Technology’s Impact on the Distribution Infrastructure

Who in our industry now best understands all the security systems on the market – how to sell, install and use them? That is the fundamental question underlying much of the change we’re now seeing in how manufacturers get their products and systems to market.

Shipments Via Distributors Expected to Sharply Decline

One of the biggest infrastructure changes occurring is how security products, systems, and the requisite knowledge accompanying those products and systems are distributed from the manufacturer to the user. In research we recently conducted, manufacturers predict that the infrastructure will continue to change and that the change will be major throughout the next five years, particularly as it affects distributors and integrators.

Manufacturers expect product and system shipments through distributors to decline sharply, from 27 percent to 19 percent, beginning from 2002 and into the next five years. Direct shipments by manufacturers to dealers are not expected to change materially as a share of the total, but integrators are expected to acquire the loss that distributors experience, accelerating from 15 percent to 24 percent of product volume.

Original equipment manufacturers (OEM) shipments are also expected to decline, while shipments direct to end users, large systems houses (Siemens, Johnson Controls, etc.) and export channels are anticipated to grow.

This is not the only change, of course. Manufacturers are installing more help desks to provide information to all middlemen and users, so they have widened their training programs. Integrators continue taking a rising share of the commercial security business. And more and more users are asking for direct contact with manufacturers.

A significant portion of this trend is due to the technological brilliance of the military. These factors will continue to contribute to commercial and residential security product planning, in the process presenting us with the question of how to effectively manage the information flow that the marketplace will need to protect our homeland effectively.

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