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Due Diligence: Dealers & Distributors

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In this final entry in our Due Diligence series, we take a look at the importance of dealers and distributors in both the equipment purchase and service processes. Some contractors prefer to buy direct from the factory, and that has its advantages. But over the long haul, many find that developing a relationship with a local or regional dealer or distributor the preferable option. Let’s explore the advantages of that scenario, and the questions you need to be asking to ensure you get the most out of such a relationship:

Consultative Approach

When you deal with the distributor, are they making sure you get into the best unit for your needs, or for their bottom line? This will be apparent in the kinds of questions they ask you. You want to feel that they really understand your needs, by really listening to the answers you give.

Make sure they use a consultative approach to selling. They should be asking as many questions as you are, as you tell them about your equipment feature and performance requirements. It may be that what you think you need and what you actually need are different. Only a seasoned, experienced representative will understand this and be able to ask the right questions to figure that out. Consequently, they can lead you in the right direction toward equipment that will actually help you accomplish your goals in the field.

Know-It-All…Or Not?

If the person you’re speaking with at the dealer or distributor doesn’t seem to know the answer to some of your questions, are they willing to admit this and find out from the right person? Or do they seem more interested in appearing to have all the answers?

You can’t afford to sacrifice getting the right product to their ego or pride. If you don’t feel satisfied with the answers you receive, find a way to politely ask for a second opinion. This purchase is too large and important not to make the right one the first time.

Does Staff Inspire Confidence?

Do a little homework before you even approach the dealer/distributor. Find out if its staff is fairly stable, or if they have high turnover. The latter could indicate a poorly managed company that may not treat its people well. This could mean you may end up dealing with a constantly changing assortment of representatives. Such a situation won’t inspire comfort or confidence in you…and probably shouldn’t. As the customer, you should expect to come first, not behind a line of internal management issues.

After The Sale

Lastly, you’ll want to find out if the distributor has the capacity (and willingness) to provide a reasonable amount of after-sale service. After all, the initial transaction is a one-time thing, but ownership of the product will hopefully go on for quite a few years. You want this extension of the relationship to be convenient and satisfactory, not fraught with stress.

Can the dealer service the equipment nearby, or will they need to send it back to the factory, perhaps far away? The latter doesn’t always mean a bad deal for you: In fact, sometimes factory refurbishment is the best possible option for keeping your equipment operating at peak condition and warranty compliant. But when that happens, does your dealer offer loaner equipment to keep you productive, while yours is in the shop?

How do they handle communications while they have your equipment?

  • Will they be proactive in letting you know when you can come pick it up, or will you have to babysit the process with several phone calls?
  • What’s their track record on delivery as promised? When they say they’ll have it ready, will it be?

Managing your expectations at this point is one of their most important jobs, and you need to know that their information is reliable. Otherwise, frustration can set in, and create a lack of confidence in the dealer. No one wants that. So do your due diligence at this end of the deal, and everyone should end up happy.

We hope you’ve found this Due Diligence series helpful, and that you’ve learned something of value that will help you get a handle on the process, the next time you need to make a major capital investment in your pipeline inspection or other professional equipment.

 

 

 

 

Cost of Ownership: Downtime and Other Considerations

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Due Diligence Series #4 

Large capital expenditures carry that significant price tag up front, but cost of ownership doesn’t stop with acquisition. When making such a purchase, part of doing your due diligence is anticipating and researching total cost of ownership over the life of the product.

Seeking Service Life

The first consideration in determining total cost of ownership is how long you expect to keep the item. What is the average serviceable lifespan of this equipment, if maintained to factory recommended specifications?

If you don’t know, ask the vendor. In fact, ask multiple vendors, because they may be tempted to skew the numbers in favor of their own offerings. Better yet, do an online search using a Boolean term such as “average service life + [name of product].” If you can’t find a general parameter, include potential brand names you’re considering inside the product name (delete the brackets).

Do They Stand Behind Their Offerings?

Another rather obvious consideration of total cost of ownership is whether or not the product carries a warranty. If so, what is that warranty, specifically?

This is the time to read the small print, before you’ve committed your money. If you don’t understand any terms or meanings, now is the time to ask clarifying questions of the salesperson. And don’t settle for vagaries: Demand explicitly defined answers to all your questions, and don’t stop asking until you’re satisfied you’ve been told the truth, and all of it. These are not questions you’ll want to have to justify not having asked later, should something go wrong.

Says Who?

Speaking of warranties, are these promises based on actual testing of the item for performance and reliability? If so, is that done solely in-house, or is the manufacturer confident enough to subject its products to objective, third-party testing?

