Business Services

Distributors Supply, Support Contractors

Dealers Focus on Easing the Supply Chain, Meeting Urgent Needs in the Field

August 19, 2013
Trans

During the busy season, contractors don’t have time for bottlenecks in the supply chain. And distributors are focused on providing what contractors need as the replacement market trends up and repair work remains constant.

Replacements Are Trending Up

When the Great Recession hit in 2008, it seemed that everyone in HVAC was soon hearing the familiar refrain: “I want to repair not replace.” But now distributors are reporting that while the market for repair is still steady, more consumers are replacing their old equipment.

And that’s certainly welcome news for the industry. “Grainger has seen the industry shift to a ‘replace’ mindset, but ‘repair’ still plays an important role for our customers,” said Kyle Gordon, senior director, Grainger Inc.

According to Scott Morgan, regional manager at Gemaire Distributors, business is looking up in general. “We have seen an increase in both equipment and supplies year over year,” he said.

More specifically, Morgan noted, “There has been a marked increase in low- and mid-SEER range equipment, indicating a significant shift in consumer spending habits.”

At Source 1 Parts, a division of Johnson Controls, product manager Kris Robertson said, “From our perspective, the focus on repair still seems fairly strong, excepting compressor replacements, which continue to be depressed by the availability of dry-charged condensing units.”

He continued, “With some manufacturers now changing to POE oil in dry-charged units, we expect replacement compressor demand to remain below historic norms for an extended period. For lower-cost repairs, we expect consumers to remain repair-oriented until the overall economy returns to a strong growth mode.”

Refrigeration Hardware Supply Corp. fulfills the needs of the replacement parts market, and according to its president, Gerald J. Leonard, “Our sales statistics indicate that technicians’ customers are still seeing an increasing customer interest in repairing older equipment.”

Leonard added, “I believe there are practical limits to this approach, depending on the age and the extent of repairs required to maintain heavy-use equipment.”

Robin Boyd, technical service advisor at U.S. Supply Co., also said he still sees an emphasis on repair work. “There is still more of a mindset to repair than to replace,” he said. “The economy may have become somewhat better, but consumers are still being frugal. Another factor is that with previous tax credits on top of local and regional rebates, much of the equipment needing to be replaced has already been replaced.”

Plus, he said, “Longer manufacturer and third-party warranties are also giving consumers more of a reason to repair rather than replace.”

Supplying Busy Season

While overall sales appear to be trending up, certain parts and equipment seem to perform better in certain portions of the country.

“We’ve seen strong demand growth for fractional horsepower motors and for small electrical components including capacitors, contactors, and relays,” said Robertson. “The demand increase for fractional horsepower motors and small electrical components caused some back orders early in the season, but we were fortunately able to recover quickly. We don’t foresee any particular shortages going forward.”

Leonard noted that for his business, there is typically a high demand for replacement gaskets.

“For extremely popular models of equipment, there are sometimes challenges in maintaining desired stock levels on certain replacement parts such as door gaskets, door latches, and some door closers, particularly during the summer peak season,” Leonard said.

Boyd confirmed that parts seem to be in high demand this summer.

He also noted, “There has also been an increase in replacement indoor coils. The two factors I attribute for this are the ever-increasing formicary corrosion issue and brazed-in TXV condemnations.”

According to Boyd, TXVs have become a hot item because of this situation. “While I agree that there are general manufacturing issues with TXVs, I suspect that many others are being wrongly condemned,” he said. “Based on calls I get, after a TXV has been replaced and there are still issues with the system, I suspect that technician error in properly diagnosing TXV failure is helping to drive the increased sale and warranty replacement of this product.”

However, it’s not just during the summer that suppliers have to bring their A-game. “We always ensure that we have the products and equipment to serve our customers in the busy and lower-demand seasons,” Morgan said.

And establishing that year-round reputation for reliability is what a distributor must do to gain the trust of contractors. “Grainger monitors customer demand and partners closely with our more than 4,000 suppliers to provide customers what they need, when and where they need it,” Gordon said. “By establishing repeatable delivery-performance standards for direct-shipped items, customers can be confident that Grainger will come through in a time of need.”

Supporting Contractors

These days, distributors are providing both old-fashioned and newfangled approaches to customer service.

Gordon shared that Grainger is committed to supporting customers’ needs in a variety of ways. These range from a branch network of more than 360 U.S. locations, to multiple delivery options, to inventory management, to mobile apps.

“We offer multiple ways for customers to have product delivered — be it standard same-day shipping, next-day delivery, or same-day immediate job site delivery. Grainger will even open a branch after hours and on weekends for emergency situations,” he said.

Going beyond these fundamental service offerings, Gordon said the supplier utilizes newer technology and solutions for contractors, including its KeepStock program, which offers contractors solutions for inventory management including labeling, scanning, mobile capabilities, and even on-site support.

“Grainger has developed specific inventory management and applications designed for the mobile nature of contractors,” he said. “Grainger’s mobile apps allow contractors to use their mobile devices to find the nearest Grainger branch, search for products, and place their orders. Integrating GPS technology and personal lists led to the development of a mobile app that helps contractors discover which products are used at specific end-customer locations, making it easier to find and order the products for service and repair jobs.”

To better service contractors, Leonard said, “RHS will stock larger quantities of certain replacement parts if specifically requested by our contractor-technician customers, especially if the technicians know they will be using larger quantities in the future.”

He continued, “RHS also offers bulk-order discounts and automatic preplanned releases of parts through contractual agreements with customers. We’ve also been adding online customer account access where customers can research their prices, warehouse availabilities, package shipping dates, UPS package tracking, and freight amounts.”

At Gemaire Distributors, Morgan said, “Our company has invested in mobile apps that allow a real-time snapshot of availability. We listen to our customers and offer solutions tailored to their needs.”

Boyd said U.S. Supply Co. is focused on serving contractors by minimizing the things that typically inconvenience and slow them down.

“We are keeping more parts available in more of our branches rather than having to inconvenience the contractor with having to wait for a needed part to be brought in from a central location or shipped from the manufacturer,” he said. “This is quite costly in that having a dozen parts available in a region where only one or two of that part may be needed in a year’s time causes excessive shelf time for some parts.”

He also noted that his company is focused on providing local tech support at the branch level.

Building Relationships

According to Morgan, the No. 1 thing a contractor should do to maintain a good relationship with their supplier is communicate.

“The key to any relationship is communication, and the key to communication is listening,” he said. “We are committed to being the best partner we can be.”

Gordon added that contractors need to open up and share their experiences with their distributor.

“By sharing information about what’s happening in the industry, challenges that they are facing, and their needs in terms of products and services, suppliers can be more proactive in addressing those issues,” he said. “Contractors should be able to consider their suppliers as partners in their businesses.”

Leonard also reiterated the importance of communication.

“Communication between contractors and suppliers is the most essential aspect of maintaining a good working relationship,” he said. “Both parties know what to expect and work together to take care of the contractor’s customers.”

Boyd pointed out that it’s a two-way street. “Contractors need to establish a relationship with suppliers that is beneficial to both parties. If a supplier is providing services that are beneficial to the contractor, it is unreasonable for the contractor to expect the lowest pricing for every transaction with that supplier. Likewise, if no services are offered, then the contractor has the right to expect the lowest costs for products,” he said. “Everyone must win in order to have a good relationship.”

Publication date: 8/19/2013 

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