- Tags : MRO | MRO Inventory Management Services | Price trend | Price forecast | Procurement research | Category market forecast
Recent Price Trend - MRO Inventory Management Services
From 2014 to 2017, the price of MRO inventory management services has been increasing 0.6 percentage points from a 9.5% to 10.1% markup per item. Demand growth has been the primary factor contributing to increasing prices, while falling input costs have been preventing prices from rising at a more accelerated rate.
Rising demand has been pressuring prices upward during the period as providers have had leeway to raise prices without risking loss of business. In particular, growth in the MCU and private investment in industrial equipment and machinery indicates buyers are operating and purchasing more machinery. Therefore, businesses need access to more MRO supplies that keep machines and the areas those machines occupy functioning and safe. As the number of MRO supplies in stockrooms increases, more buyers seek to outsource their stockroom management. Outsourcing MRO inventories better ensures a buyer’s operations rarely encounter downtime due to having no access to MRO supplies that keep machines operational.
Nevertheless, in the past three years, the prices of many critical MRO supplies have been falling, including the price of lubricating oils. Prices for lubricating oil have been decreasing as the price of crude oil has been declining. In turn, MRO inventory management service providers have been able to purchase lubricating oil at lower prices and pass these savings on to buyers in the form of reduced service rates. However, lubricating oil prices are at a moderate risk of fluctuating unexpectedly. Therefore, to protext their margins, lubricating oil manufacturers tend to curb how much they lower prices, thereby limiting the impact of declines in service provider’s purchase costs on service rates. Meanwhile, prices for electrical equipment have also been declining due to declining copper prices, a key input in electrical equipment production, thus contributing to further downward pressure on service prices.
Finally, price volatility has been low because low market share concentration has been prompting competition among suppliers. Low price volatility enables buyers to accurately plan for their MRO inventory management service purchases. Buyers, however, are still advised to enter in to SLAs that lock in a specific markup rate due to anticipated price growth in the three years to 2020.
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