When it comes to suppliers, it is important to know the different supplier options available and the benefits each may bring to your construction business.
When evaluating the best type of source for your construction needs, start by considering some critical factors, including:
- Value for money
What do different types of suppliers bring to the table?
When you work with manufacturers, you’re working with the source of the supply chain. Sourcing your materials from the manufacturer means you’re not paying any additional businesses for the transportation, handling and storing of the product.
There are potential downsides - many manufacturers create the materials after they’ve been ordered. This can create a longer wait time than what you’ll receive with a vendor or distributor. But, if what you need isn’t something readily available or mass-produced, manufacturers can create large volume orders to the exact specifications you need. Manufacturers are ideal when efficiency and intricacy are top priorities. If you will need a product in very large quantities, there could be significant savings with a manufacturer.
Vendor / Distributors
Vendors and distributors often fall just one degree of separation from the manufacturer and offer significant benefits. Vendors research and shop the product for you, saving your team valuable time and risk. The vendor is often buying in such large volume that even though you are buying from a ‘Middle Man’ your ultimate cost may be quite close to what you would pay if purchasing directly from the manufacturer.
Buying from a vendor or distributor also allows you to purchase in much smaller quantities and the lead time is usually better because the vendor or distributor carries inventory. You are likely to be able to negotiate better terms with a vendor versus a manufacturer.
In my experience, a wholesaler can be compared to a very large distributor. Many distributors in the construction products industry focus on a specialty or two, such as lumber, windows, doors, or only roofing products. A wholesaler carries a fairly large supply of a very large range of materials. In my personal experience I am familiar with a wholesaler that offered products for the following categories:
- cement products
- sound control
- stone finishes
- support products
- hand tools
- radiant heating
The list went on.
They boast over 50 major brands of materials just for ancillary products. Having a good relationship with a wholesalers can provide access to many of the materials you may need everyday in small volume and an opportunity to shop larger, higher cost materials in a pinch when your primary supplier has a hiccup, or your project timeline changes.
Generally wholesalers don’t offer the best price points or large volumes of all of the products they sell, but it is common that they still specialize in a few commodities.
Independent craftspeople who create their own masterpieces often sell their work directly or partner with representatives who help sell their final product.
Independent craftspeople are known for one-of-a-kind intricacy along with handmade detailing. If a builder or developer is looking for a very high-end or custom treatment for a project, or a portion of a project, a skilled artist or craftsperson may be the answer to creating something your competition doesn’t offer.
It is important to know that when dealing with very unique and talented professionals, the lead-time will be significant and making a change once the ball is rolling may be next to impossible.
Your project planning must be very solid. The cost of these products is typically very high, but when considering the overall project costs, the ROI can be worth it.
When you source materials through importers, high-volume orders in standard sizes are where you’ll find the most benefit.
The high-volume helps to offset the costs incurred while transporting the materials. It’s not uncommon to buy from a wholesaler or distributor who sources from importers as well.
Becoming adept at selecting the right balance of the different suppliers available requires time, careful research, and planning.
Here are a few steps I have found useful:
- Research - Doing your homework will save time and money in the long haul.
- Contact - Find the right connection at the supplier.
- Check the Supplier’s Technology - This is becoming a bigger and bigger factor for successful long term success.
- Get samples (if relevant).
- Order from their competition.
- Assess the product quality and be clear with your expectations.
- Evaluate your customer experience.
- Negotiate and make the decision.
QUALITY, CONSISTENCY, AND REPEATABILITY
Why Technology Matters
More and more, technology is playing a greater role in successful procurement operations. A strong relationship with strategic suppliers will benefit both sides.
Technology will ease the burden of the day-to-day tasks, communications, and operations between you and your suppliers and will allow your team to spend more of their time concentrating on the strategic decisions and relationships related to supply.
Success in procurement has a direct impact on the success of your business.
- Real-Time Actionable Data
- Visibility Across Your Supply Chain
- Enhanced Customer Communication
- Unparalleled Efficiency
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