Improved HVAC Installation Adds Value to the Supply Chain

As an HVAC contractor, you are always searching for new ways to improve efficiency and drive more profit to your business’ bottom line. One way to accomplish that is by reducing waste in your supply chain. When all participants in the supply chain work together to provide value with their processes, you can significantly increase your company’s profitability.

If you haven’t heard the term, “supply chain,” before and want to learn how it can drive value to your business, here’s a quick definition:

Companies that buy and sell products and services from one another make up a supply chain. They are linked through their transfer of information, materials and funds. Your company’s performance depends on the companies that supply you as well as the company buying products and services from you. Everyone is linked and the performance of one affects all.

In HVAC terms, a supply chain refers to the steps required for an HVAC contractor to get the product purchased, shipped, installed and working properly for their industrial HVAC customer.

Managing the supply chain effectively and efficiently is crucial to success because an optimized supply chain results in lower costs and a faster production cycle. Managing the supply chain in the industrial HVAC market can be complex due to lengthy sales cycles that involve many players in the decision making process. In addition to contractors, distributors, manufacturer representatives, architects, and mechanical engineers, often stakeholders and committee agreements are required because of the large capital expense involved in purchasing and/or upgrading HVAC equipment.

With all these inter-connected businesses and people playing a part in the business owner’s decision, it’s easy for efficiency to fall to the curbside. Only when all the influential players in the commercial HVAC supply chain (building owners, architects, mechanical engineers, contractors and suppliers) are committed to efficiency and exceptional care will the chain become stronger. And, when each link eliminates waste from the project delivery system, the supply chain becomes a value chain. This outcome is highly desirable. Not only is value delivered to customers, but also to all the chain participants through increased profitability.

For HVAC contractors, one of the most crucial relationships in the chain is with their distributors. Reliable distributors can make the installation process run smoothly so contractors can become financially successful. Distributors can be instrumental in growing an HVAC contractor’s business.

HVAC Supplier Role in the Value Chain

A good supplier will provide support in these pre-sales areas in order to contribute their part in the value chain:

• Less or more efficient paperwork.
• Smoothly running online and manual processes (ordering, confirming account information with updated inventory lists).
• Well-trained and informed sales staff that can recommend the best and right equipment.
• Customer-centric philosophy with focus on customer education, sales, and increasing brand awareness among architects, engineers, and contractors.
• Accessible to answer questions.
• Charges a fair price for products and services.
• Provides accurate, timely and easy to understand bid estimates and invoices.
• Prepares timely submittals and drawings.
• Easy to navigate website with product catalog, specs and quote request forms available online.

Once the parts have been ordered, the HVAC contractor should continue adding efficiency to the supply chain by performing the following:

• Helps to coordinate logistics related to the job.
• Meets contractual obligations.
• Delivers quality product on time and within budget.
• Stands behind the products they sell and the services they deliver.
• Conducts business in a professional and ethical manner.
• Pays suppliers promptly.
• Advance notice of product needs and delivery requirements to supplier.
• Willingness to learn and use new technologies.
• Provides and accepts constructive feedback on business processes.
• Plans ahead, foreseeing any problems so they can provide a solution.
• Knows where to procure specified materials and source hard-to-find products.

Installers and technicians play a vital part in maintaining an efficient supply chain, and can add value in the following ways:

• Executes according to plan.
• Provides solutions.
• Coordinates work with other contractors.
• Provides constructability feedback.
• Arrives at work on time with proper tools and equipment.
• Speaks professionally and with courtesy to customers.
• Completes HVAC manufacturer’s startup checklist and follows installation guidelines. This may be required to receive the full manufacturer’s warranty.

The mechanical engineer or architect can add value to the supply chain by completing his or her task responsibilities efficiently, and in the following ways:

• Provide post-sales support.
• Find ways to use technology to improve value.

How Can You Measure Success?

Consistent and reliable performance among all interconnected players in the value chain typically results in the following benefits:

• Decreased inventories.
• Lower labor costs.
• Better cash flow and higher profits.
• Improved budget forecasts for jobs.
• Better lead times.
• Tighter construction schedules.
• Less delays.
• Improved reputation.
• More referrals and more jobs.

Take the time to examine how your HVAC contracting company conducts business. Consider those areas that often bottleneck the HVAC installation process from running as smoothly as you’d like. What part do you play in that inefficiency and what can you do to eliminate it? By streamlining work processes and developing stronger working relationships among all players in the supply chain, you can drive value and significantly increase your company’s profitability.