Get the most out of your supplier relationships

Ever wonder if you could get more out of your supplier relationships? You work with your suppliers almost daily, so why not try to make the most of these relationships!

Join this free webinar with construction credit operations manager Allan Francis  to learn how to capitalize your supplier relationships to boost your business.

You’ll learn about:

• Why you should define your supplier relationships
• Why you should diversify your supplier relationships
• How to get better pricing, faster delivery terms and personalized service with your supplier

Transcript

Carah Vallejo (00:09):
thank you so much to everyone for joining today. We’re so happy to have you here. As Alan said, this webinar is being recorded. So if you miss anything or you want to go back, um, the recording will be sent out sometime between tomorrow and Monday. So be on the lookout for that. And today our speaker today is Alan Francis. Allen. Thank you so much for taking a few minutes out of your day. Well, to be exact 30 minutes out of your day today to be with us. Um, Allen is our manager of credit operations here at Levelset. Alan. I will let you, um, tell the crew a little bit about yourself.

Allan Francis (02:32):
That’s great. Once again, I’m Alan Francis, uh, born and raised in the St. Louis area, but have been with Levelset for the past six months. And I’m really excited to be able to be with you today. I have about 30 years of credit management experience. So I’ve been on both sides of the table. I’ve been working for a general contractor or a supplier, and then that now with Levelset and utilize all the same tools that you all have and look forward to sharing with you. Some ideas I have on your supplier relationships and how to make those better and how to utilize everything that has to do with those supplier relationships. So, and try to keep it exciting.

Carah Vallejo (03:08):
I have no doubt. There will be one or two dad jokes thrown in there today. Everybody look out, um, as Alan said, both of us are with Levelset and we are sponsoring this webinar today. Um, our main goal is just to empower people to get what they earn, um, in, within the construction industry. And we are so excited to be talking to you guys today. Levelset dot com has all sorts of resources for you. Um, tons of free resources, as well as some paid, we offer, uh, a legal, a legal plan that can help you with your liens. We offer all sorts of other things, including materials, financing, which is something that we’ll be touching on today. We’ll also send you a one-pager and some other materials around materials, financing, um, uh, to, to help you get what you earn. All right. So today we’re going to be talking about a few things. Um, we’re going to define those relationships, diversify those relationships, and really show you how you can bring value to them. And then we’ll have a Q and a at the end, but please, please, please utilize that chat box. We would love to hear from you, um, utilize this time with Alan while he’s here and his 30 years of experience, he can give you all sorts of insight and input. All right? And with that, Alan, I will hand it over to you to define those supplier relationships.

Allan Francis (04:24):
Great. So the way we’ll get started as I want, I don’t want to be too transcendental about this, but I want you to look inward at your relationships that you’ve developed with the people that supply you with the products that you use to do your job. And what I mean by that is I want you to look at that relationship to see how it works. Is is it, is it a clunky relationship where you’re not really sure what you’re supposed to supply to them and they supply to you. You really don’t know your timelines with them. You didn’t really don’t know what type of price you’re going to be paying. You don’t know if there’s any discounts involved. So what we want you to do at this level and what we want to look at at the beginning of all, this is define your relationships.

Allan Francis (05:04):
How many suppliers do you have that work with you to get you everything you possibly need? If you’re like most companies, you have one really favorite supplier that you work with. You know, that, you know the suppliers name, you know, everybody at the desk, your guys can run into their, their pro-desk and get everything done. They barely have to sign a piece of paper. They can come in, take all the materials, walk out the door and everything’s great. The bill comes in later. You don’t look at that too much to see what your margins are. And then the bill becomes due or you have to pay it, whatever, and whatever terms, 30, 60, 90 days, whatever it is that you have defined with them, that is great. However, it kind of restricts your ability to utilize other relationships and create expectations. There will get you the opportunity to build in profit at the beginning of the game.

