Empower your business with pipeline integrity data in Vendor negotiations

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the kind of the goal of this negotiating with vendors conversation is to open our eyes to potential issue issues that we have with pricing and make us aware of pricing in the first place and how we can really improve that as an organization and it's not just one person that has an impact on it you guys are going to have a huge impact on what that actually looks like and areas that we need to focus on and improve in so you guys are going to have a ton of say into this as well foreign the first thing I want to go over is what is an actual vendor it was actually it's for me it was interesting because I was in this trade probably five years before I actually understood what a vendor's role was and uh what they did I always felt like they were the manufacturer so and my profession I grew up or I really started my career in residential so it looked like that's who we that's who we use that was our vendor it was um as a manufacturer and then also in my mind the vendor was also um but they're two different things so you have a manufacturer which is and then you have the vendor which is actually so they're two different things so first off I want you guys to understand what the difference is of those two and be able to identify the difference um so that way we can figure out ways to negotiate with them so they're going to be Distributors they're the middleman they're going to buy materials from the manufacturer put them in a warehouse and then sell it to the contractor to Kalos to us so that's really their primary role there's a lot of things that they can and cannot do certain things that they can't do is improve equipment quality um that actually impact the supply chain those are areas that a vendor can't control so what they can control is the products that they choose to purchase the products that they choose to Warehouse replacement parts that they choose to warehouse and how they get that to us as a distributor so effectively shipping keeping enough inventory in stock for us as a team making our job as a GC as a residential contractor as a Commercial contractor easier so keeping a lot of stock items in their warehouses easily accessible for us that is their role and I'll and a lot of I feel like vendors sometimes miss out on that um or a lot of contractors don't lean on them heavily enough to really do their job and make it easy for us a lot of times they'll say well why don't you just stock it up in your Warehouse it's it's confusing to me because that is their primary role their primary role is to have warehouses to make materials easily accessible for us as an organization so we need to be able to lean on them to perform in their role some other things that they cannot control um pricing Trends you know raw materials they're not going to have control over that um warranty conditions and processes they're not going to have a lot of control over that the manufacturer is the one who actually puts that in place so that's going to be more relevant with equipment whether that's in residential or commercial that's going to be primarily on the manufacturer not the vendor as far as things that they can control pricing they're they're going to have quite a bit of a say in that so I can pretty much guarantee you most vendors are going to get really really good pricing and then they're going to mark it up and sell it to us that's how they make money some vendors are really competitive and others are not and we need to be able to identify that they also have you know the ability to prioritize us as a contractor so we want to make sure that they are doing that and we'll get into that a little bit more what they can and can't control is fairly impactful to our business day in and day out let me just add that when we talk about vendors and a lot of what we're focusing on here are materials equipment but there's different types of vendors as well you have crane vendors who are providing services to us we're generally going to keep subcontractors out of the conversation for vendors that's a little bit different but things like job trailers would be a vendor or renting any sort of equipment would be a vendor as well so a lot of the rules or things that we're going to discuss here also apply to those types of vendors for vendors Kalos is going to be a really attractive contractor to work with for a couple different reasons the sheer volume that we do is substantial and the negotiating position we are in today is substantially different than it was 10 years ago 15 years ago a payment history we deliver payment it's it's pretty much that simple you don't want to have to be chasing payment right you want to do your job at the agreed price and get paid so we really stand behind that so we um we we make sure we get them paid as quickly as possible without any pushback without any complaints it's just a good relationship you know we understand the mutual benefit there um that we have with them as a vendor so um so that would be some of the common interests um as far as respecting vendors I think this is an area that I don't think a lot of other contractors um have and it's something I want to push even more and that's respecting having a relationship that you respect the other person right for us to respect people we have to kind of understand their role and we went over some of that but we also have to just appreciate them as human beings and understand that they have a lot of challenges and responsibilities as well that we don't see what what we can see is I don't have X I don't have this I ordered this right and we can become very frustrated and angry and trust me you are not the only contractor that's frustrated right now we for the last two and a half years we've been in a situation where it's very difficult for vendors to get product from manufacturers they've gotten to the point where they are now stockpiling and trying to control their inventory and allocating it to organizations so that it's fair right I would like us to have a relationship with vendors where we are prioritized where Kalos is their number one client they like working with you they want to get you that scissor lift they're willing to go over some hurdles and challenges to make you a priority right and I think when we step back and we say okay let's let's build strong relationships with vendors that's really um a huge way that we can do it it's not a blind respect it's not oh you're a vendor I have to you know say okay you know you said that you said that's not available it's not available right that's not what I'm talking