ELECTRICAL CONSUMABLES

OVERVIEW

Electrical consumables are critical for any business with maintenance, repair and operations (MRO) needs. Whether this is important differs from an office to a manufacturing facility. The difference is the impact value of productivity for critical machinery when not working.

For those businesses with a significant need, consumables can be a huge expense line. Management of this expense line becomes critical whether you buy direct or through a maintenance supplier.

We have seen this category open to gaming by suppliers to win business and claw back margin later. Those businesses that persist in using an RFP approach leave themselves vulnerable to such tactics.

With millions of product and supplier combinations available on the market it pays to work with a partner.

THINGS TO LOOK OUT FOR

Sign-on​ ​bonus
Sign on bonuses are an up front payment from the supplier for awarding the contract. It is a sales tactic to hand you 'free money' while putting unfavourable terms in a contract. The supplier will add this into their margin so you are not getting anything for free.

Limited​ ​contracted​ ​basket
Offering a saving on the top items you buy means you are paying full whack for the rest. This flawed method aims to provide visibility on the items you buy most. What it usually does however, is remove visibility to the majority of items you buy. It is on these items that you end up paying more than you should.

Pack​ ​size​ ​confusion
It is common for different products to come in different units of measure. Then there are different pack sizes in individual packages (e.g. pack of 12 vs box of 12 packs). There are also bulk packs for many products to consider. Some suppliers may take advantage of the confusion created by this level of detail.

A​ ​cheaper​ ​alternative
This involves replacing premium or branded product with a cheaper product. Cheaper brands may offer valid ways to save over branded products. They may even do a similar job but may not always deliver the same result which can be more costly or dangerous in the long run.

Product​ ​Substitution
With so many products required in this space it is a challenge for many suppliers to maintain adequate stock levels. When stock runs out, an alternative product to meet immediate demand may be supplied. Sometimes the alternative product also delivers the supplier a higher profit. This type of predatory behaviour is more common than many would expect.

BETTER BUYING OUTCOME

Consider a more structured approach which delivers cost savings across time. The lowest basket price on a small range of top spend items at the time of consideration is a traditional but diminishing return approach that may reduce overall value.

  • A broad contract basket rather than focusing on top ordered items
  • Forget sign-on bonuses that lock you into volume commitments or limit you from moving when terms become unfavourable
  • Implement a substitution policy that ensures the quality, specifications and price of any substituted products
  • A robust supply chain to ensure that the contract basket of products is always available

THE DEAL

Supply Clusters has partnered with Lawrence & Hansen for all your electrical consumable needs.

Supply Clusters members receive the following exclusive benefits through L&H:

  • Locked in contract pricing on a basket of over 900 core electrical consumable items
  • Unit cost savings
  • All standard product prices fixed with an annual review conducted by Supply Clusters

L&H customers enjoy:

  • National coverage to provide you with one supplier and consistent product nationwide
  • Easy online ordering for commodity products
  • Ability to walk into any L&H retail store and pay negotiated pricing




THE BOTTOM LINE

Electrical consumables are an important component of on-going maintenance. The category is a necessary expense but there are many opportunities to save.

  • Choosing the wrong supplier can lock you into price increases and other predatory tactics
  • Choosing the right supplier offers you a better buying outcome

You should choose a provider that offers:

  • ​A strong supply chain to deliver the products you need across all locations
  • Convenient buying with a national network of outlets
  • A wide range of product at locked in contract pricing

FIND OUT MORE

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