How electrical contractors can automate the electrical product sourcing and submittal process with electrical distributors
Before the advent of online submittal forms, the product submittals process was a tedious paper chase for commercial electrical contractor Brian Swain, owner of Swain Electric, Gilbert, Ariz. Previously, Swain would have to dig through printed versions of manufacturers' catalogs for the right product and then head to the copier, hoping the information would remain legible. “Sometimes, there were copies of copies, so the quality wasn't very good,” he says.
That didn't make for a very professional-looking submittal. However, with an increasing number of manufacturers adding online submittal forms to their Web sites, Swain Electric's submittal process has been streamlined. “The forms are all in original quality, so it looks a lot nicer when you're turning it in to an engineer,” Swain says. “Of course, the more professional it looks, the better chance of it being approved.”
But looks aren't everything. Accuracy and detail have also been improved. When manually compiling the information, sometimes important product information would go missing from the report — a red flag for inspectors. “The online specification sheets have all the details the engineers want to see to sign off on them,” Swain says. “They include support information, so if the engineers need more information on the product or different parts and pieces, it's there.”
Because all of the information is stored online, Swain doesn't have to take up precious office space with bulky hard copies. Everything is easily found and always available in clean, printable files. “You can go online to get them,” Swain says. “You know they're there.”
The sites Swain has found easiest to use have the link to submittals in a prominent position on the manufacturer's home page, are supported by a product index to narrow down choices, and are organized with checkboxes by individual products. Ideally, all products chosen can then be automatically assembled into PDF form for clean printing, e-mailing, and archiving.
The online form Swain is most familiar with is hosted by a PVC-coated conduit manufacturer. “They have these cut sheets, so I can go online and find the specific one that I need for that particular project,” Swain says. “I can print and submit it along with my other materials to the engineer.”
This particular manufacturer's online submittal process is intuitive and quick, says Swain. In fact, the company has condensed the process into just three clicks.
On the company's Web site, the contractor clicks on the submittal page where the information is broken down into categories. The contractor then clicks on the category, and chooses the products in that category to create a PDF that can be printed, e-mailed, or saved as an electronic file and stored on the contractor's computer or a CD.
The PDF contains the technical description and features of the product, as well as the standards that each item meets, such as UL listing and ETL verification. It also includes the sizes the contractor selected and the manufacturer's information. Finally, there's a box with room for a specification stamp or signature, so when it's printed out and turned in for a bid, there's even a place for the information to be approved.
For electrical contractors who prefer to get all the required information from one source instead of individual manufacturers' Web sites, there are other options. Many distributors offer online submittal forms on their Web sites, although many electrical firms complain that these tools still need some tweaking (see What Do Electrical Contractors Want From A Distributor Web Site?). In addition, the contractor would still have to submit a bill of materials to more than one site in order to compare pricing among potential vendors.
An emerging alternative to individual manufacturer- or distributor-hosted sites are souped-up databases run by third-party firms, such as Glastonbury, Conn.-based ElectricSmarts Networks' NetPricer, which has been in business for about five years, and San Diego-based Trade Service's Supplier Xchange, which was rolled out in July. (For more information on NetPricer and Supplier Xchange, see Electrical Wholesaling, “Pushing Data Downstream,” May 2008. This article can be viewed online at http://ewweb.com/ebiz/electric_pushing_data_downstream/.)
Ostensibly, these systems allow contractors immediate online access to distributor pricing from within their own estimating software systems, greatly reducing the volume of extra spreadsheets and the back-and-forth fax or e-mail exchanges between contractors and distributors. These services allow participating contractors to send a list of materials to the online system — right from their estimating program — where it is matched against their selected supplier's inventory file. Within seconds, their specific pricing is returned to them for direct import into the bid. “We're in the middle, facilitating the points of contact between the contractor and the distributor,” says John Henry, director of business development, Trade Service. “Distributors like the secure platform and find it gives them even greater exposure to their customers with more opportunities to provide service.”
Keeping up with materials pricing is a daunting task, according to Phil Brownell, estimator and project manager for Northside Electric, Salem, Ore., especially over the last 18 months with the prices of copper, steel, aluminum, and petroleum-based products fluctuating on an almost weekly basis. “Things like copper wire have gone up and down like the stock market,” Brownell says. “We couldn't afford to delegate somebody to keep prices accurate 40 hours a week.”
