Looking beyond price can keep costs down! When tendering a project, as a buyer, what’s the first thing you look at? Is it the level of customer service you can expect? The supplier’s financial history? Maybe it’s compliance or the warranty that’s provided?
Or is it the price? Of course you want to know how much the doorsets or staircases (or the other hundreds of other products that go into a building) are going to impact your budget. That’s fair enough. But if you only look at that number – well, that’s where the problems can begin.
As the saying goes, you get what you pay for. While a low price can be tempting, it’s also important to take a step back and think about why the price is lower? What will you be sacrificing just to save some money? And what will that cost you in the long-run?
I’ve seen it happen so many times. Our office phones ring regularly with calls from buyers asking: “Can you supply me with doors ASAP, because I’ve been let down by one of your competitors.” It’s almost always the case that, at some point, they chose the low-cost option. Then something went wrong and now they’re scrambling for a solution – and, most likely, this means the project is going to be delayed and will probably go over budget.
Doing due diligence the right way
The pre-qualification and tendering process can be long and laborious, with paperwork, factory visits, meetings and phone calls. Suppliers go to so much effort to demonstrate why they’re the best choice for a project – and specifiers spend a lot of time learning about those companies.
So why does it often seem like all of that time and effort is moot when it all comes down to price in the end? It’s especially frustrating, considering that price alone is such a deceptive figure to base a decision on and doing due diligence can ultimately keep costs down!
Instead, we believe that more weight needs to be given to other elements of a bid. Of course, the price should be considered, but so should the supplier’s:
- Testimonials and case studies
- Financial standing
- Memberships and accreditation
- Technical abilities
- Guarantees and warranties
- Aftersales service
- Customer care
- Account management
- Staff training
- Machinery investment
- Research and development
- Risk management
- Contingencies for disaster recovery
I’ve seen plenty of examples of due diligence gone wrong. For example, there was the case of a supplier who didn’t have the necessary credit limits to procure the materials in a high enough quantity. This meant they weren’t able make enough of the product fast enough because they didn’t have enough materials.
There have also been cases where suppliers promised a certain level of compliance, which they were incapable of delivering. Currently, there are huge revisions happening with Part B of the Building Regulations and in January, there will be another massive revision in regards to Secured by Design membership.
It costs money to get certification and to have products tested. The quality needs to be there to ensure the products pass the assessment and if a product isn’t going to be able to meet those criteria, the manufacturer shouldn’t be able to bid. They certainly shouldn’t be able to win a tender because their inferior product is the cheapest out there.
Discounts for commodity volumes and long-term contracts
Now, I’m not saying that commodity volumes and the security that comes with a 12- or 24-month contract shouldn’t count for something. Those things are great for a company like Stairways – and we reward them as best as we can with discounts or rebate structures.
But there’s still a rock-bottom that we can’t go below without sacrificing our quality, or our customer service, or any of the other benefits we offer our clients.
The problem is that the suppliers who undercut reputable suppliers are the ones that don’t have a trustworthy stance. They haven’t invested in things like training, standards, machinery, operations or all the other things that Stairways and many of our prominent competitors, have. All that investment is to ensure that we’re not just supplying today, but that we’re still supplying in ten years’ time – that Stairways remain successful and reliable, that we can help the industry grow and that we can provide the right service when you need it.
Recently, for example, we were involved in a framework agreement with a large housing business. The pre-qualification stages were extremely long, but after all that work, when the scores came back, it was clear that the end scoring was heavily based on price. Stairways and another reputable firm came in second and third, while the winner was a company with no sort of status or stature – and, worryingly, no compliance or technical aftercare.
Sure, that bottom line was probably very attractive. But don’t you want to partner with a company that’s going to solve your problems, that’s going to be proactive when you’ve got an issue and that’s going to supply a quality product that meets all statutory regulations? Those things are important and though they may add to the price per unit, they may actually help to keep costs down.
Prices have to go up eventually
It’s also important to remember that prices do eventually have to go up. The costs of raw materials and labour go up and this is outside of a manufacturers control. For timber doorsets and MDF, we’re usually looking at, at least two price increases a year and I’ve had national house builders say to me: “Well, we’re not paying the increase”.
While I understand that perspective and the pressures that buyers have to face, there’s only so much a business can absorb before value, service and all of the benefits we offer our clients begin to deteriorate Here at Stairways, those are things we just won’t sacrifice – our clients and quality are too important to us.
Now, I’m not saying let’s put everything up by some ridiculous amount. When we’re dealing with a commodity product, it is, to some degree, a “stack ‘em high, sell ‘em cheap” scenario. That’s all understood and there is a certain price point that the market will pay. However, I think there also needs to be some give and take – and it may be that the clients will also need to reconsider their own budgets and margins to ensure that they can get the quality, service and value that their project deserves.
Stairways: providing value
Here at Stairways, we believe in working in partnership with our clients, understanding how they build, the challenges they face and how we can improve our products to ensure the best result. We want to build on the success of our business while delivering quality products and exceptional service.
We may not always have you the lowest price – in fact, we often don’t – but we aim to provide value for all of our clients and the end users which will ultimately keep costs down! A smooth process, a reliable service, compliant products and warranties you can count on – these things may cost a little bit more, but they could actually save you money (as well as time and frustration) in the end.
To find out more about the benefits of choosing Stairways products, or to discuss a project with one of our experts, please don’t hesitate to get in touch