Allan Francis (05:57):
If you use a job sheet, which if you ever heard any of my webinars before, I’m a huge fan of a job sheet, create a job sheet on any job that you do, whether big or small and start defining what your project is, look at, what type of products you’re going to need. Look at exactly what the timeframe is going to be. Look at your margin and be honest with yourself about your margin. Sometimes we, you know, we, we get that job awarded to us and it’s like, oh, well, this is good. We’re going to make a lot of money on this, but you want to really have the hotel truth, your own power and decide, Hey, this is what my margins are. And I need to build as much profit into this as possible. And this supplier relationship, this is your first, the first thing out of the gate that you can start building in profit to that project that you’re looking at.

Allan Francis (06:44):
So get a job sheet, fill that out completely. And let’s start looking at what we can do. You have a lot of ways you can negotiate better pricing. You’ve got a lot of ways that you can negotiate your timetables by diversifying the relationships that you have. If you only have one supplier, you don’t have a lot of choices. So look at the different materials you have and start expanding your reach and expanding your look and focus on where you can get those supplies. And either have those suppliers start maybe bidding against each other. Hey, I can get it for this here or get it for that. There look at your payment terms and what you can possibly do to expand your ability to say, Hey, I’m going to pay this upfront because I’m using material financing, quote, that’s something that Levelset does. I have material financing and I’m going to pay for this all up front.

Allan Francis (07:32):
What kind of discounts can I build in? And those are the ways you start defining that relationship. Now let’s step back again and look at what makes your relationship with your supplier special. And if anybody wants to chime in, if you have a particular relationship you want to talk about, or you had a question you want to ask about it, feel more than free to jump in. A lot of times people say, well, I’ve got this special relationship. I know they’re giving me the best possible price. And they know that I can pay them. When, when I get paid, we have a pay when paid type relationship about 20 years ago. That was a great idea. And that was a great thing that happened. But then suddenly some of these bigger supply houses started coming in and buying up all the little guys and almost overnight, what has created the supply payment disaster is everybody’s term was, went from paid wind, paid to net 30 overnight.

Allan Francis (08:29):
The supply houses got to take advantage of that. Some of your larger general contractors got to take advantage of that, but all these subcontractors and smaller guys in the middle, they got left holding the bag. They started having to pay for everything with their personal credit cards and taking out personal lines of credit. And you want to buffer yourself from that. And this is what we’re going to talk about today to help get you on the path, to utilizing your supplier relationships, setting expectation patients. So you can get the most what we call bang for your buck, working out through there. So, uh, without me being the one, that’s always doing the talking, anybody have any questions so far or something that you want to throw in it’s pretty soon. So I didn’t really expect that yet. So we’ll move on. We’re going to give you an example of home Depot.

Allan Francis (09:19):
Uh, I don’t know how many of you are any of the people you work with use home Depot as a supplier. They are, they are fairly large in, in doing business with some of the smaller mom and pop or mid-level sized businesses. And what most people do is they go to their website, they get a shopping cart and they fill out everything in the shopping cart, and then they pay for it at the very end, or at least they get what they consider to be as close to a bid or a quote for the materials. They need find a way to pay for it. Come pay, whatever price they’re told by, by what the computer says. It’ll say, pay this amount. They get put on a list of delivery whenever it’s convenient for home Depot to deliver it. Not when it’s convenient for you to deliver it or when you want it delivered.

Allan Francis (10:07):
And then that’s the game. That’s it? Everything. Everything is already set in stone. When what most people don’t realize. If you work with somebody that, or you have a line of credit somewhere else where you can pay for everything upfront, you go online, you fill out that little online shopping cart, print it out instead of paying for it immediately, and then pick up the phone and call the pro desk. Everybody knows who the pro desk is. When you walk into the home Depot, it sits off to the side. You can rent tools from them and everything else, or you can even call them and ask for the pro desk and tell them, Hey, here’s my order that I have online. I need this delivered at a certain time. Not what your lot, what the computer says I needed delivered. Is there anything you can do to help me out?