about clear precise communication with that vendor in a mutual respect doesn't mean whatever they say is fine and A-Okay there's there's a difference there so we need to establish what that actually looks like I push pretty hard I push vendors pretty hard and I don't think there's anything wrong with that but I also understand they're in a tough spot so what does that look like from there in what is the solution how can I help you achieve this goal is there anything I can do right is there any way we can think outside the box because a lot of times the staple answers and that's out of stock is it though is it really out of stock 50 of the time that's not actually the case there's one or two somewhere it might not be convenient but work with me here like I appreciate you we do a lot of business with you how can I get that one over there in Ebor how can I get that one over there in Tampa I want that one here in Orlando how can I get that so ask a lot of questions go dig deep and um when you have a respectful relationship they'll want to work with you opposed to decline not respond to that email and have it just be one of those oh I'm sorry I was out of the office sort of emails that's not helpful you want them to see an email from you oh somebody from Kalos let me take this and that mutual respect will get you that in a lot of ways I want to mention quickly too that it's important to recognize the difference between the company that you're working with and the individual so if you fail to see that individual and you fail to see what their personal role and goals might be then sometimes you miss out especially if you're talking to somebody who's you know their counter staff or their customer service and they're somebody who you've developed a relationship with in the sense that they know that you're not a jerk to deal with maybe you've had a conversation or two you know a little bit about them you know you care about the person and that's key because in terms of professional development people are going to want to help you if they feel like it's actually a benefit to them in their career to do so especially when it means sometimes they might be going a little bit around their Authority chain because a lot of times that's kind of what we're asking people to do we're kind of saying like hey can you dig a little harder can you talk to your boss can you you know and a lot of people don't want to do that because it Ruffles feathers it might make them look bad but they might do it for you if they understand that helping you win is going to help them win uh and that's a that's an area where you can actually push a little bit harder in terms of asking questions and being like come on that's not that's not good enough for me I I need a little better than this can you please help me like please I need it um help me out here if you have that relationship where they feel like you're gonna have their back and when they do achieve what you need you're going to be the one who when you're talking to their boss says something nice about them you're going to be the one who uh helps them progress in their career a lot of times people are more willing to to go to bat for you and when they do go to bat for you just let them know you appreciate it that's going to be a big one um at meant something it was helpful the job went smooth um you you see what they did they went about a little bit above and beyond there right and never throw people under the bus um that's that's kind of a rule across the board it's never beneficial to throw people under the bus and that includes vendors so and so said it was ready and then now it's not ready what happened none of that matters you know what ultimately matters is I need this can to get a job done let's get this you know let's be yeah solution based yeah exactly so that's the ultimate goal throwing people under the bus along the way it doesn't help when we when when we're looking at this I want us to keep an eye out for vendors that we could deal with not just vendors that we want to negotiate that we currently have but also potential new vendors that we want to work with so when I'm identifying some here's some things that I look at um do they have the right product mix for our organization do they have you know materials that we think are good um do they fit our business do they service our areas if it's a crane company if it's Conex company equipment rental um copper supplies whatever it may be do they have what we need when I say are their prices competitive we want to just have a brief view when we're searching for potential vendors so when I say identifying vendors that's what I'm saying big picture look back scan what are my options and be able to identify vendors that may be a good fit for us as an organization um location is going to be a big one as well where are they located how many branches do they have where's our main Hub where do we do a lot of work are they located near that that's going to be a key one intangibles will we be a priority customer meaning are are we just gonna be yep they they buy from us they're just another number will we have an impact on their organization that's great enough for them to recognize the value that we're bringing to the table right because we want that when we have a vendor that we're working with we want to be valued and appreciated and those people that are willing to go above and beyond for us so identifying that will will we be a priority customer will we be of value will we be treated with value and respect obviously there's a certain level of quality there might be a massive Crane company that has a ton of crappy cranes that are going to break down and fall apart that would be poor quality whether it's a product it is a really crappy product that we don't want to represent to our clients so that's gonna you know we have to take that into consideration as well does the vendor share common goals with us um so are they are they looking to grow are they looking to help us grow that's another a big one for me what are some of those areas that they can say yeah Kalos is great will they share our name with other people that they know potentially is also a big one um so kind of keep that in in mind do we have some common goals um do they have a good reputation in the industry um so if for instance a crane company has a bad reputation oh they never show up on time well that's going to be reason for pause like do you do you want to go down that path or not do you really want to put the time and the energy into setting up a meeting and negotiating pricing probably not so that's again we're just sifting through and identifying vendors that we