- Features | April 28, 2015
Partnering With Local Suppliers
In the world of electrical contracting, we rely heavily on our suppliers and vendors to support us, but we typically don’t take the time to support them, to help them help us be successful.
WE EXPECT A LOT FROM OUR VENDORS:
- We expect them to have industry and field knowledge of materials so they can accurately fill our orders.
- We expect them to understand what a superintendent is requesting in “field language.”
- We expect them to have answers for all our questions on the tip of their tongues.
- We expect them to respond to our communications promptly.
- We expect them to have everything “on the shelf,” ready and waiting for us.
- We expect them to know what our needs are, usually before we communicate them.
- We expect their pricing to be fair.
- We expect them to support us unconditionally.
Sometimes we experience the failure of a vendor to meet one or more of these expectations:
- The material is not in stock.
- Materials are backordered.
- They ship us the wrong items.
- They don’t respond to us fast enough.
- Their price is too high.
We blame our vendors for impacting our business with these “failures,” but what have we done to ensure success? Have we communicated effectively? Have we planned ahead to allow a reasonable amount of time to fulfill an order? Have we built a relationship with the vendor above the “order material, receive material, pay invoice” level? Have we engaged them as partners on our projects or in our businesses?
BUILDING A RELATIONSHIP
Instead of blaming our vendors, let’s explore what a more supportive and mutually beneficial relationship might look like.
To begin, we need to shift our relationship with our vendors from that of customer > supplier to equal partnership. We must begin to recognize that we need each other to be successful. Contractors need suppliers for information and materials, and they need us for orders and revenue. When was the last time you sat down with your local supplier’s branch manager and discussed your needs on a project or enterprise level? Have you ever had a conversation like that?
Larger electrical contractors often put Master Vendor Agreements in place that define the terms and conditions of business transactions between the two companies. This agreement sets forth terms for items such as submittals, conforming materials, returns, payment terms, discounts, and insurance. In addition, this agreement binds the vendor to the contractor’s subcontract terms at the project level and makes them equally liable for delays, defects, insurance claims, indemnity, and documentation. In return for accepting this agreement, the contractor typically guarantees the vendor a certain level of business (total order value per year) and favorable payment terms. This is the starting point for a partnership.
The next step is open communication. It is the contractor’s responsibility to clearly communicate their needs at the project and/ or enterprise level. At the project level, this is accomplished by bringing the vendor onboard early in the project. They should be given copies of the plans, specifications, and project schedule. The contractor will also need to complete thorough material takeoffs and provide these to the vendor. This provides the vendor time to put together the required submittal packages.
Be mindful that these takeoffs are for large material buyouts, not miscellaneous orders. Typically, these large buyouts