Published In May 2000
Supplier relationships can contribute greatly to the success of an electrical contracting firm's voice/data/video (V/D/V) market entry. By taking advantage of supplier expertise, capabilities, and services, your firm can greatly improve its day-to-day operations, customer satisfaction, and profit margin. The term "supplier" represents all entities in your company's supply chain, which includes distributors, manufacturer representatives, manufacturers, and others. The term "partnering" is used loosely in this article to mean anything from informally teaming with your suppliers to better serve a customer on a particular project to developing a long-term business relationship structured around a written agreement, such as a franchise or dealership. The relationship's structure will vary from supplier to supplier and from project to project. However, in all cases, your company should stop and ask how suppliers can better serve customers. Today's V/D/V suppliers provide much more than a ready inventory and prompt delivery of products at the right price. Firms should take advantage of these expanded services when entering the V/D/V market. Partner with your suppliers Your business is both the supplier's customer and a gateway for the end-user to access the supplier's products. Without the supplier, your company cannot schedule work. Without your company, the supplier's equipment and materials will not be installed. Both electrical contractor and supplier have alternative routes to the customer. You can bypass a portion of your traditional supply chain and buy directly from the manufacturer or, via e-commerce, purchase materials and equipment directly from suppliers anywhere in the world. Similarly, suppliers can bypass you as a distribution point and sell materials and equipment directly to the customer. In today's topsy-turvy V/D/V market, roles are constantly shifting. It is sometimes difficult to know if someone is your partner or your competitor, because these roles often change from project to project. Sometimes, alternative supply chains are valid and make sense. Consider what additional services traditional suppliers can and do provide. They may be much more valuable to you than a short-term price break. Partnering is in both the supplier's and electrical contractor's best interest, because it provides the customer with what is needed. Firms and suppliers provide integral pieces of the puzzle of meeting customers' V/D/V needs and requirements. V/D/V suppliers can provide a great deal of value to your company beyond on-time delivery of needed materials and equipment. Suppliers must also provide value in the form of services to ensure their place in the supply chain. You aren't just buying materials and equipment from your supplier; you are purchasing added value in the form of product knowledge and services. Selecting V/D/V suppliers Many electrical contractors select suppliers based solely on price and delivery. This may work in the power distribution market, where products are fairly standardized and interchangeable, but it does not always work in the V/D/V market. For example, products are not always interchangeable, and there may be many acceptable products for a given application. These product choices often have different capabilities, installation requirements, and performance parameters. Competing technologies may also need to be considered for a particular application. Should the horizontal cabling in a customer's newly renovated and technically upgraded office complex be copper or fiber? A decision like this, which involves competing technologies, often is not based solely on price and delivery. Rather, it involves considering the customer's business, anticipated future needs, applications, expected technological advances, among other factors that the supplier can help with. Your firm must not only seek out V/D/V suppliers that can provide on-time delivery at a reasonable price, but also those that can help you select, install, and test V/D/V materials, equipment, and systems. Technical assistance Suppliers have always provided technical assistance, but in today's rapidly changing V/D/V market, that assistance is critical to your success. Your firm must ally with suppliers that are knowledgeable in selecting and applying the right product for the right application. Knowledgeable supplier personnel can help you avoid misapplication of materials and equipment that can result in lost profit and dissatisfied customers. Design assistance Many projects require the electrical contractor to design all or part of the V/D/V system. The scope of the design effort can range from determining the customer's needs and requirements based on a simple customer statement about the desired system to receiving a nearly complete design with only the final cable routing and exact equipment location remaining to be done. In either case, V/D/V suppliers can be a valuable source of information and can help your company complete the design. Even if a firm is merely detailing a near-completed design, V/D/V suppliers can help by suggesting alternative materials and equipment, as well as installation methods that can improve the efficiency of installation and installed system performance. These design improvements provide a firm with a competitive advantage in a bid situation. They also position your company as a state-of-the-art player in the eyes of the customer when the functionality and technical life of the V/D/V system are improved. Companies entering the V/D/V market often do not have the needed technical in-house expertise for the more comprehensive, complex projects. A specialized system such as a local area network (LAN), fire alarm, security, or other system requires specialized knowledge, registration, certification, or licensure. Often manufacturers and distributors have technical staff with the necessary expertise and credentials to do the design. Suppliers with design capabilities can assist your firm in performing the design and meeting project requirements. For some time, the trend has been to replace control systems having hardwired logic with programmable control systems. This trend continues, and there is an increasing need to program control systems for custom performance. Suppliers can provide programming assistance when the firm does not have this expertise in house. The supplier could also provide training to help the firm develop this expertise in house. Installation assistance Installation requirements and procedures for V/D/V materials and equipment often vary from manufacturer to manufacturer. Suppliers often provide training for installers, which can take place at the project site, at the electrical contractor's home office, or at a local