Canadian Electrical Industry News Week

 

maximize PurchasingBarry Olson

This article is the first in a series that will examine six tactics the electrical contractor can use to maximize purchasing power and profitability though procurement.

Whether one has a dedicated purchasing team or relies on project managers to procure materials, awareness of these tactics can help increase profit and efficiency.

One of the first lessons an economics student learns is the principle of economies of scale. Relating to the procurement of material, the concept is easy to grasp: if I buy more of an item, I should get a better price per item. Some items—such as copper wire or other commodity materials—are less inclined to deep manufacturer discounts, but the principle holds true, in general. A distributor is more likely to lower its profit margin on a $1 million order than on a $1,000 order. For a larger electrical contractor, the ability to use economies of scale can be very profitable, yet many of these contractors seem to use this tactic ineffectively. Some of the most common reasons are considered below.

Timing

To take advantage of economies of scale, one must have material to buy. Due to the cyclical nature of business, the timing of material needs is sometimes out of sync. Every job has a schedule with milestones and deliverables that need to be met. Therefore, to take advantage of economies of scale, material delivery schedules must be compared between jobs. These deliveries need not coincide exactly; they just need to be within a specific window of time.
Buying switchgear is a great example. Suppose three jobs are expected to start in the next 180 days, but all have slightly different dates when switchgear is required on-site. After comparing schedules, a six-month window is identified in which most of the deliverables will be needed. Rather than buy each job separately, you would be better off rebidding all three jobs as one package to manufacturers; winner take all.

I have done this many times with great success. One caveat: Ensure you pair up one distributor with one manufacturer, as you need the manufacturer and distributor to act as a team. This way, the distributor does not try to involve more than one manufacturer, and it gives every incentive to go all in with their lowest possible price. The ultimate goal is to create competition between manufacturers to realize the largest potential discounts. This same bundling procedure can be used for pipe, wire and other bulk materials as well.

Poor communication

Often, the larger an electrical contractor grows, the more departmentalized it becomes. Creating departments makes sense from an accounting and human resources standpoint. It is not uncommon to set up a new department specifically for hospital work, mixed-use facilities, or an industrial division so that those with specific skills within an organization can concentrate their efforts. While this offers a large contractor the ability to create a fine-tuned crew of specialists, it also can negatively affect communications. As a department grows, so does its independence within the company. It doesn’t take long before project managers interact solely with others in their departmental group. Encouraging interdepartmental communication is the only real way to combat this condition.

Contractors that charge their project managers with the task of buying out projects usually struggle when incorporating the tactic of economies of scale into the procurement function. In general, project managers are highly focused and mainly concerned with the present. Getting things moving is of the utmost importance, and the material buyout is one of their last priorities, which then becomes a rushed endeavour. Early coordination efforts can make a marked difference in the process. As soon as you land a job, you need to develop a schedule for material deliverables compared to any other projects in hand. Matching material needs gives you a better idea how to bundle projects and take advantage of economies of scale. Often, this function is best suited to a designated individual with exposure to all departments who can quickly determine whether the project can be incorporated into a strategic buyout. Depending on your company’s size, the owner, chief operating officer or purchasing manager may be the best individual for this task.

Takeaway

In today’s ultra competitive environment, even a 1–2% variation in material costs can make a difference. By using the principle of economies of scale whenever possible, one can maximize the power of every dollar spent and realize more profit to the bottom line.



Barry Olson has 25 years of purchasing experience with large union contractors and is currently the director of purchasing for SASCO in Southern California. He holds a Bachelor’s degree in organizational leadership, is nearing completion of a Master’s degree in the same discipline, and plans to continue his studies with a Ph.D. Barry can be contacted at BarryOlson@Outlook.com.

This article has been reprinted with permission of Electrical Contractor Magazine. These articles originally appeared on ECmag.com in 2015. Next in the series: accurate valuation of materials.

