The role of the distributor within the electrical contracting industry has significantly changed over the past several years. Traditional electrical distributors have incorporated voice/data/video products into their inventories, some establishing separate datacom divisions.
Specialist datacom distributors have entered the marketplace. The Internet and related technologies have changed the way distributors interact with customers. And, while distributors’ primary reason for being remains selling product, perhaps the most significant change is their evolution from suppliers of goods to providers of a wide range of solutions that can help contractors be more efficient and productive.
To get maximum value from their business relationships with distributors, contractors must be aware of many ways today’s distributor can be of service, establish open communications with distributor personnel and take advantage of the available value-added services that meet their varying individual needs.
“Distributors, like contractors, operate differently,” said Arnold Kelly, Graybar construction market director. “Some provide bare-bones services and are simply just a source for product. Others provide a wealth of services, above and beyond products.”
Sophisticated distributors are able to tailor their service offerings to meet the needs of specific customers, Kelly said. Such distributors do not take a one-size-fits-all approach. Some contractors only need quick and easy access to their materials with minimal services. Others, however, will need everything from high-tech electronic solutions and project management services to on-site material management.
Steve Bellwoar, president of Colonial Electric Supply, described distributors as a contractor’s connection point to the marketplace.
“They hear a lot of things about jobs, competitors, everything,” he said. “Whereas home center employees have general product knowledge, personnel of specialized distributors have in-depth knowledge of products, capabilities and applications, and this can save contractors time and money. Looking at the cost structure of the electrical contracting business, labor exceeds everything else. A distributor’s knowledge and service, if properly used, can greatly reduce labor costs.”
There is a wide range of value-added distributor services. Knowledgeable distributors keep contractors up to date about product developments and arrange product training for contractor employees.
Many distributors offer consulting and design services and bid-preparation assistance. Through their Web sites, distributors make it easy for customers to access product information, place and track orders, access records, and provide information about changes in standards.
Industry and product knowledge and the willingness to share it are among the most important value-added benefits electrical distributors provide, said Roger Georges, president of electrical contractor, Medina Electric Inc., Hamel, Minn. The broad knowledge of distributor staff helps contractors avoid problems as well as solve problems that may occur.
“Having a good stock of inventory certainly is important, but the value of dealing with a good distributor goes beyond that,” Georges said. “Because distributors know our industry, they can help in many ways. If we need a particular type of material or tool to get something done, our distributor has the product knowledge to advise us what works best. If a needed fixture or component is unavailable, they can suggest a substitute meets specifications, and we avoid delays in the project schedule.”
Georges said Graybar personnel assisted in the selection of a prewired media panel for a recent project.
“The recessed panels saved installation time and look much nicer than separate components mounted on the wall,” he said.
Knowing the industry also means distributors can help customers minimize the effect of increases in pricing.
“By making us aware commodities pricing is going to increase, we can evaluate our requirements and purchase products we need before prices go up,” said Georges. “Home improvement centers and walk-in retail outlets may carry many of the same products, but they can’t match the product knowledge of an electrical distributor, and they do not have the industry knowledge that is so important.”
Harold Ware, president of Libra Electric Co., an Oklahoma City electrical contractor, said price and availability of needed products are key considerations in his company’s choice of distributors.
“If we are in a bid situation, price is the driving force,” Ware said. “For negotiated and service work, availability of needed products may take precedent over price.”
According to Ware, Libra Electric primarily depends on distributors for product, not value-added services.
“We don’t finance through distributors, but sometimes have the distributor deliver fixtures by floor on a project,” Ware said. “That can save on-site labor, and that service could have an impact on the distributor we buy from.”
Some distributors also will bring a trailer with supplies to job sites. Electricians use what is needed and the contractor bills for products used.
Gary Edgington, a project manager for Baker Electric Inc., Des Moines, Iowa, said his company wants distributors with a knowledgeable sales staff, in-stock products, competitive pricing, timely delivery, backup and support after sales, and fast resolution of problems.
“In addition to product, we expect distributors to provide training when necessary, after-hours support, and assistance with startup services,” said Edgington. “For example, we might need assistance with specialty equipment like generators or alarm systems, and the distributor can arrange for a representative to come on-site and help get things up and running. We find most distributors are committed to resolving problems in a timely manner, which may include after hours support, overnight freight for urgent items, and providing additional support staff when required.”
However, some services that distributors provide may go unused by its customers.
“Everyone is so busy that they sometimes can’t look at the big picture and, therefore, are reluctant to change and try something new,” said Bellwoar. “Improved ways of doing business exist already in many other industries, but when it comes to an old school industry like ours, it takes time. It is coming slowly due to the focus on price instead of total procurement costs.”
According to Bellwoar, one way to combat this is with personal contact, such as mailings, that outline what is available.
“The responsibility to educate customers about all that we offer falls on the distributor’s customer-service team,” he said.
Kelly said Graybar has a sales force of more than 500 representatives trained about the company’s value-added services.
“They are ready and able to help our contractors better understand how to improve their projects with products and services that can improve efficiency, reduce waste and provide higher value to the end customer,” he said. “Most contractors who are engaged in significant projects could probably really benefit from the various project management services that Graybar offers. We have a vast array of services to choose from. It is really important to choose what is appropriate for the contractor, and really, what is important for a particular project. Online services also provide contractors with the ability to source product, check stock and prices, and order status virtually 24/7.”
Getting the most from a distributor-contractor relationship requires effort by both parties.
“It is an interactive process that for us involves studying customer needs and providing solutions,” said Bellwoar. “There must be a trust relationship that is developed over time. We need to understand their world. We need to identify the problems and constraints they face and eliminate them. In my opinion, the logistical side of large projects holds much potential. We are still not very coordinated along these lines and the inefficiency costs all of us money. And here’s a tip: don’t always go with the low bidder. Pick quality distributors to work closely with on projects and services. With a positive feedback loop on all sides, everybody benefits.”
Kelly advises contractors simply to sit down with their distributor’s sales representatives and discuss what services can be provided that will help improve business.
“As a distributor, we welcome the opportunity to share ideas on how to deliver win-win solutions that mutually improve both of our businesses,” he said. “Contractors simply buying on price alone may be really missing some opportunities that their competition may be using to gain a real competitive edge in the marketplace.”
Expect value-added distributor services to continue to expand.
“Technology will certainly be a core ingredient in future solutions, and that is why Graybar continues to invest in technology. But technology itself is not the solution,” said Kelly. “It simply helps to enable better implementation of our services by bringing these solutions to the customer faster and more efficiently. Simple tasks, like pricing updates for estimating packages, can be updated from our system using the improved communications available today via the Internet.”
Value-added services are always changing, and most changes will make it more convenient or less time consuming for the contractor.
“Quite frankly, there are lots of programs that would make life much better for the end user that never get off the ground because of old-style, price-oriented purchasing strategies that assign zero value to cost-saving practices—a distributor can’t offer something that doesn’t at least recoup its costs,” he said.
“A positive and respectful relationship with a good quality distributor is a great investment.” Kelly said. “The idea of using one distributor against another to drive down the sell price may work once or twice but is not a good long term strategy. The sky is the limit when trust exists and there is much opportunity out there for a better tomorrow.” EC
GRIFFIN, a construction and tools writer from Oklahoma City, can be reached at 405.748.5256 or firstname.lastname@example.org.