Market dynamics will be consistent with the previous period. As such, price growth will remain marginal
Los Angeles, CA (PRWEB) October 30, 2014
Automation integration services have a buyer power score of 3.7 out of 5, reflecting positive negotiating conditions for buyers. Thanks to low up-front capital requirements, a steady stream of suppliers has been able to enter the market in line with rising demand. This has kept the market relatively competitive. In turn, price growth has slowed to a marginal rate over the past three years and will continue to be sluggish through 2017. “Buyers have more leverage in markets where supplier options are growing and, coupled with increasing competition, buyers gain negotiating power from the minimal price growth,” according to IBISWorld business research analyst, Daniel Krohn.
Buyers also benefit substantially from low price volatility. A healthy balance between the supply and demand within the computer component and software markets helps mitigate the risk of upstream vendor discontinuity and abrupt input price hikes. On the demand side of the supply chain, automation service vendors cater to a variety of diverse markets, such as the manufacturing, wastewater and mining industries and the demand from these buyers is largely dependent on corporate profit and private investments levels. Because of the large number and diversity of key buyers, as well as consistent growth in corporate profit and private investment over the past three years, automation integration vendors have enjoyed relatively stable streams of demand, further reducing their supply chain risk. In turn, low supply chain risk enables suppliers to keep consistent pricing strategies. Buyers benefit from the resulting low price volatility because it makes it easy for them to budget their automation integration expenses and strategically time their procurement.
Nonetheless, rising demand and high switching costs curb buyer power. “Rising demand has helped alleviate competitive pressures in the market and, in turn, given suppliers some freedom to raise their prices,” says Krohn. Meanwhile, high switching costs have locked buyers into their initial supplier choice, preventing them from trying out different vendors. Together, these factors have hurt buyers' leverage over suppliers. Major vendors include M and W Process Automation GmbH, Rockwell Automation, Inc. and Schneider Electric SA. For more information, visit IBISWorld’s Automation Integration Services procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Like IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of automation systems integration services. Integrator personnel assist in the purchasing process and control processes in an industrial or manufacturing facility to ensure machinery works in conjunction with one another. Integrator personnel also make sure to integrate IT systems in an attempt to reduce costs, use less energy and increase production in the facility. Integrator personnel may also offer related services such as redesigning floor plans, completing electrical design, training and certification and installation support and maintenance.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.