want to work with so that would be kind of the process that I would encourage all of you guys to be looking at and and start stockpiling vendors that you think would be a good fit we hit on this a little bit but making the relationships a win-win um and that you know weighing the value of vendors here so here's some values that we have um like I said volume um communication is a big one and that goes both ways I've personally had poor communication with vendors and I've personally received poor communication from vendors neither of those are good so we need to have clear precise communication and when it comes to pricing we have to be extremely clear of what we're expecting if we're not I tend to hear what I want to hear and they tend to hear what they want to hear and they may be two different things right so that's going to be really key on pricing and also availability is a big one because if if I'm like yeah you think that'll be here in a week yeah week week or two well I'm thinking a week and he's thinking two weeks he said two weeks right week or two so I'm hoping it's in a week and he's he's saying it's two weeks right so we need to eliminate that gray area and say but but when uh but what is the price um I need I need some more clarity help me help me understand um what this is actually going to be what's what what is it right because we we want to solid answer if they give you a wishy-washy answer or I give somebody a wishy-washy answer yeah it's not good going down this list knowing the market price and that's looking through four or five vendors and knowing hey what can I kind of get this for right that's kind of your Baseline we should be getting better pricing than that right um obviously knowing your product um knowing who you're talking to maybe it might not be this Branch guy maybe we need to talk to somebody else we we're getting to that size where we have the ability to talk to that next level of people because there's always going to be different levels of pricing for vendors there's going to be your average contractor then there should be we should be at priority we should be at the top of the list best pricing possible asking a ton of questions open-ended questions are great you know why does it why does why does it cost me so much you know help help me understand I don't get it like yes I you know I appreciate you offer shipping but you only do that like once a week you know so it's it's appreciated but it's not 10 appreciated yeah um I love it it's a nice part but at what cost elements you're always going to want at least two people there if you don't you get in your way you're justifying it you're negotiating against yourself before you know it as we dig into that deeper having at least two people involved letting them come up with the first best price um first that's where you negotiate down from they know that it's not like they don't know that they know that they're expecting that if they've done any negotiating they're expecting that um also know what your number is right where do you want to be I'm not saying it won't be better than that sometimes it is better than that now you might say well 10 would be good right so but it's good to have conversations these types of conversations and I would have to do a lot of research into the electrical specific materials and Market to be better educated on it I can't go in blind I can save 15 but by the time I look at their numbers I might be like I was wrong it's 20. I was wrong it's 10. um and we can go from there but before we we dig in too deep we want to analyze all of that and figure out what do we really believe is a fair price what do we believe that win-win number is that that contractor will make their ten percent and we're not getting screwed over right sure we'll take in all the benefits that they have the shipping we'll pay a percent for that their location will pay a percent for that whatever um but beyond that we gotta we gotta get good pricing so this slide here are we a priority customer these are some things that add value to vendors that we want to consider are we considered a priority customer you know if you need 2 000 feet of CAT5 2000 feet of wire and they only have 2 000 feet of wire are we going to get it we want to get it right so if if it comes to does Kalos get it or does Bob and a Truck get it we would like to be valued there right we would like to have established that relationship um we would like them to realize that hey we're here for the Long Haul we're not here this year and gone next we're here they're going to take care of us so that way we don't have any reason to search anywhere else right if they lose Bob in a truck bummer but it's not a million dollars walking out the door um so we need to take that into account also we need to reevaluate uh pricing every year or two and there's two sides of that um inflation is a real thing um right now vendors are reevaluating their pricing every quarter and it's always going north for us in turn where you are steadily growing as an organization so the value we're bringing to that vendor is steadily increasing right so there may be quarters where they say hey xyz's got a 10 price increase and your response may be I think mine needs to only go up five I think five sounds better can you do that for me maybe they can another big thing that I think let me bump forward here I think we're pretty much to the end um some closing tips but another big thing why pricing is so critical to me yes I want vendors to make 10 percent but when we get really good pricing um that really enables us to do more with vehicles compensation um how we're paying people potentially job bonuses like I would much rather see you guys as a team us as a team benefit from some good conversations from some win-win relationships rather than seeing so and so vendor 3x their profit over three quarters I would much rather see those funds come to us and be distributed and adjusted and rewarded to the boots on the ground the people actually doing the work thanks for watching our video if you enjoyed it and got something out of it if you wouldn't mind hitting the thumbs up button to like the video subscribe to the channel and click the notifications Bell to be notified when new videos come out HVAC school is far more than a YouTube channel you can find out more by going to HVAC ourschool.com which is our website and hub for all of our content including Tech tips videos podcasts and so much more you can also subscribe to the podcast on any podcast app of your choosing you can also join our Facebook group if you want to weigh in on the conversation yourself thanks again for watching foreign [Music]