SUPPLY AND DISTRIBUTION

However, there is one segment of our industry — supply and distribution — where the old adage must be amended to read: “The more things change, the more things have to change.” Supply and distribution will look so different 10 years from now than it did 10 years ago that it may be unrecognizable. No longer will the supply house with the fanciest showroom and best selection of delicious donuts on the counter win your business.

Entry into the distribution and supply business used to be dictated by the old standbys: price, product, and service. People will often disagree on the order of importance of these three items, but there’s no denying they’ve always been the primary concerns — until recently, that is. Thanks to the Internet, price is about as transparent as it can be. The Internet has universalized product availability. HVACR suppliers all have access to roughly the same products and offer them for roughly the same prices. Customer service has also followed suit. While some suppliers have better customer service than others, all suppliers have good service. A supplier that does not offer good service is a supplier that is likely no longer in business. Good customer service is the absolute minimum threshold every supplier must meet in order to survive.

THE MORE THE MERRIER?

So, if product availability, price, and quality service are all minimum barriers of entry into the supply and distribution business, why do we need more than one supplier? Aren’t those things enough? What else is there? What separates the best suppliers in any given market from the “us, too” suppliers?

The answer may look simple on paper, but it is far from simple in practice. Only the very best suppliers have the necessary resources and are capable of getting it right. Of that group, even fewer pull it off as a matter of routine. It largely depends on the supplier’s ability to partner with its customers and its willingness to meet them exactly where they’re at in their business cycle and growth curve.

In my years managing and consulting for small, medium, and very large HVAC contractors, I’ve never seen any two companies that are even close to the same. The best suppliers have picked up on this and are now tailoring their services to provide solutions to their customers that are applicable and relevant to where they are today and hope to grow to in the future. Many other suppliers, however, have not adopted this mentality and are watching their customer lists shrink. Doesn’t it seem like a simple thing every supplier would want to do?

The difficulty in this seemingly simple concept is in its scalability, and the No. 1 deterrent is attitude. The more customers a supplier has, the more custom solutions and relationships it must develop. Suppliers that are customer-centric and embrace this mentality can develop a seemingly infinite number of these relationships. However, suppliers that consider this concept to be an afterthought or a necessary evil always seem to struggle to execute customized solutions for their customers. And, it shows — you simply can’t fit a square peg into a round hole.

SELECTING THE RIGHT SUPPLIER

What kind of supplier do you partner with? Unfortunately, there is no short list of things to look for to determine whether or not your supplier is vested in your success and is willing to think outside the box when it comes to providing solutions that will help you grow and become more profitable. The answer, due to the uniqueness of every contractor in business today, is always different. However, there are a couple of questions you can ask yourself to determine whether or not you are in the right relationship:

• Does my supplier really know about my business? (Product mix, growth goals, what my sweet spot is, where I struggle, etc.)

• Does my supplier suggest ways to cut my costs based on observations it’s made about the way I do business?

• Does my supplier offer compelling value-added programs or initiatives that could improve my company or help me grow?

• Has my supplier spent time with me to develop a pricing strategy that makes sense based on the kind of business I’m in?

• Does my supplier participate in and offer me the very latest in technology the supply and distribution industry has to offer?

• Is my supplier an integrated part of my supply chain or is the operation just an extra step keeping me from getting what I need, when I need it?

• Does my supplier make it easy for me to do business with them?

• Most importantly, does your relationship with your supplier feel right? Having been their customer for many years should not be enough to make it feel right. Comfortable, yes, but not right.

If your answer to any of the questions listed above was “no,” I would suggest taking a hard look at the relationship you have with your supplier and consider a change if it’s not willing to partner with you in a way that makes perfect sense for your business. Remember, every supplier in town would love an opportunity to earn your business. Use that to your advantage. You’ve taken a lot of risks and worked very hard to get to where you are today — make sure your relationship with your supplier is working for you. I’ve seen many companies that have gone from the red to the black simply by making sure they were fully leveraging their relationship with their suppliers, or by changing suppliers for a much better value proposition.

My advice to the readers of The NEWS is always free. If you would like a free evaluation of your current supplier relationship(s) or have any questions, please feel free to email me at the address listed atop this page.

Publication date: 12/21/2015

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