South African Channel Partners Analysis for Industrial Automation and Control Solutions

Well-established Channel Partner Programme is the Key to Overcome Lack of Skilled Labour

At present, only a limited number of manufacturers in the South African industrial automation and control solutions (ACS) market have a coherent channel partner strategy. However, channel partners will be a critical component of any sales strategy wherein manufacturers want to boost their market share without significantly increasing the outlay on sales.

"With regard to suppliers in this market, the lack of adequately skilled labour in the South African economy has brought about the dependence upon skilled distributors and agents that are able to provide the necessary service for highly technical products," notes the analyst of this research. "The most successful suppliers in the industrial ACS market have a well established channel partner programme that expands their market reach and effectively increases the number of skilled technical staff under their control." The industrial ACS market has numerous multinational companies (MNCs) that are market leaders across most of the product segments within the total market. However, geographical and specialised reach is accessed through regional distributors that are fully capable of supplying not only the product offering of a MNC but the service offering as well. This highlights the importance of developing and maintaining an effective channel partner programme in order to attain success in a highly competitive South African market.

Building Close Relations with Channel Partners is Integral to Long-term Market Success

The lack of channel partner loyalty within the market presents a duopolistic challenge that is exacerbated by the tendency of suppliers to 'cut out the middlemen' by dealing directly with customers, with the aim of circumventing distributors and agents. "Numerous distributors and agents have emphasised that their suppliers tend to offer the same discount that they provide to their channel partners directly to end users," remarks the analyst of this research. "Conversely, the lack of channel partners' commitment to one specific supplier creates complications for the supplier resulting in suppliers feeling less obliged to provide full marketing and technical support needed by the channel partner." This market condition ultimately results in poor relations with suppliers. It causes factors such as limited knowledge transfer from the supplier to the channel partner.

Effective relationships are the key to long-term customer satisfaction and loyalty, and personal contact is an essential ingredient in building those relationships. Suppliers may not have the resources to develop close relationships with every customer; so, they depend on channel partners for individual contact - because they understand local customer requirements in terms of products and levels of service. Thus, developing and maintaining an effective channel partner programme is integral to long-term market success. "Few manufacturers in the South African ACS market have a cogent and rigorous channel partner strategy," comments the analyst of this research. "However, when manufacturers want to increase their market share without significantly raising the cost of sales, they will have to turn to channel partners as a prominent sales strategy."

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following end user sectors in this research:

• Metals, minerals and mining
• Petrochemicals and chemicals
• Pulp and paper
• Power
• Water and wastewater
• Food and beverage
• Automotive

Technologies

The following technologies are covered in this research:

• Automation and control solutions
• Valves and actuators
• Motors and drives
• Sensors