Previously, when preparing a bid, Brownell would take the extensions — the bill of material — for the job, even though basic discounts were already plugged into the estimating system, export it into Excel, and then send it out to several suppliers for hard pricing. Then, he would wait for the suppliers to get back to him. After that, he'd print out the spreadsheets and manually plug the numbers into the estimating software.
To top it off, all of this had to be done under the pressure and stress of analyzing the quotes for materials and trying to put out the most accurate bid possible. “Sometimes, mistakes were made,” Brownell says. “Those mistakes could either cost you getting a job or they could cost you a lot of money if you got a job too cheaply.”
Therefore, Brownell considers these database systems as a form of risk management. “I see it as a very valuable tool not only for improving our competitiveness, but also for cutting down some of the stress that you get into at bid time,” he says. “But it also is improving our accuracy; therefore, reducing risk.”
Brownell estimates that the new system saves him between 4 hr and 8 hr of comparing prices and manual data entry. “Basically, I can do it in 15 min.,” he says. “The actual download of the prices takes about a minute.”
This gives him time to review each bid and make sure he didn't leave anything out or add anything that shouldn't be there. “I can make sure there are no errors in the take-off, instead of sitting there frantically trying to punch in numbers with the clock ticking,” he says.
It takes less time to receive a response as well. Contractors get pricing back from distributors in real time directly into their estimating software. This wasn't true in the past. “Somebody had to look up all of those prices,” Brownell says. “Every time they sent a list, they had to have somebody price that out. So, you ended up with one to two days of somebody's time involved in trying to do this manually, even using spreadsheets and e-mail to speed up the process.”
Nonetheless, Brownell won't be taking extra coffee breaks. Instead, he'll use the time saved with the online system to bid more jobs, making his firm more competitive in a tight economy where every project counts. “Anything we can do right now to give ourselves a workload when there isn't going to be any other work out there to bid is to our advantage,” he says.
To win enough projects to cover its overhead/fixed costs and keep key people working, Northside Electric has already lowered its prices and margins. Another benefit of the automated bidding system is that it has translated into a 3% to 5% decrease in estimated material costs for bidding purposes. “That's just off the top of my head,” says Brownell. “I'm being conservative.”
This means that the company has won a few projects it otherwise would have lost to another company in the past. “Those projects would have gone to someone else,” Brownell says.
Earlier iterations of database systems failed because updates didn't happen frequently enough, and prices became dated. “There was something that fell apart regarding updates, so the data was unreliable,” says Robert Hartwig, estimating software administrator, Guarantee Electrical, St. Louis.
Distributors were reluctant to participate in these systems out of fear that lowest price would trump the added value of customer service. Without cooperation from distributors, most services based their prices on an average from several vendors or strictly on UPC codes. “For a duplex wall outlet, depending on the grade, color, and manufacturer for that one item, you could have 50 or 60 different UPC codes,” Brownell says. “So unless the UPC code you happened to be using in your estimating system matched exactly with what the vendor was giving you, you might have thought you had all this great pricing. But when you looked more closely at it, it was the column three Trade Service price, which the system defaulted to when the UPC codes didn't match.”
Since then, distributors have come to trust that their customers won't cherry-pick prices. These systems have developed into a symbiotic relationship. “Distributors didn't know as much about the job primarily because they didn't see the list of material — the nuts and bolts to the whole thing — until the very end or never. Now that's available to them,” says Hartwig. “If a distributor maintains the database and helps us estimate to get the job, he gets rewarded by being the supplier for that project. It's encouragement to keep the pricing up-to-date.”
The new database models let contractors work with the same distributors they've been using for years. Currently, nearly 2,000 distributor locations are supporting Supplier Xchange. “We'll work with anybody if they want to use it,” says Henry. “The major players are already onboard.”
Electrical contractors choose which suppliers they want to receive pricing from. On a weekly or monthly basis, those distributors upload current price files for each participating customer, containing either prices or authorized discounts for each individual contractor. “It's very specific and very focused,” Henry says.
The file resides on the server so when the electrical contractor sends a request, it goes to that file and gets the pricing. “We've got well over 20,000 to 30,000 items in our database,” Brownell says.
In return, Trade Service keeps the distributors up-to-date by sending them copies of what the electrical contractors have asked for and how often they've asked for it. “They get some feedback into what we're looking at through the system, so if they see quantity levels where there are some negotiations or some other price breaks involved through those reports, they're encouraged to contact us to discuss that,” Hartwig says.
