Evaluating Your Suppliers

Two construction workers with contractor licenses shaking hands in front of a pile of pipes.

Materials are a huge part of your contracting business. Without them, you can’t build. They are also a huge cost to your business and, even with a little markup to pay for them, you still want to find them at a low cost with sacrificing quality.

Many contractors find a reputable supplier and stick with them for many years. This can be a great deal for both of you, if you can find one that won’t start steadily raising price (above the current market) on you after year three. These kind of partnerships can be beneficial for both contractor and supplier. The supplier has a steady customer and the contractor has a definite supply of quality materials at a healthy price.

Unfortunately, this isn’t always the case. In every business, there are those who want to cut corners or price gouge and the materials supply industry is no different.

So what does this mean for you, the contractor?

Research and vigilance. When you choose your materials supplier, there are three main areas to evaluate: Price, Quality, and Reputation.

When looking for a new supplier, price is probably going to be your most important factor since you still need to make money on a project and can only charge so much for labor. With those concerns in mind, you’ll probably get several dozen quotes from area suppliers and the first number you’ll look at is the overall price. That’s natural and reasonable, so you’ll start your first categorizing based on that.

The second area to keep in mind is quality. It may be great to pay bottom dollar for a load of lumber, but if it’s rotten or warped, you may be out of luck. Even worse, the rot may be well hidden and so you might end up with an irate client call and be forced to tear down a good part of the new building to replace shoddy materials. If you can, visit the supplier’s site to check on the quality of materials you are receiving. Keep your eyes open for the old “bait and switch” where the supplier shows you good stuff, but sends you sub-par junk.

Finally, check the supplier’s reputation. If they’ve been in business long enough, a shady businessman will eventually do enough bad deals to get a bad rep. Call around to other contractors that you may have established a good relationship with and ask if they have had any dealings with the supplier you are researching. They might have some insight. More than likely, they will refer you to a supplier that they have had good dealing with in the past and everyone wins.

However, you can’t stop there. Your supplier must keep your business with every delivery. Check the materials for quality as soon as they arrive on-site every time. This may seem unnecessary after several years of high grade materials, however it actually is vital to both your business and to that of your supplier’s. It only takes one or two poorly constructed projects or bad deliveries to ruin a reputation. By making sure that each material delivery is up to standard, you’ll know that your project will be built of sound components and in the process be an indirect quality assurance for your supplier. If you report several sub-standard deliveries, the supplier will know that something is going wrong in his own business and the good ones will work hard to rectify it. If not, it’s time to go shopping again.

Just as in every aspect of your business, the supplies and materials you purchase must be constantly evaluated. They are a reflection on you and your business. By doing extensive research on your supplier and staying aware of the materials you receive, you will ensure that your reputation stays high and your costs stay low.