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Component Manufacturing dverti$ dverti $ er
Don’t Forget! You Saw it in the
Adverti$$er
October 2023 #15291 Page #98
Design Connections
Geordie Secord, Senior Recruiter TheJobLine.com – Canada
Make Competition About More Than Price
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near certainty in the component business is that your customers will, to some extent at least, shop your price against your competition. Depending on the relationship history you have with your client, you may have the opportunity to match a lower price, but your competition will still be used as a benchmark. Is this a reasonable arrangement? Is it a productive process? Is there anything that can be done to minimize this? First, some thought about the positive and negative impact of lower component pricing for the builder. Obviously, if a builder can save 10% on the truss package for a house, then that has the potential to flow straight to the bottom line. But what about the risks for the builder? It could be that the package offered by your competition is missing some elements of the package the builder is accustomed to receiving from you – commonly this could be things like gable ladders, lay-in gables, or even valley sets. Having to build any of these components on site, especially if it hasn’t been planned for, can very quickly consume that 10% savings. If your competitor can’t deliver product to site when promised, the resulting delays can be very costly. And, if that new supplier happens to make a mistake that causes delays on site, it is likely to result in much or all of that savings evaporating. So, there are risks involved in your client looking at a different supplier. Business can often be considered a risk/reward environment. What is the relative reward? To take a simple example, let’s look at a typical house that would sell in a market near me for $750,000. The truss package for that house might be $15,000, or 2% of the home’s market value. Saving 10%, or even 20%, on the truss package is a potential savings of $1,500 to $3,000, but it is less than ½ of 1% of the value of the house. I don’t know about you, but I can’t think of anything that I commonly buy in which my decision-making process would be significantly swayed by a savings of less than 0.5%. Of course, the reality is that this is common in the component world. Your client receives your quote and that of your competitors, and their eyes lock on the number at the bottom of the page – lowest number equals better number.
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