Allan Francis (10:56):
And if I pay for everything upfront without using my home Depot credit card or whatever, is there any type of discount that I can get? And you’ll start noticing that the more you do that the pro-desk is going to start recognizing who you are and suddenly all those little openings in their schedule for delivery start. Well, you know what I know it says we can’t deliver it till next Friday, but I noticed we had a cancellation. We’re going to deliver that tomorrow. And they’re going to start knowing your name. You’re going to be able to utilize that relationship going forward. And they’re going to start telling you about certain discounts that you can get, because you’re either buying over a certain amount or because you’re paying for everything upfront now with Levelset. We do the very same thing with them. We’ll contact home Depot for our customer.

Allan Francis (11:43):
They know they’re going to get paid upfront. We can also tell them when these products are going to be needed at the job site. We can work in, you know, a lot of times what most people don’t know, home Depot we’ll in free delivery within a certain range, rather than charge you for it. So just a good example, home Depot Lowe’s and a few others good example of how you can utilize paying upfront or doing things a little differently and talking to the pro-desk and making those relationships in order to be able to get what you want and maximize your profit in the job just by starting something as simple as that. So any questions so far, that’s pretty straightforward.

Carah Vallejo (12:25):
Yeah. Yeah. I don’t see anything in the chat, but I think that’s because you did a great job. I love that we covered defining those relationships and that home Depot example, I think resonates a lot because that, I mean, everyone recognizes the name home Depot, but do, would you say that that works as well with some of the other suppliers that are maybe regional are not as mainstream like this doesn’t have to be the big guy, like home Depot that where this can work. Right?

Allan Francis (12:54):
Really, in some ways it works even better with the smaller individual and regional comp L and w um, they’re, they’re not quite what a, what a home Depot is, but they’re a smaller regional, and we have a few other just mom and pops that, um, a good example, I think Southern Georgia, Cedar is a small little lumber company, but they’ve gotten to have a relationship with us and they will take the, normally they don’t do deliveries for people, but they take the extra step because they’re working with us, working with the customer and we’ve exp they know that they’re going to get paid every time they know it’s going to be quick payment and they know it’s worth it to them. They’re going to get more business because we’re going to continue to refer more business to them. So the relationship becomes a much larger, you get to piggyback on top of all the relationships that Levelset has built.

Allan Francis (13:44):
And you can utilize that with these other suppliers. And maybe you don’t want to, you know, I know it seems logical to buy everything from a local supplier, but maybe you can get a better deal from a local supplier, two states away. We’re going to find that out for you and we can help you with that. So expand those relationships, look at what, and I keep using that same word, expand your relationships, but expand the base of who you get your products from. Know that at some point in time, if you do better by getting your supplies from certain parts of the country, based on just the weather, this past 120 days of, of lumber prices has been nightmarish. We had several customers that came to us with a project and the lumber price went up 150% by the time that everything delivered, right? They could build that in and in charge of their customer without doing a change order, right?

Allan Francis (14:43):
This protects you from some of that. Let’s say you have a $10,000 credit line and you say, oh, you know what? I don’t need material financing. Well, that thousand dollars credit line is going to help you with maybe one project. But if you use material financing, you don’t have to use that $10,000 to buy the big stuff. You can use material financing to buy the largest stuff, and then keep that line of credit of $10,000 open for emergencies, or you need more nails or more, you know, more support, whatever that you need off the top of my head, you know, more PVC pipe that, you know, save that credit line and utilize material financing. And the other part of it is you’re going to know how much this financing is going to cost you Levelset is not one size fits all. We balance everything based on the project, based on your company and how long it’s been a business.

Allan Francis (15:35):
We balance all that out. You might get a great rate from us. We’re going to tell you exactly what you’re going to pay up front. And knowing that ahead of time, you can build that into your bid that you have for the customer, you know, your customer. And I mean, that gives you a lot of advantages to building profit in your job. You want to, you want to get your profit margins out of the single digits in, in, into something serious, serious money. And you want to save your credit lines for emergency situations. You don’t want to, if you have a hundred thousand dollars credit line, that’s great. But think about how much further that credit line can go. If you develop these types of relationships we’re talking about today Is about this. Go ahead, Karen. I’m sorry.

