Opportunities and challenges have always gone hand in hand.

With the 2026 fiscal year now halfway through, orders for SIMATIC Industrial Automation authorized distributors have risen by 17% overall, but this hasn’t made life much easier for them. The old tactics of profiting from information asymmetries and hoarding inventory to capitalize on price differentials have largely failed in this year’s market environment.

The most common complaint is inventory. As demand surges in emerging industries, popular models in categories such as PLCs, servo drives, and variable frequency drives frequently go out of stock. Everyone wants to stock up to ensure project delivery, but when placing orders, no one pays attention to the long-tail models. By year-end, when inventory is taken, a mountain of dead stock has accumulated—money just sitting there—and that’s how cash flow efficiency for the entire year gets dragged down.

Another factor is people. End customers are no longer willing to accept “hardware-only” sales. Whether it’s an OEM equipment manufacturer or a production line retrofit, the first thing they ask for is product selection and optimization, program debugging, and on-site troubleshooting. Many small and medium-sized distributors have sales-focused teams with only a handful of certified engineers. When faced with complex projects, they have no choice but to turn to the original manufacturer for coordination. By the time the schedule is finalized, the customer’s patience has run out, and long-term business relationships are lost.

Cross-regional pricing is another long-standing issue. When foreign trade orders account for a large portion of business, differences in pricing rules and payment terms across regions make it easy for goods to flow between regions. This erodes profits from local projects, and when customers compare quotes from both sides, it ultimately undermines the hard-earned mutual trust within the entire authorized dealer system.

Change is actually already underway. Some distributors are calculating the ratio of spot inventory to project order stock separately, reclassifying technical services from a cost item to revenue, and using customized solutions to avoid simple price comparisons. In the second half of fiscal year 2026, distributors who adopted these strategies did indeed find themselves in a more stable position.