How HVAC Contractors Can Satisfy Customers in a Crisis
9 MIN. READ
In today’s global business arena, HVAC contractors are at risk of purchasing and supply chain management disruptions. The pandemic, the closure of the Suez Canal and issues with the Port of Los Angeles are just a few recent examples.
These events combined to cause shipping delays, substantial price increases in raw materials and components, and outright shortages. In addition, an already tight labor market contracted. Shipping was disrupted, and as a result, delivery times were stretched out.
You cannot prevent external events like this, but by implementing some key purchasing and supply chain management steps outlined below, you can help preserve the lifeblood of your business: customer satisfaction.
1. Communicate well and often
As in all crises, communication is essential. Your customers depend on you for timely delivery and project completion as you promised, but delays introduce stress to the situation. Thus, it is not just communication, but excellent communication that is key.
Great communication is:
- Clear, honest and polite as opposed to blunt and defensive. If a customer sees that you are stepping up with the facts and actions you are taking, they will be more likely to cooperate. At the first sign of dishonesty, trust falls and stress rises. And once you lose trust, it is hard to recover.
- Timely – Let the customer know as soon as you see a supply chain issue verbally and/or via your website and social media accounts. Avoid surprises.
- Consistent and readily available. Post information or updates on your website and social media accounts. Readily available customer service and easy methods of contact are crucial to keep customer stress levels manageable and maintain trust. You do not want to leave your customers in the dark.
A final note on communication: Assumptions about customer needs can lead to dissatisfaction, so do not assume customer requirements. Make sure to fully discuss them in advance in contract negotiations, and check in along the way to make sure there have been no major changes.
2. Digitize, digitize, digitize
You must have centrally located, accurate, easily accessible data and the ability to perform solid analytics. If you are depending on Excel spreadsheets and paper records, you are lost already. Purchasing and supply chain management today involves a lot of moving parts - keeping track of them without digital records pretty much guarantees you will miss important details and pay dearly down the line (in time, money and customer satisfaction).
If you adapt any of the strategies below without digitizing, you will not be able to tell whether they are succeeding without accurate data.
3. Organize to manage crises
When inevitable problems arise, you have to address them head-on to diffuse the situation and control the consequences as much as possible. Set up a supply chain crisis management team composed of senior members from the operations, sales and customer service, purchasing/supply chain and finance departments. Appoint a leader and give them specific authority to run the team reporting to the CEO (in some cases, the CEO might lead the team).
The agenda should cover the impact of a particular supply chain crisis for each significant customer project. Each team member should focus on projects from their individual perspectives:
- Sales/customer service should concentrate on the customer profile, the value of past and current business levels, and the key customer decision-makers' priorities.
- Operations should bring knowledge of project schedules and issues and their customer counterparts.
- Purchasing/supply chain should know the materials and labor required and have close contact with their vendor counterparts.
- Finance should have a clear understanding of the project and customer P&L and be able to provide prompt analytical support.
The team should meet frequently to deal with current customer issues and formulate action plans to be approved by the CEO.
Its mandate should be clear and published: They are responsible for devising and implementing plans for dealing with supply chain crises as they arise and to be prepared for future supply chain crises.
4. Optimize your purchasing and supply chain management based on customer needs
It does not matter how smooth or "optimized" your supply chain seems to be - if it is not addressing customer needs, the chain is not sustainable. Here are a few tips on how to truly optimize it for your customers:
- Develop key performance metrics from customer needs. Select and manage your suppliers based on their performance against those metrics.
- One key metric to track is DIFOT – Delivery in full on time. This metric is calculated by dividing the number of deliveries made on time and in full by the total number of deliveries. For example, if there were 100 deliveries, and 80 were DIFOT, the DIFOT rate is 80%. The higher the rate, the better.
- Choose supplier locations wisely. Are facilities located close to your customers to minimize transportation time?
- Verify that your suppliers can handle a crisis. Do they have an established, proven crisis management program? Your crisis management team should review major contracts to confirm this.
- Return to basics. Examine your logistics process to see how many times a shipment is touched. Consider if each is necessary. By removing or automating touches, you can save time and money, which you can then pass on to your customers.
- Consolidate your supply base. Having multiple suppliers for the same products or services increases costs of management and reduces your purchasing leverage with suppliers. Try to:
- Increase supplier rebates. Rebates and cost savings can be used to finance improvements in purchasing and supply chain management.