Carah Vallejo (16:16):
I’m gonna say, um, we did have some feedback here and Gregory says as a plumbing contractor, um, I’m using Ferguson primarily and paying Cod, but have to fight to get good pricing every step of the way. Um, he goes on to say, I have to make them compete against HD back in the nineties. When I was in business con, when I was in business, contractors were assigned a multiplier so that they knew where they were at, but now the method has to set multipliers in a case by case mystery. So I think this is a good segue. I want you to be able to touch on that, but also to how to now diversify those relationships and use what you’ve just said to your advantage. And so, you know, bringing it all together, speak to what Gregory said, and then we can talk about how to diversify those relationships,

Allan Francis (17:06):
Gregory. I’m so glad you brought that up because, and I’ll tell you why, because we work with Ferguson every day. And so we have that relationship and here’s the thing what you want to do. And I’m so glad you brought that up. This is where you get to turn the tables on the suppliers, because you’re going to develop a relationship where when Levelset comes to the table and is buying materials for you, we get to say a little bit about what prices are being paid and what’s going to happen. And whether or not you’re going to have to pay for your own delivery. And you don’t have to worry about the multipliers. You’re, you’re going to automatically put yourself at the front of the line because you’re coming to the table, the best experience. I don’t know if you’ve ever had the chance to do this because especially if you’re buying like a, a little car or something like that, going to a dealership with all cash and it takes all their, it takes all the sales person’s power away.

Allan Francis (18:00):
Yeah. Okay. Whatever you just said, but I’m paying cash and you get to just keep repeating that until you get the price you want. This is very similar to that because we have the buying power and the more we’ve done this, the more buying power we get and Ferguson is a beloved customer of ours. And we know how to work that relationship to help our other customers. And if, you know, if there’s other, other issues, there’s any delivery issues or anything else, that’s something we can address and get out in front of before it becomes a problem. And, um, so that, I’m glad you brought that up. You’re correct. If you go up against some of these larger suppliers, you just feel like you’re a man alone, out on an island somewhere with, with no hope of being able to negotiate anything, but time is money and you want, when you want something, you need it for that job.

Allan Francis (18:47):
And you want to know that it’s going to be delivered when they say it’s going to deliver. And some of our larger companies have, if you haven’t noticed, they’re starting to bring their materials to the United States. So we don’t have to wait for these long shipping times to come across from other countries, they’re building up inventory and you want to be able to take advantage of that. And that’s the way to do it. You’re you’re coming to them. They’re saying they want Cod part of the problem you have with CR Cod. And I don’t want to get out of order. But part of the problem you have when you’re paying Cod is, and this is we’ll just keep this amongst friends. Um, a Cod payment is usually done through the desk, the front desk, or the, what you call the supplier desk. You walk into it, there’s a counter.

Allan Francis (19:32):
And you’ve got a couple of sales people. They’re mostly inside sales and Cod customers are handled either in inside and or at the counter. And the commissions are very little and the outside, outside the salespeople don’t get any pieces of that. So depending who you talk to, when you call in, if you’re calling in and getting an outside salesperson and you you’re a Cod customer, how important do you think you are when they know they’re not going to get any commission off that sale, they’re going to pass it off to inside sales who is lower on the totem pole has very little ability to set when things are going to ship. So when you’re coming in and you’re saying, you’re a cash customer, you want to make sure you’re getting to all the right people. And that’s, that’s what we can help you do. You’re not just Cod.

Allan Francis (20:21):
Yes. You’re going to pay for everything upfront, but you’re going to utilize that through the already established relationship that you have. So what I would recommend you do in that situation, you go to Ferguson. Yeah. Cod, but I want to open up, you know, I’m going to pay for everything upfront, but I at least want some type of credit account. That’s set up that I can pay everything through. And that way you’re going to be supply. Usually you’re going to be given an outside sales person. That’s going to take care of you better. Another way to utilize the relationship. You’re no longer dealing with every odd person that happens to not be off on vacation that day. You’re going to get a guy that calls you back.

