For any business utilizing an electrical distributor, there are multiple ways supply chain, lean manufacturing and excess inventory can affect the bottom line.However, most don’t realize just how many factors drive up the installed cost of an electrical part. The most common (and costly) factors to consider:
- Labor to procure parts: man hours to research and locate parts needed, estimated dates of arrival and available quantities. A single source Supply Solutions Group has multiple resources for getting what you need, when you need it.
- Downtime while receiving material: The job can’t start until all the parts needed have arrived. Waiting to receive material affects the job timeline and results in wasting resources like labor. A Supply Solutions team manages inventory and procures more before you run out.
- Inventory management: Keeping inventory levels stocked is key to a job finishing on time. A Supply Solutions team makes sure you have the material you need.
- Excess inventory: Excess inventory plays a huge role in exceeding job costs because it is typically over-procured and then unable to be returned without a restocking fee. A Supply Solutions team maintains stock levels without exceeding and is able to return unused material.
- Labor to deliver: Supply Solutions can set up job trailers on site to cut down on deliveries and material shortages.
- Labor to install: Having the right parts in the right quantities cuts back on installation costs by reducing the number of on-site days needed.
- Removing existing material: Another factor affected by adequate inventory levels. If your installers can take out existing parts and install new ones in the same day, labor costs are automatically lessened.
- Recycling: Hiring out to recycle materials appropriately can be expensive, a Supply Solutions Group has multiple resources to take care of recycling efficiently and cost-effectively.
All of these factors add up to result in the actual purchase price of an electrical part only representing 20% of the installed cost! Fortunately there are options for streamlining the process and trimming unnecessary costs in a distributors supply chain management division.
Written By: Mark Greene, Vice President of Business Development at North Coast Electric and an expert in Vendor Managed Inventory. For more information about how the NCE Supply Solutions Group can streamline and cut costs on your next project, contact Mark at firstname.lastname@example.org