- Utilize an e-commerce solution to consolidate your supplier base and drive pricing down.
- Develop and nurture effective supplier relationships. Strong partnerships here will prove beneficial to your customers as you increase loyalty with the supplier.
- Communicate your key success metrics to your suppliers in the purchasing process. Manage them according to those metrics. Stay in close communication, with frequent reviews of specific customer projects.
- Important: Make sure you understand going in what the supplier needs from you to meet your customers’ needs.
5. Consider indirect costs as well as direct costs
Any cost savings you can achieve on your end can translate into cost savings for your customer:
- Shipping: Shipping can add significant costs to parts and supplies. If you choose qualified suppliers closer to your customer, transportation costs will be less, and you will be able to reduce the price to your customer.
- Fuel/transportation: Make sure that you know and negotiate how much your logistics company is charging for fuel escalations.
- Inventory: Manage your warehouse closely and be sure that inventory is tied to accurate usage forecasts and specific customer needs. Focus on parts and supplies that are subject to market disruption. Your crisis management team should play a part in planning here.
- Outsourcing: If you have a large and costly warehouse function diverting a lot of your attention and resources, consider outsourcing to a third-party logistics (3PL) provider.
6. Build an effective customer service organization
Coming back to the idea of excellent communication, your customer service team needs to portray themselves as a unified force that advocates for customer satisfaction and prioritizes honesty and helpfulness. Here are a few tips to help:
- Hear and understand the voice of the customer. Pick up on their tone so you can respond appropriately. Hear their concerns - do not just listen to them. By being actively invested in their problems and responding with empathy and reason, your customers will be more satisfied with the interaction, even if their problem is not immediately solved.
- Be accessible. Make sure that there are multiple easy ways for customers to contact you - email, phone and text. Make sure they all work so they can contact you with convenience.
- Train customer service representatives to find customer pain points quickly and address them effectively by escalating them as needed.
- Ask what the customer wants and values. Build customer service processes that support common customer needs through effective purchasing and supply chain management.
- Develop and use customer satisfaction surveys to identify areas to improve:
- Include purchasing (quality of products provided) and logistics (timeliness of delivery) metrics in these surveys.
- Discuss and track customer scores, act on them and let the customer know what you did so they can see that you are acting on their concerns.
- Integrate the use of customer service data across the company. Sales, operations and purchasing/supply chain must understand and emphasize customer satisfaction so it is an ingrained process.
- Include customer service metrics in performance evaluations so that customer satisfaction is a core value across the whole company.
7. Pick the right technology
You can enhance purchasing and supply chain management with customer service at the forefront by using the right technology. Find a solution that:
- Is easy to use.
- Automates your procurement function parts, supplies and labor.
- Enables you to track supplier performance against key supplier metrics.
- Provides centralized storage of procurement data.
- Supports compliance.
- Includes an analytics capability and a centralized dashboard for reporting.
- Helps you select reliable, qualified suppliers.
- Provides timely and accurate data for forecasting.
- Is simple to implement.
Raiven can help you with purchasing and supply chain management
Raiven Marketplace automates your procurement process to provide a one-stop procurement platform. You can save money on purchases and reinvest those savings into customer service and satisfaction initiatives.
To begin, you can load your own suppliers into Marketplace. Or, you can take advantage of our alliance with Avendra, the leading hospitality procurement services provider in North America, to access their universe of industry-leading suppliers. Avendra negotiates discounts, service levels, capacity and quality, saving you time and resources.
You can hit the ground running with a reliable portfolio of suppliers, and at discounts of 7-25%!
Notably, all of your data is available to you in real time in a simple, focused dashboard. You can easily access and analyze supplier performance against your key customer satisfaction metrics in real time.
As for labor, the Raiven contractor platform does all of the things for labor that Marketplace does for supplies and parts. Raiven’s contractor performance reporting and management generates a subcontractor Quality Contribution Index (QCI), from 0 to 1,000, giving you complete visibility into the best and worst performers at all times. You will know who you can rely on in tough times to satisfy your customers.
And, of course, Raiven is there with close implementation support! Get started now to set up your purchasing and supply chain management solution for maximum customer satisfaction. Contact us for more information today.