training center. Usually, this training is provided without charge, and electricians and technicians that complete it are certified to install the manufacturer's product. These certifications may also be required by the project's technical specifications. Having a trained workforce is critical to V/D/V market success, and V/D/V suppliers are the best source for product-specific training. Testing and verification assistance Many technical specifications require the V/D/V system to be tested after installation and that its performance be verified as compliant with the specified performance criteria. Whether required by the technical specification or not, the electrical contractor should always perform all necessary system testing after installation and document the results. All tests should be performed in accordance with industry standards and manufacturer recommendations. Suppliers of installed materials and equipment, as well as suppliers of V/D/V installation and test equipment, can assist the company with component and system testing. Suppliers can provide the company with test procedures and recommendations, the loan or lease of required test equipment, as well as training in the performance, interpretation, and documentation of tests. When needed, the supplier can send its own technicians to perform the tests, verify system performance, and assist in troubleshooting any technical problems. Prefabrication and bundling assistance A lot of time is often spent on site receiving, checking, storing, and distributing V/D/V materials. This is especially true for large V/D/V projects. In addition, fabrication of standard assemblies can take more time and be more difficult to produce reliably in the field than in the controlled environment of a manufacturing facility. Here again, suppliers can help your firm streamline its installation process through prefabrication and bundling. A little planning and supplier involvement can save time in materials handling and fabrication at the site. Working with suppliers allows materials and assemblies to be prefabricated and delivered to the site, ready for installation. Standard assemblies can be pre-made; cables can be cut to length, terminated, and labeled, among other things. Similarly, materials and equipment shipped to the site can be bundled or packaged for a particular room or work area. Receiving and distributing bulk V/D/V materials in the field can be tedious and time consuming on large, repetitious projects. It is much more efficient for materials to be prepackaged in a controlled environment such as a manufacturer's distribution center or distributor's warehouse than at the project site. Marketing assistance Suppliers assist in marketing your services, either directly or indirectly. Often, V/D/V suppliers are the first to know about customers' upcoming projects because questions about product capabilities and available technology usually arise during the early planning stages of a project. By partnering with suppliers, your firm may be selected to do all or part of the V/D/V installation for the supplier. The supplier could also recommend your company to the owner to perform the complete installation. If you become the supplier's only authorized installer or preferred installer in a particular area, you would perform all of that supplier's installation, upgrades, and warranty work while benefiting directly from the supplier's marketing and business development activities in the area at no cost. Suppliers need qualified installers they can work with and, by partnering with them, you can raise your firm's visibility in the area and gain instant credibility with customers. Procurement process assistance In addition to technical and marketing assistance, your suppliers can also assist in procuring needed V/D/V materials and equipment. This will lower your transaction costs and improve your procurement efficiency. Lines of credit can be established that will allow your service personnel to obtain needed material and equipment directly from suppliers without going through your internal procurement process. This allows your service personnel to work more efficiently and reduces the amount of inventory and resulting inventory-carrying charges. Further, if you have long-term purchasing agreements with suppliers, more expensive maverick purchases from unapproved suppliers by service personnel can be curtailed. With your suppliers, you can work out customized delivery points and schedules that improve both service and project work efficiency. Customized delivery can include anything from off-hour delivery of V/D/V materials and equipment directly to service personnel to just-in-time (JIT) delivery of materials and equipment to a construction site. Vendor-managed inventory (VMI) systems on either long-term or accelerated short-term projects reduce your firm's involvement in the day-to-day procurement process, decrease administrative time and cost, lessen the chance of stockouts and misorders, and eliminate restocking charges at the end of the project. Your suppliers can also provide billing reports and invoices tailored to your firm's needs. Reports can be traditional monthly paper-based, regular electronic, or real-time reports posted on the Internet. Billing reports can be designed so your accounting department is able to easily track material and project cost variances. They can also assign material and equipment costs to the project, service call, or internal function that incurred them. Suppliers strongly influence a firm's success in breaking into the V/D/V market. Suppliers not only provide materials and equipment at the right time and price; they also provide other value-added services to the firm. For example: - Product-specific design, installation, and testing assistance is often not available anywhere else. - When there is a problem with the application, the supplier may be the only one that can help. As the firm's experience and expertise in the V/D/V market grows, so does the importance of supplier relationships. By working together, the electrical contractor and supplier can provide greater value to the customer. To accomplish this, the electrical contracting company is to select compatible suppliers with the same commitment to quality and customer focus that it has. Acknowledgement This article is the result of ongoing research into the impact of information technology on the electrical contracting industry that is sponsored by the Electrical Contracting Foundation, Inc. The author would like to thank the Foundation for its continuing support. Dr. GLAVINICH is chair and associate professor of architectural engineering at the University of Kansas. He can be reached at (785) 864-3435 or firstname.lastname@example.org.