Conventional or Online? Sourcing Dilemma in the Industrial Automation Industry Resolved !

Published on : 06 June 2023

The internet has taken the world by storm. With online ordering from e-commerce retailers becoming the new norm, sourcing of components online was not to be left far behind. Here, we compare the traditional and online modes of procurement in the industrial automation industry that can enable organizations to make an informed choice.

Traditionally, sourcing in the industrial automation industry has been dominated by manufacturers and their distributors along with their channel partners of system delivery, for the end users & OEMs seeking them out for the continuance of their systems and uninterrupted operations. The rise of online sourcing has been a game-changer, though. While some companies swear by the conventional approach of sourcing, an increasing number of organizations are opting for online procurement. Here, we take a look at the pros and cons of both:

MANUFACTURERS/ DISTRIBUTORS /TERRITORIAL CHANNEL PARTNERS

Pros

1. Trust: Since manufacturers or their distributors are authorized to sell parts, buyers can rest assured about the genuineness of the product being sold.
2. Warranty: Original components from manufacturers or distributors come with a warranty, making it easier to replace in case of defect or damage.
3. Easy access to support: Distributors often provide support and technical assistance in the event of any system issues, which may not be the case with sourcing online.
4. Customization: In the case of businesses that are looking for customized solutions to meet their requirements, manufacturers may offer an advantage over online sourcing that offers standard products.
5. Direct Communication: Direct communication between the buyer and seller can lead to a better understanding of system requirements, thus ensuring the purchase of the right product.

Cons

1. Support for Obsolete Parts: Manufacturers and distributors may not provide a replacement in case of obsolete spare parts. In the event that they do, the lead time for the same may be very long and it may be available at a higher price.
2. Higher pricing: Product offerings from distributors are generally priced higher, leading to businesses turning to more cost-effective sourcing options.

ONLINE SOURCING

Pros:

1. Increased Accessibility: Online marketplaces offer a neutral platform that brings buyers and sellers into direct contact with each other, thus eliminating intermediaries in the sourcing process and minimizing costs.
2. Competitive Pricing: With multiple suppliers available on online marketplaces, prices have become more competitive, benefiting buyers by driving down costs.
3. Convenience: Online sourcing allows customers the option of shopping from their own offices or home, at any time of the day, without having to physically visit suppliers.
4. Increased Options: With the rise of online marketplaces, buyers can access a wide range of products such as spares, equipment etc. from multiple suppliers, compare them and select the best products that meet their requirements.
5. Availability of Obsolete Components: Sourcing critical components for discontinued products is a challenge, with buyers struggling to maintain system uptime due to non-availability or long lead time of end-of-life components. Online marketplaces help source such obsolete spares that are generally not available with manufacturers and distributors, thus prolonging the system life of obsolete technology.

Cons

1. Authenticity Concerns: Buyers may be skeptical about the genuineness of parts sourced from online marketplaces, making them shy away from online sourcing.
2. Warranty Concerns about: Warranty is another concern for buyers when using online marketplaces, who may be unsure whether product warranties would be provided.
3. Service concerns: Lack of services provided like installation etc. may make buyers prefer manufacturers or distributors over online marketplaces for their sourcing requirements.
4. Security risks: Frauds or identity thefts can pose a risk to buyers if the marketplace is not secure, or if the seller is not a trusted or verified one.
5. Return policies: Online marketplaces may have stringent return policies, making it difficult for businesses to return products that do not function well during first installation.

So, should businesses opt for conventional or online sourcing? While sourcing from manufacturers and distributors offers some advantages, the future would be defined by online marketplaces that are set to become the norm. Leveraging the benefits of online marketplaces while exercising the requisite caution can help businesses enhance their procurement processes, streamline inventory management, and expand their reach to new markets.

IndAXonline, India’s leading online marketplace for brand new, surplus new, used and refurbished automation spares and unutilized automation assets, is a game-changer at the forefront of this transformation. The only company in the industrial automation industry that offers clearly defined policies for product return, replacement, and transparent warranty clauses, IndAXonline provides reused components in good working condition that are “Tested Ok.” With turnkey services like installation, firmware change, repair and re-engineering, over 100,000 parts in stock that include Allen-Bradley, Siemens, Schneider etc, and over thousands of parts sold every year PAN India and globally, IndAXonline deals with only assessed and trustworthy vendors to ensure hassle-free, assured and secure transactions, and speedy deliveries. So, switch to the future of sourcing.

Contact us at info@indaxonline.com for more information