“One of the questions posed in our recent market research, was whether there was value in having a preferred supplier for utility infrastructure connections. 61% of respondents said they thought there was – yet when asked if they had a provider of choice, only 42% said this was the case. This provides us with a potential business opportunity, but when the pros and cons for establishing a preferred supplier framework are considered – is it the right thing to do?
“First let’s look at what that 42% who already have a supplier of choice like about them. Common responses were ‘relationship’, ‘trustworthy’, ‘one point of contact’, ‘experienced’, ‘communication’ and ‘knowledge’. All makes sense and good to see ‘communication’ sitting near the top of the pile – ref my last article. These are all attributes which you’d expect a preferred supplier to have and more interestingly perhaps, they all focus on what that supplier can do, their delivery and the capability of their team. No one mentioned price.
“Then when we asked for opinions on having a preferred supplier – positioning it as more of a business proposition, the 61% who said they thought it would be a good idea, commented on perceived benefits such as ‘quick engagement’, ‘speedier working’ and ‘easier to manage’. They also mentioned the advantages they thought they might enjoy through having an agreement in place – collaborating on innovation, sustainability options and health and safety practices for example, as well as benefitting from access to skilled labour at short notice. The 39% who weren’t in favour of adopting a preferred supplier, said their response was influenced by bad experiences in the past, or that they would usually be steered by a client’s need for tendering. They also challenged what the advantages and disadvantages might be around price and service, questioning competitiveness of quotes – and how the initial pre-qualification process might work.
“Considering all of these responses, the positive comments all focus on a productive way of working, understanding each other’s businesses and working in collaboration. While the negative responses highlighted some very valid points – one being the need to address a client’s requirement for tendering. It can be standard practice to ask a number of different suppliers to quote for a job, demonstrating a fair process and proof of where value for money lies, but interestingly, this was one of the only times price was mentioned in whole of our market research.
“The other counter arguments were the impact of previous experiences of working with just one utility infrastructure provider (UIP). I’d argue that just because it didn’t work out once, doesn’t mean that would be the case with a different supplier. And then, how might the pre-qualification process work? What would be the terms and conditions of the relationship? Clearly, there’s scope for further discussion here, but what I take from these findings – well all of our research in fact, is the importance of building a relationship with your clients, which may mean you find you have a preferred supplier without necessarily having a framework agreement in place.
“Those who have a provider or choice know their UIP delivers for them, time after time – suggesting that communication, understanding and reliability might be considered more important than price. I’d encourage those who are bound by the requirements of a tendering process to consider what a UIP might offer beyond its initial quote, and explore where value for money really lies. Finally, those whose view of working with a preferred supplier has been tainted by past experience, need only look at the 61% who are very happy with their UIP, to see it isn’t all bad news and the right (preferred) supplier is out there waiting to work with them…why not give us a call?”
Rob Sparkes, CEO, Matrix Group
*617 construction industry buyers were contacted independently across March and April 2021. 178 were spoken to and 33 surveys carried out. 30% hadn’t worked with Matrix Networks previously.