Carah Vallejo (20:58):
Yeah. Very gracious. Said he finally got a dedicated sales man, and he knows what you’re saying about dealing with the desk. Um, he doesn’t have an account. So w so knowing that and using that, how is that something that we are able to assist with? And again, just a time reminder, we are at 1 21. So I want to make sure we have enough time to

Allan Francis (21:19):
Cover.

Carah Vallejo (21:22):
Oh, I do have an account just only a Cod. So, um, Gregory, I love how, um, interactive you have been. This has been fantastic. Uh, I’m gonna have Alan contact you after this, or you can contact him either way to carry on this conversation, because I think there’s a lot of value in Alan’s knowledge and what he can bring to you. So, um, I’m, I’m thrilled that we were able to make this connection, but I definitely want to get to diversifying, um, your relationships and then like how we can bring that value and bringing it up, bringing it all home and bringing it together.

Allan Francis (21:56):
Well, at that time went by really quick and Gregory. I promise you, uh, we could do a whole seminar on Cod customers and how to make it work for you. And I will get with you, if you want to email me on the side, I will get with you and we will make that happen, especially with Ferguson. So anyway, we can move on to that. Um, Kara, can you tell me what direction you want to go next since?

Carah Vallejo (22:18):
So let’s just talk about, you know, why, why have more than one? What, why, what is the value proposition behind diversifying your relationships? Um, and how can you get the best deals in services? You know, as you said, it’s kind of counterintuitive to not just go with one and have all of this, um, like professional equity built in, but why is it important to diversify? And then you can go into really just how, um, financing might be able to bring value to all of the projects that someone is working on.

Allan Francis (22:49):
Yeah, that’s, that’s a really good point. Really good question. Um, it’s, it’s your life. It’s not counterintuitive to the point of when you’re ordering from one person and there’s the supply chain disruption in some part of the country or in someplace where that person, you know, you don’t know where that supplier necessarily is getting its product or how it’s getting its product. And if they can’t come through for you, you have to go back to your general contractor or your hiring party and say, Hey, there’s a delay. Hey, it’s on back order. If you have the ability to talk openly with your supplier, and I’ll make this really fast, talk openly with your supplier and say, listen, what if something happens? What is the worst case scenario? When can I have this product? If there’s a supply delay, if there’s a supply chain delay, are you getting this from more than one supplier?

Allan Francis (23:39):
How do I know that I’m going to be covered? Because this is a time sensitive project. If you’re dealing with a public job and you don’t show up on time with the product, you’re supposed to have a lot of contracts with the government right now, especially with all the infrastructure, investment will penalize you for every day. You don’t start your section of the job. You, you don’t want to be any part of that. You want to make sure you’ve got a backup. So that’s one reason you want a diverse supply. That other reason, plain and simple, Hey, I got it from Ferguson for this much. And you went to ABC company and they can get it to me for this much. If you’re ordering, if they know you’re going to do a volume of business with them, they’re going to, they’re going to listen to that.

Allan Francis (24:18):
And they’re going to try to take care of you as best you possibly can. You also have to determine what’s important to you. Is delivery date more important to you than dollar amount. You need to make that priority. What you need to decide, what your priorities are for your particular project. That’s why a job sheets very important. You need to know what the timeline is going to be. If you’re talking to your GC and you’re talking to the project manager and they don’t give you the straight answers you need, you need to go higher and find out what type of timeline you’re looking at for not only payment, but for when things need to be where they need to be.

