| SIC Codes: | 5085 |
| NAICS Codes: | 423840 |
Companies in this industry distribute supplies for machinery and equipment used in the manufacturing, oil and gas, and warehousing industries. Major companies include Applied Industrial Technologies, Industrial Distribution Group, McJunkin Red Man, MSC Industrial Direct, and WW Grainger.
Demand is closely tied to the level of US manufacturing production. Because many operating costs are fixed, profitability depends on operational efficiency, particularly inventory management. Smaller companies can compete effectively by providing specialized supplies or superior service (delivery service and product expertise). Large distributors with a network of warehouses and outlets can maintain a lower inventory/sales ratio. The industry is concentrated: the 50 largest companies generate about 50 percent of revenue.
Major products include abrasives, strapping, tapes, and inks (30 percent of sales); mechanical power transmission supplies (17 percent); industrial containers and supplies (15 percent); industrial valves and fittings (12 percent); and bushings and bearings (10 percent). Other products include tools, motors, fasteners, and cleaning supplies. Large distributors may carry 500,000 different items classified by stock-keeping units, or SKUs. Products are grouped into product lines. Wholesalers are often referred to as either "general line," meaning they carry a mix of items from multiple product lines, or as "specialty line," meaning they carry a large variety of items from a single product line.
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