For items not in the file, the service provides the average market price. “Our distributor may only have 60% of the materials we use on a project,” Brownell says. “By using Trade Service's average market price, I can get a reasonably accurate price for the rest of the material at the same time — instead of relying upon preset discounts, which may or may not have any relevance at this time — that we put in when we set the estimating system up.”
However, there may be a bug in the system with at least one electrical estimating software product on the market. Hartwig reports that if a contractor runs three or four distributors at a time in this particular software, the automated data input will cherry-pick among them and indiscriminately pick the lowest prices. He feels this is counter to how electrical contractors choose distributors. “This isn't the way we'd buy the job out because it would be too intensive for our purchasing person to track — fittings from here, conduit from there,” Hartwig explains. “We would like the evaluation to be more per distributor and to award all the material for the project to a single distributor. If you just let the lowest price drive everything, everyone loses at the end, and service gets left behind.” (See Window Shopping on page C22).
Apples to apples
Often, price is only one consideration for choosing a distributor. In fact, most electrical contractors won't trust price lists that come in too high or too low. “The reality is if the prices are more than 1% off from high vendor to low vendor, you ought to be taking a look at it and making sure somebody's not quoting you apples when you ask for oranges,” Brownell says.
Northside Electric prefers to work with local vendors, even if they're a subsidiary or franchise of a national chain or brand. “Price, of course, is the majority of the matrix, but we like to support people in our community so we like to deal with local vendors,” Brownell says. “We tend to choose people that are in our area so that if there's a problem, I can drive for 10 min. to go sit in somebody's office and discuss it.”
In addition, electrical contractors tend to stay with the distributors they've used successfully in the past, according to Brownell. “As you go down the road, there are going to be problems,” he says. “How the problems are handled is what separates the rock stars from the groupies, so to speak, so you find out who really values your business and who's going to take care of you. We like to reward that.”
Sidebar: What Do Electrical Contractors Want From a Distributor Web Site?
In 2005, Channel Marketing Group, Pittsburgh, surveyed electrical contractors to compile data regarding their Internet usage. The contractors were asked to identify features they would like to see on distributors' Web sites. Below is the list of features ranked “most desired” by electrical contractors:
- Ability to verify delivery
- Track back orders
- Links to manufacturer training
- Links to electrical contractor resources
- Ability to download statements and invoices
- Purchase history reporting
- Ability to check pricing
- Line card with links to manufacturers
- Online ordering
- New product information
- Branch contacts
- Directions to branch locations
- Branch overview
- Links to manufacturer catalogs
- Material safety data sheets (MSDS)
- Links to manufacturer spec sheets
- Company overview
Source: Channel Marketing Group
Sidebar: Window Shopping
Nearly a quarter of the world's population — roughly 1.4 billion people — used the Internet on a regular basis in 2008, according to the Digital Marketplace Model and Forecast from IDC, the Framingham, Mass.-based provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. Of these Internet users, 50% made online purchases in 2008. By 2012, analysts estimate there will be more than 1 billion online buyers worldwide making business-to-consumer (B2C) transactions worth $1.2 trillion. Business-to-business (B2B) eCommerce will be 10 times larger, totaling $12.4 trillion worldwide in 2012.
Yet, most electrical contractors lag behind the general population in online purchases. “My experience for shopping for supplies on the Web is fairly limited,” says Phil Brownell, estimator and project manager for Northside Electric, Salem, Ore. “I use the Web to get information about material and find specified material that I was unfamiliar with. I also e-mail suppliers to get quotations.”
Results from a 2005 survey of electrical contractors by Channel Marketing Group, Pittsburgh, revealed that even though 39% of the electrical contractors surveyed visited distributor Web sites at least once a week and 22% visited multiple times a week, 32% had not purchased electrical materials online. Furthermore, only 13% of electrical contractors purchased between 11% and 25% of materials online, 13% purchased between 11% and 25% of materials online, and 44% purchased less than 10% of their materials online.
Brownell isn't alone in his Internet usage and lack of online purchases. The survey results indicated most electrical contractors will use the Web to check prices for estimates and bids but, when it comes to actual procurement, will seek out the distributor in person. This suggests the Internet is a great way to compare prices and find good deals, but lacks the customer service most electrical contractors have come to depend upon.
“Although price is important, it's not the only criteria,” says Robert Hartwig, estimating software administrator, Guarantee Electrical, St. Louis. “The service distributors provide is more than just the product. It's the delivery and the efforts to get it there on time.”