Allan Francis (24:53):
Now, we can also move to one thing. If I have time to do it, uh, we have another example of, uh, we’re, we’re dealing with the supplier and I’m not going to, since it’s, this is more of a negative example. I’m not going to use their name. They had been hit by fraud quite a few times, and they made so many hoops for both the person financing the job for the person, for the actual customer to try to get their product that their delivery schedule was shortened to the point that they actually lost a contract. You need to be able to get with people that are going to be somebody you can trust to deliver everything you need delivered when you need it delivered. So that kind of taking a step back, but just know that use your buying power to get exactly what you want and get the confirmation that you need to be able to make your projects work. If the project doesn’t happen, then you lost that money and you lost your credibility with your customer.

Carah Vallejo (25:52):
That’s right. So I think, um, our last slide here is bring the value. How can we bring value to all of these relationships? Um, I know that we’ve talked a lot about materials financing and how that can bring value. Um, so maybe just hit some of those highlights on, you know, why paying everything up front and having those options. Um, we haven’t touched on the pay-when-paid terms. Maybe that’s something we can talk about and just kind of how this brings the value, um, to, you know, Gregory he’s in plumbing. How does that bring the value to plumbing? How does it come in, um, with some of the other verticals and industries with them under that construction umbrella,

Allan Francis (26:36):
Great questions. And when you’re doing material financing, usually whoever you’re doing it with, but I know in Levelset, we allow 120 days to get to maturity. So that’s going to take, you’re going to get you everything paid off, up front, but then you get 120 days to pay back everything that you just purchased. Now there’s a little bit of finance charge. Like I said, it’s not one size fits all, but the best part of that is you can build it into the job. You’re bringing value to the job by being, you’re bringing value to what you’re giving your customer, because you can do everything in a timeframe that’s acceptable to them. And you’re able to rapidly expensive that back to your customer. You can build it into the project. That’s not doing anything. That’s not, you know, there’s nothing underhanded about that. It’s the real cost of doing business.

Allan Francis (27:21):
The sooner that everyone is, is very transparent about the way the money is really being spent, the better off everyone is. So you’re bringing value in the plumbing industry, a good example of that. There’s certain type, you know, you can get your PVC from here. You can get your other tools from here. You, you know, you’re, you’re constantly having to find different locations or different suppliers. Did, you know, a supplier that’s a one-stop shop. It’s usually going to cost you about 20% more knowing that you have somebody that partners with you in material financing, you can bring us seven invoices from seven different suppliers, and we’re going to pay those all up front. And then you’re going to get the ability to take another 120 days to pay those off. That’s going to give you seven new relationships, because now you’re going to be able to come back to them and say, Hey, they’re paying pretty good.

Allan Francis (28:10):
I might open a line of credit with each of those. And then the best part about that is those seven different suppliers are, most of them, probably half of them are going to report to some type of credit reporting bureau. And you’re going to be building your credit at the same time. This is especially new or especially good for our new customers that are maybe just starting out. Um, I’m going to use Revere mechanical out of, uh, in, in Las Vegas. Uh, one of our customers they’d only been in business about six months. They came to us now they’ve just been named, uh, 20, 21 businesses on the rise for Henderson, Nevada, something they would’ve never been able to do. They credit us with being able to give them the ability to speed up their growth. And that’s the other value you want to grow your business quickly. This is a way to do that. We even have other customers that are larger million dollar multi-million dollar companies that just want to utilize their credit line with their bank better. So I think overtalk that, but,

Carah Vallejo (29:10):
Well, those are some fantastic values and we are just about at time, I wanted to make sure that we opened it up for any questions. We don’t have anything in the chat currently. Um, but just wanted to give a couple of seconds, have an option there for anybody that may have any questions. Um, don’t see anything coming through, but I also wanted to show again, this is Alan, our wonderful speaker today here is his email address for anybody that may want it. It will also be in the email that we send out with all of the information from this webinar. Um, some other great articles to read some other things to think about again, that will come out either Friday or Monday, and it doesn’t look like we have any questions. We are right at one 30. So thank you, everyone. This was a wonderful time, Alan. Thank you so much for taking this time out of your day. I’m so grateful. Yeah. All right. Bye everyone. Thank you so much, Monica Gregory. Bye-bye.