NEWS RELEASE                                                                                                    DECEMBER 2015

Half of All Flow Control and Treatment (FCT) Purchasing Decisions Are Made Remotely

The choice among suppliers for an FCT product is more often made outside the local sales area.  This means that coordination of local sales people is routinely necessary.  Furthermore, market forecasts and sales quotas based on where the products will be used have to be adjusted to take into account the remote influence.  A big portion of sales can be in large projects.  Most of these involve remote influence.

Large companies are moving toward global sourcing.  A few hundred large companies purchase 40 percent or more of FCT products.  These large purchasers also are the ones with the large projects. Most large project purchasing decisions are made by groups and not individuals.

Local Influence vs. Purchasing Company Size for Flow Control and Treatment Equipment


Small companies with  60% of   the market


local decision making influence


Large companies with 40% of the market

  Project Size →

Smaller companies tend to make purchasing decisions in the country, province or state in which the product will be used.  In larger companies, decisions are frequently made by corporate people in another locality.  Another factor is project size.  The larger the project, the more likely the decision will be made in part by people not at the point of use.  McIlvaine has determined that anywhere from 50 to 200 large companies account for 40 percent or more of the purchases in any of the flow control and treatment product areas.

When the influence of EPC and system suppliers are included, the relative percentage of local decision making is further reduced.

Percentage of purchasing decisions made at another of the 95 countries, regions and provinces rather than at the user plant

  Small Company (Purchases) Large Company (Purchases)

Local  Decision

Remote Decision

Local Decision

Remote Decision

Large purchaser           20 40
Small purchaser 60 10    
OEM, EPC 5 10 5 15
Consultant 5 10 5 15
Total for category 70 30 30 70
Total for market which is 60/40 small 42 18 12 28
In the total market, 54% of the   decisions are locally and 46% made remotely

For a major system or component, 46 percent of the decisions are made remotely. This number is much higher when components such as pumps and valves for new plants are evaluated.   Seventy percent of the decisions would be made remotely.  Often a valve is assembled in a component in one location and then shipped to the end user. The component supplier will make the ultimate purchase but the end user man have substantial influence on the valve choice.

Most of the decisions will be made locally for repair parts and replacement valves, pumps, nozzles, etc. The exception would be large companies that are moving to global sourcing.

Sales management needs to take into account the remote influence and large project impacts. 

The first step is to create detailed forecasting of markets by use in all the sales territories.  McIlvaine has divided the world into 95 significant territories (9 regions in the U.S. and 6 regions in China).  This spreadsheet then becomes the template for adjustments by remote influencers and large projects.

The sales effort at the global sourcing headquarters for Arcelor Mittal which has more than 100 steel plants and coal mines needs to be proportional to the remote influence. A large project such as the $3 billion potash mining project in Canada or $20 billion coal gas pipeline in China must also be taken into account.

McIlvaine addresses all three of these needs.

  • Detailed forecasting of markets is available with individual reports displayed at: Markets
  • Detailed analysis of projects is available with a number of annual subscriptions explained at: Databases
  • Detailed listings of OEMs and end users is available in the following: People

The general program is summarized at: Detailed Forecasting of Markets, Prospects and Projects