Published In March 2000
"The last great mystery"--that is what one contractor called the game of managing lighting materials for the average new construction project. He made that comment in a focus group on lighting sponsored by Electrical Contractor back in January and organized by C-E-C Group to obtain an update on the status of lighting material management. To put it mildly, participating contractors from the Washington, D.C. area came loaded for bear. Their complaints about the current state of affairs in lighting seemed so universal and unanimous that we decided to extend the project by calling representatives of the whole lighting scene to obtain a larger view. So, after conducting interviews with designers, factory sales reps, manufacturers, and distributors, this is what we learned about the present state of lighting logistics in commercial new construction. Without mentioning names of our sources, we have pieced together the puzzle of commercial/industrial lighting management that is indeed mysterious and confused. Some of the following may be controversial, but we think it is time for a new discussion of lighting material management. It is not a perfect picture, but perhaps a closer look at it could stimulate some new cooperation between the various players that will improve things for all of them. Players in the game of lighting-how it works The process of managing the lighting game for a new construction project might be depicted in the form of a Y as noted in the figure. At the bottom of the Y is the building owner or ultimate customer. The two branches of the Y represent supplier relations on the left and the building design process on the right. Players in the supplier relations branch are lighting manufacturing companies, their field sales reps, and local area distributors. Players in the design process are architects, lighting engineers, and specification writers. Working up from the customer at the bottom are general contractors, and at the middle of the Y and in the hot seat are electrical contractors who must carry out the construction process on site. They must organize materials, methods, and labor on the job site to carry out the intentions of the designers and meet the needs and wants of the customer. Of course, you could invert this model depending on whether you want the customer to be on the top or the bottom. However you wish to view it, there are still supplier-customer relationships in all branches, which could use some serious revisions, according to our contractor focus group. Problems seem to begin with accelerating demands by owners for getting buildings up in shorter and shorter time intervals. This demand compresses schedules all along the line and makes materials logistics planning ever more time sensitive, with less and less room for errors or omissions in scheduling. General contractors must schedule the work of 18 or more trade contractors on the site. The slightest deviations can create havoc toward the end of the project, precisely when lighting equipment is arriving for installation. Electrical contractors carry high risk for labor intensive lighting installations, so they have little tolerance in their budgets for delays and substitutions during this crucial phase of construction. One thing they cannot stand much of is idle labor crews and equipment on a job site waiting for lighting materials to arrive later than planned and promised. These problems are exacerbated when architects are vague about their design intentions and do not fund engineers adequately for complete product evaluations and design drawings. Then, specifiers have insufficient information on which to prepare detailed instructions, so that the focus group contractors estimated they must compile about 20 percent of the lighting product details needed for adequate and complete product selection, bidding, and ordering. Increasingly, contractors feel they must employ engineers or subcontract design work to be sure selected products actually meet the intentions and needs of the building owner, and will be approved by design authorities. On the materials leg of the Y are lighting manufacturers and their sales and distribution channels. Most of the manufacturers sell lighting products through two channels. One, devoted to national accounts customers and custom lighting products, is staffed by salaried sales and applications engineers who are company employees. They often work out of the home office or corporate headquarters. The commercial/industrial lighting construction market is serviced mostly through independent factory sales reps, who are compensated on commissions for sales. Obviously, their focus is on making sales. They usually represent a number of different manufacturers; the highest number we encountered in this research was a firm that represented 37 different suppliers. Their primary role is to obtain preference for the brands of the suppliers they represent because they are only paid on commission. The number of product options has grown to an unmanageable number of variations, even by the most conscientious sales reps. The catalog description of a typical lighting product may require more than 24 alpha-numeric characters. Manufacturers use national advertising to maintain brand awareness and create preference for their products, and exhibit at national trade shows to introduce new products and maintain personal relationships with designers, specifiers, distributors, and contractors, plus owners. They also produce elaborate product catalogs containing detailed mechanical and photometric information about their products. Lighting designers need photometrics for visual effects, and contractors need mechanical details for estimating installation labor and methods. Some of them attempt to address all the players with the same advertisement or display design, thinking that approach saves money. The process in action-warts and all Most new construction projects are let through a competitive bidding process that has a long history. Project specs are organized into sections by specification writers using guidelines and a standard format recommended by the Construction Specifications Institute. Lighting usually is a subsection of Section 16, Electrical. The specifications are accompanied by drawings that show details of the type and brand (or equal) of lighting products desired by the owner. Unless they specialize in lighting applications, electrical contractors depend on local area distributors to compile and price a bill of materials for the project, while they work on estimating the required installation labor. Distributors, in turn, rely on the local factory sales reps to help with detailed product catalog numbers, pricing details, and delivery requirements. Most of the time, contractors rely on these lighting packages as compiled by the distributors, who must compete for the lowest priced package including fixture, ballast, lamp, controls, etc. Sometimes, a contractor might seek a lower overall price by compiling the package himself from supplier catalogs, and seeking estimates from sales reps directly, or by modifying the package recommended by a distributor with preferred substitutions. Obviously, distributors do not like that practice very much. But, some contractors merit the direct service of sales reps, who will quote lighting products independent of distributors. A small but growing trend involves contractors who can purchase directly from manufacturers. The focus group validated that growth in design-build contracting gives contractors new power in product selection. In this mode, they are often consulted on installation methods