Read More Articles on Electrical Industry Canada by this Barry Olson:

6 Tactics to Maximize the Purchasing Function: Tactic 2 — Pricing - 

6 Tactics to Maximize the Purchasing Function: Tactic 3 — Time

6 Tactics to Maximize the Purchasing Function: Tactic 4 — Influence

6 Tactics to Maximize the Purchasing Function: Tactic 5 - Know Your Prices

 

 



Contractors! You Deserve Better.

Ledvance EIN Aug4 You Deserve Better July 2022Contractors! You Deserve Better | Win $2,000 Grand Prize from LEDVANCE, THE WORLD'S LEADING VERTICALLY INTEGRATED LIGHTING COMPANY

OFFERING SYLVANIA AND LEDVANCE BRANDED LIGHTING PRODUCTS IN CANADA


You deserve better and LEDVANCE wants to make sure you know it. Enter for a chance to be one of over 190 winners with the grand prize including $2000 and a SYLVANIA Work Light!

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2021 Canadian Electrical Code Overview of Changes

EIN CSA Group Logo 2022 400CSA C22.1:21, Canadian Electrical Code, Part I contains many updates and changes that are potentially significant to electrical professionals. This online, self-guided course provides the key changes and impacts to the industry presented in an easy-to-follow format.

 Designed for professionals with a good working knowledge of the Code and who solely need the key changes including general updates or those made for clarification, safety, and new products and systems. Key changes due to Rule relocation or deletion are also noted.

This course may help save valuable time to help keep electrical projects safe and in compliance. This training is developed with input from a broad cross-section of electrical industry experts and with cooperation from all provinces, territories and several key jurisdictions across Canada. 

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Changing Scene

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Government of CanadaThe federal governemnt has officially launched a call for proposals (CFP) for the Zero-Emission Vehicle Awareness Initiative (ZEVAI). The initiative’s 2022 CFP will help fund new and innovative projects that aim to increase awareness and knowledge of ZEVs and charging and refueling infrastructure thereby increasing public confidence in these vehicles and their economic and environmental benefits.


Natural Resources Canada will provide funding through non-repayable contributions of between 50 and 75 percent of the total eligible project costs, with a maximum funding of up to $300,000 per project. The CFP will close on August 18, 2022.

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Omnicable joins ETIMETIM North America announced that OmniCable has joined the product classification standards organization. Headquartered in West Chester, PA, OmniCable has 24 locations throughout North America, and also owns Houston Wire & Cable (HWC). The company partners with many electrical manufacturers and only sells to distributors.

According to John Dean, Director of Marketing & E-Commerce, OmniCable/HWC, “The wire and cable industry is often called commodities, but there are very distinct features and attributes for the different products our manufacturers produce. 

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Atkore United Poly SystemsAtkore Inc. announced that it has acquired United Poly Systems, a manufacturer of High Density Polyethylene (HDPE) pressure pipe and conduit, primarily serving telecom, water infrastructure, renewables, and energy markets.

“We are pleased to complete the acquisition of United Poly Systems, which strengthens Atkore’s product portfolio, expands our manufacturing capacity and further enables us to meet HDPE customers’ needs,” stated John Pregenzer, President of Atkore’s Electrical business. “HDPE pipe and conduit is a growing market that is expected to benefit from U.S. infrastructure legislation, and United Poly Systems is a great addition to Atkore. We welcome these employees and look forward to working together to continue to serve and support our customers.”

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Canadian Electrical Contractor Discussion Group: Can You Count the Deficiencies?

EIN CECD 400Have you ever been called to fix the work of a 'handyman'?

"Was supposedly done by a"certified ' electrician....told the homeowner that he got a $266 permit....no record at TSBC. Can you count the deficiencies?"

"There is a second panel change in the triplex also.......even more deficiencies. Think the guy was a glorified handyman. Ones not obvious: 240 BB heat hooked up 120....drier on 2p20....range on 2p50....water heater fed with 2c14 Bx on 2p15."