The testing alone isn’t really enough to tell you much, so you’ll want to ask if test results are readily available from the manufacturer. They should be willing and able to provide you with product spec sheets carrying all applicable information. This might serve as a good bellwether for setting your expectations of long-term cost of ownership.

Don’t Forget Consumables.

Of course, you can’t know every scenario that might face you down the road as an owner of the product you’re considering for purchase, but you can definitely create some kind of basic projections for what it’s going to cost to replace worn or lost parts. Ask the vendor about the average cost for consumable parts on the product you’re looking at, and how easy it is to get those parts if and when needed.

Another factor in long-term cost of ownership is the time it takes you to wait for such parts. Ask about average turnaround time for consumable supplies, delivery and repair requests. Include questions about shipping costs, which can often be significant, especially for more heavy-duty equipment.

What about ease of sourcing for such consumables? Are some repair parts proprietary, or can they all be purchased at a local hardware store or home center? This seemingly small detail can easily derail a project schedule if not planned for ahead of time, and we all know time lost is money lost.

Cleaning and Maintenance

Find out the manufacturer’s suggested cleaning and maintenance schedules, and what they consider mandatory. How easy will it be to keep the equipment under consideration clean and properly maintained on an everyday, weekly, monthly and quarterly basis? This is a regular and ongoing cost of ownership that can really add up over time, but if you take care of it, won’t morph into an unpleasant surprise down the road.

Speaking of which, you need to consider unplanned maintenance, as well. How easy is it for your own crews to perform minor field repairs on the product in question? If turnaround time isn’t quick, will the vendor provide a loaner replacement until yours is back online? If so, will it cost you anything?

Of course, there will be some maintenance that will cost money, even if it’s not unplanned. Explosion-proof equipment requires factory refurbishment due to safety considerations, but make sure you know about this up front.

Training Can Cost or Save You.

One of the long-term costs of ownership frequently overlooked at shopping time is training. What does the manufacturer offer in the way of training your crews to use and maintain their products? Do they make it easy for you to take advantage of? Will they come to you, or must you go to them? Have they made an effort to pack as much information into their training modules as possible, to take up as little of your crews’ time as they can while still imparting needed wisdom and experience?

Accessibility of Technical Support

The last factor you need to consider is how easily you can get technical help related to your purchase. The best in the world is of little value if it’s not accessible when you need it. How is the vendor staffed for such support? Do they provide several avenues (phone, text, email, in person) through which they can be contacted? Are they available during the hours you’re most likely to need them?

Adding It All Up

Take notes on all of these points and attach figures to those that can be anticipated. Make a matrix or spreadsheet containing a column for each point, and fill in those figures for each potential purchase candidate. This will help you compare apples to apples, and refer back to the comparison as needed. Add up all the figures and at the end of this document you will have created the proverbial (and literal) bottom line.

Now you can make an informed decision based on realistic, total cost of ownership for each piece of equipment you’re considering.

Next up: Our final post in this series, dealer/distributor considerations

 

 

 

 

 

DueDIligence Part 4 header

Manufacturer Considerations, Part 3: Just What You Need

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Due Diligence Series Post #4 – Manufacturer Considerations, Part 3

In your manufacturer considerations thus far, you’ve vetted potential big-ticket equipment vendors for flexibility, both in attitude and ability to deliver. Those are both pillars of a solid vendor foundation. But what about the things that set them apart from the competition? What about surpassing your expectations into the realm of “above and beyond?”

The ability to deliver in this realm rests largely upon business philosophy and the vendor’s sense of their mission. This is the area where, handled properly, everything else in your manufacturer considerations becomes run-of-the mill. In this area, even parts of the rest of the transaction that may have seemed ho-hum turn into the Deciding Factor; the thing that exceeds expectations and delights the buyer.

Have It Your Way

Those of a certain age will remember the old 1974 Burger King commercials, proclaiming “have it your way.”

It was a brilliant campaign that allowed the #2 fast food provider to pull a lot of market share away from McDonald’s. The #1 giant had demanded everyone simply accept that their burgers were going to be delivered with the standard ketchup, mustard and chopped onions…no exceptions.

It was a classic example of the business success principle of putting the customer first, rather than trying to shoehorn them into what works best for you as a business. It’s no less effective today.

With that in mind, you need to ask of a potential equipment vendor is whether their standard stock is all that’s available, or if they offer customization. Clearly, the ability to have an off-the-shelf item tailored to the specific way you and your crews will actually use it is a serious advantage; not just in outcomes, but also in making that equipment pleasant and satisfying to use.

