Project World

09/11/2019

Sourcing for Large Projects: The Distributor's Role

Project work, it is exciting, it can be lucrative and it can be very complex as well as very price sensitive. Pairing up with the correct vendors can make or break the success of a construction project. More and more our customers ask us why they should not just order their industrial valves directly from the manufacturer. They believe that going direct will result in a better price without having to incur the middleman’s charge.  Speaking from the “middleman’s” perspective, I can tell you this just is not the case. Distributors cannot only offer competitive pricing but overall cost savings that affect a project. Following is a quick look at where a distributor can play a major role and provide great assistance and savings in project-based work:

The Product

A distributor represents multiple manufacturers and has become the expert on recommending the best technology for the application.  Why use Stainless Steel when Carbon Steel will meet code requirements?  A good distributor is there to represent the best interest of the end-user.

Many distributors also have their own degreed engineers on staff that will help select, size and automate the valve before it shows up on the site. We all know that there are unforeseeable slip-ups that happen on a project. A distributor’s staff-engineer could help determine a quick alternative to a problem, which would minimize downtime on the job.  Imagine a positioner or actuator already installed on your control valve when it shows up to the site? It allows for ease of installation to the plant and allows your contractor to move along to the next challenge of the building process.

The Price

Taking into consideration the above, when you are specifying the correct/best alternative for the application the owner can reap considerable savings. As well as the fact that the distributor has a long term relationship with the manufacturer and buys more valves in a year than most large EPCs or Contractors can for one project.  Why wouldn’t the distributor’s multiplier be just as competitive as what a manufacturer would sell it for direct to the end-user?  Actually, the manufacturer, for the most part, is thankful to have a distributor deal with the paperwork and logistics as those requirements are not a “core competency” for the manufacturer.

The Documentation

For EPC’s timeliness and accuracy of project submittals are a critical part of a successful project and profitable project. These submittals include accurate proposals, approval drawings, monthly delivery schedule, shipping documents, accurate invoicing, etc. When dealing with a single distributor you will get consistent information in a mutually acceptable format without having to chase multiple manufacturers. For the EPC it is dealing with only one company to manage the submittal documentation all the way to the invoice. The distributor takes the responsibility of managing multiple manufacturers and translating the information for the EPC.

Streamline the Buying Process

Why deal with 20 vendors when you can deal with one or two.  Consolidating your orders to a distributor allows the distributor to recoup margin throughout the entire order, versus on just one product, thus being able to be highly competitive when pricing the entire project.  Furthermore, establishing a concrete relationship with a distributor will give the contractor/EPC/owner a true partner to assist with those “emergency buys” when something goes wrong and we all know the only certainty in any project is that something “will” go wrong. Not if but when that happens, you will have a knowledgeable, committed ally at your side throughout the entire project to manage those unforeseen “emergencies” to help keep the project on-time and under budget.

Furthermore, the distributor usually has a broader breadth of knowledge than the one manufacture that is used to selling their one widget. Imagine having additional technical experts on your team knowing all of the widgets available in the marketplace, suggesting, and specifying the best product for your specific application.

A distributor can also streamline the shipping process with consolidated shipments, reducing the numbers of invoices and minimizing the chance of a product arriving late or damaged. We all know it is no good to you if one valve shows up and you need 10 to finish the line.

Consider how your last project went and whether sourcing with a true distributor partner would have improved your performance and ultimately your results.

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