In Search of Excellence
For decades, building service contractors and distributors have felt as if they were on the opposite ends of supply chain logic when negotiating contracts. In actuality, they have had the same concerns during this time. Both say they are more interested in the quality of products and services rather than the price, yet both are dismayed to find price the main focus of their discussions, blaming the other for the misunderstanding.
The main cause of these frustrating situations is habit. Too many companies on both sides find price the easiest and fastest way to get through a conversation about what to purchase. And few stop to think of the damage such habits are causing their operations until after a few shipments have been delivered. Yet, with a little extra work and insight BSCs and distributors can develop true partnerships based on mutual interests.
Many suppliers already realize that they offer much more than product to their customers, but it’s up to contractors to do the legwork necessary to find these potential partners. As long as a BSC is knowledgeable regarding what support a successful business needs, and how to find it, that person’s supply conversations will focus on efficiency, labor savings and mutual cost reduction instead of penny-pinching.
Gather your thoughts
Finding the right supplier involves understanding what a BSC must do to succeed. What type of operations are involved? How many customers does the BSC have? How spread out are its accounts? What kind of consumption rates do they have? What special needs do some accounts have? How much inventory can the company take on or place at customer sites, if at all?
Beyond practical operations details, BSCs also must look at their company’s goals, says Mark Dancer, a Chicago-based consultant specializing in customer buying behavior. This is a business need that many contractors fail to think of when considering supply options.
“Look at your growth objectives and decide what you plan to do, how you plan to get there and then what you’ll need to make it work,” he says. “Whether you want to integrate more technology, be viewed as a specialist or try to serve larger accounts, you’ll need a strong supply partner to achieve these goals.”
“Often a contractor finds that doing business with a local distributor enables them to concentrate on other mission critical issues, enhances their operational effectiveness and improves their bottom line,” says Rebecca Pando, marketing director for the International Sanitary Supply Association (ISSA), Lincolnwood, Ill.
Entry-level workers often receive more questions from BSCs for minimum-wage jobs than their distributors do before signing large contracts. The right products delivered in the right ways can save time and money, and improve work quality just as a good employee can. Therefore,it makes sense to take a distributor search just as seriously, if not more seriously.
First, BSCs should ask around to find out which distributors other people suggest. If a company is branching into an area where its current distributor doesn’t service, executives can ask if there is a company in that area that their supplier recommends. Often, distributors refer business to peers in non-competitive areas. Calling other contractors in the area and asking who they use as a supplier is another option. Another way to find distributors is to look for those who belong to professional organizations such as the ISSA.
Once BSCs have located a few prospects, they need to make appointments to talk to a contact at each. Contractors should let those people know that they want to spend enough time discussing their needs and how the distributors can meet them, says Steve Epner, president of BSW Consulting Inc., St. Louis, who has worked extensively with distribution organizations.
“If a distributor balks at spending enough time talking about your needs before you sign anything, especially if you are willing to make sure it’s a good deal for everyone involved, then that is not a company you should work with,” he advises.
When interviewing a potential distributor, contractors must explain their operations, goals and needs, then ask a series of questions about the distributor’s operations. All this should take place before talking about the finer points of pricing, says Pando.
“Price reflects what you’re asking for, so contractors need to know what they are willing to pay for and be realistic about the cost of those needs,” adds Epner. “All too often, the customer looks at price and ends up in trouble because the distributor doesn’t always know how to sell around price, cutting corners instead, which will give the contractor inferior service.”
BSCs need to give a prospective distributor enough detail that that person can offer the best options available. This can be done while the contractor gathers his or her own information in the initial meeting. Key here is determining, based on what you tell the distributor, how committed the prospect is to partnering with customers.
Questions to ask include:
Will they truly partner with you? Some distributors still might want to move product, regardless of who they’re selling it to. The ones who want to partner with other businesses are the people who will best understand what BSCs need and how they can offer those services, says Dancer.
A good test to determine if distributors are the partners that they say they are is to ask them to articulate the business goals of one of their customers. Would that company change to help a loyal enough customer and how have they done so in the past? It should quickly become obvious if the company is progressive enough to help a BSC grow.
Can they offer quality products?Contractors need to know that prospective distributors carry the brands they want or can get them when necessary.
“More often than not, manufacturers introduce new products to their distributors first and spend a lot of time with their sales people pointing out each feature,” says Pando. “Because most distributors carry multiple lines, they should be able to determine which product will fit a contractor’s needs the best.”
