Preparing for a Rebound in Construction


Ready for some good news? According to a survey conducted by McKinsey & Company, two out of three European OEMs believe that revenue and profit will increase by 2020.

As reported by Construction Europe by KHL, the survey found that most companies see an increasing importance in aftermarket and a higher demand for customized machines for specific applications.

But What Happens Between Now and 2020?

Smart construction OEMs know that it is the perfect time to re-evaluate, and perhaps search for new and innovative suppliers. Taking the time to research new supply partners can lead to cost savings, improved product solutions and faster delivery. There are two methods for checking into a company’s capabilities and pricing – traditional and fast track.

The standard supplier evaluation can take two to three months and involves the following timeline:

  • Narrow target suppliers to three companies (2 weeks)
  • Send a Supplier Audit Survey that covers: (3 weeks)
    • Company Overview and Standing in the Marketplace
    • Manufacturing Capacity
    • Product Review/Technical Accomplishments
    • Quality Systems/Certifications
    • Business Financials
  • Based on the survey results, provide approval to move forward or terminate the evaluation (2 days)
  • Conduct a site inspection (1 week)
    • To shorten inspecting time and travel, have a local representative from your company or private consulting firm conduct the site inspection.
  • Provide confidentiality agreements and wait for their return. (1-3 weeks)
  • Send drawings/prints for RFQs (2 weeks)
  • Receive and schedule bearing sample testing (3 weeks)

The fast track method realizes that price may be the initiating factor to move into the next step, so it skips to the request for quote before investing time in supplier evaluation.

How to Streamline the RFQ Process

To obtain a bearing quote without providing too much sensitive information upfront, some companies will send a screen-captioned modified part drawing, blocked print without any company identification or sensitive markings. This way, the potential supplier can provide a quote within a short time.

Once the quote is received, appraised and approved, the strategic sourcing group starts the traditional supplier evaluation process.

Either method can produce favorable savings for construction OEMs. However, once a supplier is selected, it is important to verify all information with a formal review and sample test period.