There are a few national and large regional players with a decade or more under their belts, and those few have figured out how to create a distinct and profitable business. There are still a lot of smaller regional distributors who participate in some form of integrated supply agreement, though increasingly they have become a secondary or even tertiary supplier. This caused a lot of lost business, but it also created a lot of higher-profitability business for many smaller independents.
More recently, third-party integrators and outsourced purchasing services emerged. In some instances, these have been the most disruptive and in some cases destructive to traditional customer relationships. A few of these services seem little more than hired thugs to achieve low-price goals. Their "added value" seems hard to define beyond purely transactional savings. Of course, if that's what the customer is defining….
Customers focused on transactions have different needs and perceptions of value than those with a more strategic outlook. That's precisely why integrated supply remains a fragmented market, and perhaps why Grainger couldn't crack the code and decided to back away from this $200-million segment of business it held.
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