This often is the area that is hardest for contractors to get through, because they might get caught up on the prices of the best products, instead of focusing on information gathering before negotiating price. But Epner suggests contractors take notes and wait to discuss price alternatives until after getting answers to the rest of their questions.
Can they get you the quantity you need? “If they ship you too little, then you can’t clean on a given night and if they ship you too much, you’ll have to pay to handle the extra material,” says Epner. “You want exactly what you asked for when you order it – no surprises when you open the boxes.”
This can be a big issue for smaller contractors or those who need specific quantities sent to various customer locations. A BSC may have to pay more for smaller numbers of supplies, but the cost to store, track and pay in advance for too big of an order might be comparable or more expensive.
This conversation requires a BSC to have a solid understanding of his or her own inventory costs to put prices into perspective.
Can they get you the packaging you’ll need? “If your cleaners use three rags a night then you’ll want them prepackaged that way to save someone the time it takes to separate a larger box into each worker’s cart,” says Epner. And contractors don’t want an odd quantity that leaves too much left over or requires them to order another box to meet the right amount in a given night.
Proper packaging can give the BSC more control, easier tracking, less waste and less spending. Determine what this is worth before questioning added cost for special packaging or to determine the cost if a distributor can’t meet those needs.
Can they get you the product when you need it? If most cleaning employees start work after 5 p.m. then a late afternoon shipment will be too late for BSCs to deliver to job sites before workers begin their shifts. For those contractors who need items shipped to customer accounts, they need to know it will get there during work hours when the facilities are open and when there will be someone to receive the products.
The same concerns exist for shipments that arrive too early. A BSC may not have a place to store an entire shipment of chemicals for even one or two days. Internal costs again play a factor here.
Will they really deliver what you want? Too many distributors will substitute one product for another in order to meet time or packaging needs and the customer ends up getting only part of what they wanted, says Epner.
Sometimes these switches are explained up-front – if a BSC wants one broom right away it may not be available, but another one that is “close enough” is available. Other times the customer isn’t informed until a shipment of different products arrives.
A contractor concerned with product performance and cleaning efficiency should know that “close enough” is not good enough when it comes to customer quality or making the most of a worker’s time. Getting the right materials the first time is essential and a supplier should acknowledge this need.
Will they help you put together special programs? Often, a contractor might emphasize niche services. Therefore, a BSC who is interested in offering green cleaning or mold remediation will want to show that he or she is using the right products to do so.
A distributor can help a contractor find the right products, but what about market them or help educate facility managers about them? Can the supplier provide their product brochures with the BSC’s company name on them? Can the distributor offer selling points to use with the BSC’s customers?
“These extra steps can help cement a true growth partnership and are the true future of supply relationships in this industry,” says Dancer.
What other services can they offer you? Some equipment purchases may cost too much for an initial investment, so BSCs should see if leasing programs or consignment sales are an option. Often, used machines are a necessary option for small contractors, but not every distributor might understand the value of offering a cheaper, used item.
Distributors also have numerous skills necessary in their profession that BSCs could benefit from. Perhaps a supplier can help with drop shipping, shelf stocking or specialized training. These services will come at a cost, but could outweigh paying someone in the BSC’s own organization to do the same work with less experience or efficiency.
How do they make all of the above hassle free? “Sometimes the best suppliers are the ones you don’t hear much from,” says Dancer. “Their goal is for you to not have to see them much and when you do, they don’t mess up.”
Often the reverse is true; the only time contractors see a supplier is when there is a problem. BSCs should think about how this type of relationship works with cleaning customers and then ask how the distributor avoids such problems.
In addition, some distributors might be willing to work with customers to find solutions to common problems or ways to improve existing processes – even if they already seem efficient.
How will they let you know what they are doing for you? “It’s one thing to say you’ll support a customer when giving a marketing pitch, but I like to see a report card that proves it,” says Dancer.
BSCs should find out if the distributor will issue reports regarding its on-time delivery record, responsiveness to technical questions, frequency of tight order turn-arounds or getting hard-to-find items for the contractor. These all can help justify any higher costs the BSC might pay.
Some companies even use such reports to show how a BSC’s willingness to pay more for a certain type of delivery or packaging saved the distributor money. And then they actually give some of the savings back to the loyal customer, says Dancer.
If a contractor is willing to work with the distributor for the best arrangement, such profit sharing is not out of the question in today’s age of supply partnerships, he says.
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