When you’re shelling out the kind of money it takes to outfit yourself well for CCTV inspection, why not hold out for a solution from a vendor who’s happy to let you have it your way?

Help Along The Way

One of the significant determiners of satisfying, long-term business relationships with an equipment vendor is whether the manufacturer works through a dealer network to help with delivery and repair. While the manufacturer must set the tone of how they expect customers to be treated, it’s often far more convenient to work with a local distributor or dealer, whose primary business is the service of the products he delivers. These middlemen more than earn their keep by helping you navigate any warranty policies and performing maintenance work on your purchase close to home.

It’s no secret that CCTV equipment necessarily has parts—such as the optics—that regardless of ruggedization by the manufacturer, are still vulnerable to the harsh environments and sometimes necessary rough handling they’re subjected to. So when those or other parts need replacement or repair, it’s important to have someone not too far away you can depend on to get you back in the field and productive as soon as possible.

Along those lines, we all know that sometimes, a part may take a bit longer than expected to arrive, or some other factor can cause delay in getting your equipment back. But the jobs don’t wait, and you don’t want to create a disgruntled customer. Does your potential vendor have a loaner policy, providing a temporary replacement to keep you working until yours is returned? This is one question that you may never really need to know, but if you do, it can make all your due diligence efforts worthwhile.

Can you get the equipment the way you need to?

Another really important question to ask, if you’re responsible for purchasing equipment for a municipality, is whether the vendor makes its products available through the channels you’re required to use to buy it. More and more public works departments are coming under blanket purchasing laws that require them to use online purchasing cooperative interfaces, commonly referred to as “buy boards.”

If you’re one of them, you want to make sure that the equipment you spec in your capital expenditures is available for purchase through this channel, or you can find yourself out of luck and disappointed when it comes time to issue the purchase order.

Increasingly, manufacturers serious about competing in the marketplace are understanding that they need to have a presence on these boards. Although lack of such a presence doesn’t automatically disqualify a vendor from consideration, it should raise concerns about how serious they are about maintaining a serious, long-term presence in the industry.

So when you’re considering a vendor for such big-ticket items, it’s clear that doing your due diligence is an investment of time and effort that can pay off long into the future. We hope this series has been helpful in outlining some best practices in planning for and protecting your equipment investment.

Manufacturer Considerations, Part 2: Who Comes First?

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Last time, in discussing manufacturer considerations, we covered important questions to ask about potential equipment vendors, regarding identifying real decision makers, and the ability of the company to be flexible in meeting your needs. This post, we’re taking a look at not just the potential vendor’s flexibility in ability, but also in attitude.

Your key question in this area of doing due diligence is: Who comes first in your potential relationship—you or the vendor?

Manufacturer Considerations: Relational or Transaction-Based?

Obviously, every vendor will have certain strengths and limitations, and it’s your job in vetting them to find out what those are. After all, it’s a well-established fact that the most successful business relationships are those built and nurtured for the long-term. It only makes sense, really. People are predisposed to do business with those they know, like and trust, and it takes time to develop all three of those relationship facets. That kind of bond isn’t built overnight, or over the course of a single transaction.

So it’s the vendor that puts you, the customer, in front that will likely be your best choice to sustain such a long-term relationship. Clearly, it should always be the needs of the customer that drives every business relationship. In other words:

  • Does the vendor appear to exist because they like selling a certain product or service, and then hope to sell that to you as they envision it?
  • Or do they like dealing in a certain realm of service and seek out the products to sell that will best fulfill that mission for their customers?

In that vein, a specific question to ask is whether the manufacturer offers free field demonstrations, so you can see the equipment perform in YOUR real-world environment, rather than just a controlled factory environment. If not, you need to ask why.

Manufacturer Considerations: Convenience and Confidence…But For Whom?

Are they simply not set up for such demonstrations? If that’s the case, they’re missing a key component of good salesmanship, and probably aren’t as serious about their business as they should be. Sure, this kind of service costs them money in labor, energy and other resources; but if they’re not willing to make that investment, one must question their commitment to their success.

Or perhaps they’re simply not confident that their product(s) will perform as promised in an uncontrolled environment. Given that nearly every situation you’ll encounter in this industry takes place in the very definition of uncontrolled environments, that’s a real red flag. If it pops up when you ask about field demos, your best bet is to run, not walk, in the opposite direction.

Manufacturer Considerations: Service After The Sale: Retrofits

We talked last time about vendors offering service after the sale in terms of maintenance and repair. That’s a fairly common concern that most potential buyers will ask. But what about support long after the sale?