Go HERE to join the discussion

 


 

Grimard is more competitive and produces estimates 3X faster with Procore

Procore

When the pandemic lockdowns started in March of 2020, Grimard (an electrical contractor) had to decide whether to shut down its operations entirely or implement a new platform with people who were now freely available for work. Once they implemented Procore, they found a way to efficiently communicate with stakeholders and offer full transparency in terms of project costs and planning. It also allowed Grimard to utilize historical data to make project estimates more accurate. Grimard was able to streamline its bidding process, which made it more attractive to potential clients and helped the business grow.

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Iron+EarthThe RenuWell Project partners are excited to announce the groundbreaking of two pilot sites located near Taber, Alberta. These pilot sites are the first of their kind to repurpose inactive oil and gas infrastructure as a foundation for renewable energy development and job creation.

When operating, the solar projects will generate 2,030 MWh annually – enough electricity to power 280 average Alberta households or irrigate 11,700 acres of farmland for an average year. This is roughly equivalent to $200,000 in electricity sales per year with 1,100  tCO2e savings in GHG emissions. Over a 25-year lifespan, the projects will generate 50,750 MWh, with GHG emission savings of 28,420 tCO2e.

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David O'ReillyBy Elle Bremmer

Recently, I had the pleasure of sitting down with David O’Reilly, Vice President Home & Distribution and Secure Power Divisions with Schneider Electric Canada for a discussion regarding the Wiser EnergyTM smart home solution, the Wiser Approved training program, and his thoughts on several different subjects, including sustainability and future technologies currently in the works at Schneider Electric. David has been with the company for five and a half years in his role.

We recently published a study (version en français ICI) from Schneider Electric showing a strong interest from Canadians in smart home technology. 

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Product News

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Ericson String LightsEricson announces upgraded versions of their extremely capable line of Industrial String Lights and SL, LED Stringlights. These new and updated products have several key features important when safe, code compliant lighting for industrial workspace is necessary.

Infinitely capable, these ruggedly built products have several industry leading & exclusive features including:

Industrial String Lights:

  • A United States Navy Specification since before WWII, they’re time and application tested...

 

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Intermatic Pool and Spa SolutionIntermatic Incorporated announced its new P40000 Series Load Centers, a set of next-generation panels for pool-only applications, as well as its new PE24GVA 24-Volt Valve Actuator, an easy-to-install valve actuator that allows for tool-free cam adjustments. Both solutions remove obstacles for pool service professionals while delivering lasting performance.

“Intermatic load centers and valve actuators have been the preferred choice of pool professionals for more than 30 years,” says Brian Lamberty, product marketing manager at Intermatic. “The PE24GVA and P40000 Series build on that tradition, helping pool professionals streamline service calls while setting the standard for quality and performance.”

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Klein Tools Zipper BagsKlein Tools introduces new Stand-up Zipper Bags, in a 2-Pack with 7-Inch and 14-Inch sizes, both designed to handle tough jobsite conditions and stand up so tools and small parts can be easily accessed when working.

Stand-up Zipper Bags, 7-Inch and 14-Inch, 2-Pack (Cat. No. 55559)

  • Perfect for storing pliers, wrenches, screwdrivers, drill bits and other small tools and parts
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Emerson HV SafetyThe Occupational Safety and Health Administration (OSHA) estimates 350 employees are killed annually in electrocution accidents, which roughly equals one fatality per day. In the face of these dangers, OSHA officials and industry safety consultants alike recommend eliminating potential hazards on work sites, rather than simply relying on contractors or employees to follow safety guidelines.

To help safeguard employees from electrocution, Emerson has launched its Appleton™ Powertite™ Lock Collar, a device that fastens over plug and connector connections and is secured with a padlock, preventing unauthorized personal from disconnecting the cable connection once in place. 

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Peers & Profiles

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Copper $US Dollar price per pound

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