and suppliers in the design phase. In addition, they usually favor the delivery team that has proven most reliable and responsive to their needs. They also reported more freedom to choose brands and suppliers of those lighting products that are not restricted by architectural or engineering criteria to specified sources. Of course, they often have unrestricted power to select products and sources in retrofit projects that do not involve architects and engineers. Overall, this type of work amounts to nearly half of all electrical contracting business. In any case, the products selected must be approvable by the design authority. This process requires that a contractor provide product data/spec sheets before materials are ordered. Once they are approved, the contractor issues an order to the selected distributor or supplier, and the products are released to the manufacturer(s) for production. Since time is of the essence on the job site, meeting the shipping and delivery dates are crucial for efficient job site coordination and project completion on schedule. Often, there is a financial penalty for delays and a cash incentive for schedule accelerations that impact the owner's budget. In the real world, this process seldom works without a hitch here and there. Lighting specifications are not always clear and complete, design drawings often lack product details necessary for ordering and installation estimates, catalog sheets are not always up to date, product numbers are often unreliable or not transferable to other suppliers for equals substitutions, prices are often subject to change up to the minute bids are due, ordering information to suppliers often is not accurate, promised delivery dates are not kept, and customers are not well served. It is no wonder contractors in our focus group expressed frustration and anger at the present state of affairs. From what we gleaned from the interviews and focus group, this process has deteriorated dramatically over the past 10 years or so. It has been exacerbated by an acute shortage of qualified people in all the critical positions, and lack of training of new hires. Some of the players have adopted high technology solutions in communications that do not always work as well as their promise. No automated information technology is good as one qualified person talking with another qualified person to solve a problem through mutual cooperation. After the pricing game, the contractors' major complaint was lack of trustworthy and timely information about lighting product shipment and delivery details. Distributors often pass along delivery dates they get from sales reps that are not forthcoming from the factory. Calls to the factory by the contractor are typically referred back to the local sales rep, who is out selling new jobs and gets no extra compensation for servicing existing projects. It should be obvious to all the players that each one is not just a supplier to the next customer in the line if the process is to profit all of them. The process requires an overall systems approach. If contractors at the end of the line are to service the general contractors who must service the building owner, then designers must service specifiers, manufacturers must service sales reps, sales reps must service distributors, and distributors must service contractors. The weakest link in the chain troubles all of them. At present, it seems the emphasis of all the players is on making the sale, while post-sale service is given insufficient priority for all to make a decent and deserved profit. Recommendations for possible improvements Most buildings are built on schedule and some come in under budget. But, when projects go awry, only the lawyers win. It is little wonder that some owners express acute dissatisfaction with the design/bid/build/sue approach to new building acquisition. It seems to us there is some blame for all the players in this game of lighting charades. But, blame gains no one a profit from lighting unless all accept some responsibility for making needed improvements to the overall design/delivery system. When we asked each player during the interviews to make some recommendations for improvements, they usually had something to say about another player. However, when you put all the recommendations together, a decent overall plan for improvement of lighting material management in a perfect world emerged: 1. Architects and general contractors should not agree to-and owners should not demand-a project delivery schedule that squeezes all time for lighting contingencies out of the process. They should recommend and hold to a realistic construction process. 2. Engineers should prepare drawings that are complete and sufficient for estimating and bidding lighting products. They should consult with contractors during design to assure a project spec that can be installed, delivered, and serviced with minimal complications 3. Manufacturers should prune their lighting product lines of redundant options, and issue timely and complete product catalogs that provide complete, accurate information for designers and installers. They should consider issuing product information in different forms to meet the differing needs of designers, specifiers, and installing contractors. One size does not fit all in advertising design either. (Advertisers, take note.) Manufacturers should promise only what they can deliver and deliver what they promise. They should implement current state-of-the-art e-commerce technology to make lighting delivery information available to contractors, with no barriers from middlemen. 4. Sales reps should focus more on contractors in proportion to designers, specifiers, and wholesalers. They should work with contractors to create optimum lighting packages that maximize benefits from each supplier. And, they should provide timely, accurate response to contractors seeking delivery commitments for products under order. 5. Distributors should package lighting systems for their best prices only once, and avoid a price auction during the bidding negotiations that ends only minutes before bid submittals are due. 6. Contractors should begin the material management process earlier-as soon as contract award-to give suppliers maximum time for production and delivery. They should assume total responsibility for product logistics, since the general contractor and customer hold them to the schedule and budget. This means doing a better job of tracking production and deliveries without shifting responsibility to others. 7. All players should hire people motivated to do a good job of customer service, and provide the training needed in material management to assure customer satisfaction in the chain of design, specification, pricing, production, distribution, and installation. This especially includes the project managers assigned by contractors, who represent the captains of the team in the eyes of the customer. Finally, this might be a good time to consider organizing a new partnership in the jurisdictions of association chapters for better materials management on all types of jobs. Such a partnership could include the local area architects, engineers, sales reps, distributors, and contractors. When they all see themselves as part of the same team in the eyes of the customer, perhaps some of the problems discussed above can be removed from the process of lighting management. Contact the leaders of your association to get this new program working for you. Tagliaferre is proprietor of C-E-C Group, consultant to the electrical industry, and a contributing editor to EC magazine. Phone: 703-321-9268 or e-mail email@example.com.