  • If you find yourself happy with the vendor’s offerings but a little short on budget, are they open to working with you?
  • Does the manufacturer offer retrofits and certified, pre-owned equipment, or do they only want to sell you new products?

Toyota, the car maker, learned long ago that planned obsolescence as a manufacturing policy is anathema to Americans, despite our tendency to be a disposable society.

In a country whose history includes a long tenure of the Big Three automakers, whose long-lived products practically defined the driving experience of an entire nation, Toyota learned that it needed to build cars that last, and then stand behind them. So they launched their Certified, Pre-Owned program, and it has carried their sales through every recession and down economy since.

Manufacturers of such durable goods as CCTV inspection equipment and vehicles face much the same expectations. Contractors don’t want to have to give up on an Old Faithful vehicle, even when the inspection systems age out or they really just want to move up to some newer technology. Vendors need to be able to offer a halfway option between limping along with legacy equipment or having to shell out hundreds of thousands of dollars for a full, brand new system.

That’s where the smart ones offer retrofits and pre-owned options. After all, if they can’t stand behind equipment they made themselves, even if it’s got a few miles on it, who can? Those who put their customer first seek proven ways of making their equipment accessible to buyers at every level. Refurbished units or retrofitting new equipment into existing vehicles is a great way to do that.

These are a few of the ways potential vendors can build in an attitude of flexibility in working with you, along with their ability to deliver.

Next time: Final manufacturer considerations.

Manufacturer Considerations, Part 1: Choose Your Partners Well.

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When you take on the purchasing role in your company, with each buying choice you must decide whether the purchase warrants a short-term or long-term stance: are you just choosing a vendor, or a partner in your success?

With consumable items such as office or cleaning supplies, you can basically view them as commodities, which allows you to buy more on price and availability; in other words, a short-term stance that lets you be flexible according to immediate needs. With big-ticket items such as durable equipment, however, only a long-term buying stance will serve you well.

Such huge capital expenditures will either help or haunt you for years over the course of their service lives, depending on the due diligence you did to determine whether these purchases would wind up as expenses or investments on your bottom line. That’s why you need to think about more than just the equipment itself. You need to consider the vendor you’re getting it from.

There are quite a few questions you need to ask yourself about this company you could be associating with for quite some time. After all, you’re hoping the equipment has a long and healthy life, and you’ll likely be working with its manufacturer and/or distributor for the length of that life.

Vendor or Partner? Important Questions

Will the manufacturer be more than just a vendor? Will they take a consultative approach to sales and service, functioning as a full partner in your success? In other words: Whose needs come first—yours, or those of the vendor? In researching the company, there are several other questions you can ask to help you answer these.

Who owns the company? Is it privately held by a small group or family that values the company for what it really is and does; or is it simply another “property” in some big holding company’s portfolio, vulnerable to being sold off or broken up at the whims of a profit manager? The answer to this question largely determines how your company will ultimately be treated by the equipment seller. Respect for staff and company values starts at the top, and extends to the customer…or it doesn’t.

Who in the company will you be dealing with, and are they the real decision-makers? Do they have the authority and power to truly satisfy your requests? Again, this knowledge is crucial, because small business or family-run structure is far more flexible and less formal, allowing for the idiosyncrasies of new or long-established relationships, rather than being forced into some rigid corporate structure. You, the client, will always feel the upshot of that policy.

How long has the potential vendor been in the marketplace? Are they newcomers to our industry, or do they have a track record of quality, performance and innovation? What’s their corporate culture concerning service and after-sales support? When you’re considering equipment that gets beaten up as badly as most pipeline inspection systems do, that last question will have a considerable bearing on your overall happiness with your purchase in the long run.

Time Well Spent

This is where due diligence can get a little time-consuming, but it’s time well-invested to protect one of the largest spends you’ll ever make in your work. Good references are important, but don’t just stop at the “happy customer” testimonials the company offers. Seek out and ask colleagues who are or have been their customers, for real-world opinions.

Go to industry shows and ask around. Participate in online forums offered by our industry’s trade publications, where you’ll find plenty of your colleagues willing to speak out. And don’t forget social media: Lots of contractors and municipal representatives spend time on Facebook and LinkedIn. Join them, and ask about their experience with, and for honest feedback about, the vendor you’re considering.

This is just the beginning of the homework you should be doing on companies you’re considering entering into a significant relationship with. Next month, we’ll explore Manufacturer Considerations, Part 2, in this ongoing Due Diligence series.