Vendors Play Key Role in Providing Value-Added Services
For many years, vendor performance in the construction trades has been evaluated on three metrics – price, quality, and delivery. These metrics have made sense over time and have been widely accepted as indicators of performance. Vendors that have historically performed well in these areas have generally been successful, and those that fall short in one or more areas generally do not.
In today’s environment, contractors are looking for vendors to help them create competitive differentiation that will help set themselves apart. There are several areas where contractors are looking for value-added services that they are willing to pay a premium for:
- Assistance in Planning and Maximizing Cash Flow: Project managers have precious little time to manage all of the materials that are required on a job site. Vendors that can engage early on in a project and assist in the planning of material deliveries and helping to manage lead times from manufacturers can be an ally to the construction team. And when helping to advise when materials need to be ordered to limit the potential for late deliveries instead of ordering too far in advance, cash flow can be maximized.
- Vendor Managed Inventory: While common in manufacturing environments, vendor managed inventory is an opportunity in construction environments to improve productivity. When superintendents can spend their time focusing on job risk, namely labor, they can be more productive. Vendors that can deliver and manage commodity materials can relieve that responsibility from the supervisors on the job site.
- Points of Use Delivery of Materials: Vendors typically deliver materials to a job site dock door or some other common location. Those that can take it to the next level and deliver it within the 30:30 Rule (within 30 feet or 30 seconds of installation) can significantly increase productivity on a job site and reduce secondary time. In order to accomplish this, the vendor needs to commit to planning and coordinating with job site supervision and be flexible with their time commitment to be on the job site.
- Recommendations of More Safe and Efficient Products: Vendors are in a favorable position to get exposure to new products from manufacturers. By introducing contractors to products that can help them be safer and more efficient, they increase their value. Since many of these new products may be more expensive than traditional products, helping to create a return-on-investment model is also helpful.
The expectation for vendors to provide more value-added services continues to grow. Those vendors that are on the leading edge of providing new cost effective services will have more opportunities to grow with forward thinking contractors.