The term ‘value engineering’ is enough to send a shiver down the spine of any catering equipment manufacturer or supplier, as they believe that dealers are sometimes swapping out what would be the most suitable equipment in a kitchen, for inferior alternatives.
CESA remarked on this issue for a story on this very website, with chairman Simon Frost saying that the value engineering changes are made with little or no consultation with the customer or specifier, let alone the equipment supplier.
This prompted an avalanche of comments on this news, with Peter Rigby, national sales manager at MCS Technical Products, agreeing with the point. “Too many times manufacturers/suppliers have presented products all the way along the chain, only to be told that the project has been ‘value engineered’. The comeback is usually that the builders have requested cuts; sometimes that’s right, but sometimes it is dealers getting greedy. Let’s all work together.”
Linda Lewis Kitchens’ MD, Linda Lewis, also concurred: “It’s important that the dealers stick to the original specification – then the customer gets what they have ordered, the right kit to do the job. We speak to disappointed customers all the time who thought they were having our Cuppone ovens and someone has substituted with an inferior brand that won’t do the job. It costs them twice in the end.”
Agreement also came from the ‘other side of the fence’, with Alex Bradley, commercial manager at distributor Restaurant Design Associates commenting: “Tendering for work is fine so long as everyone involved pays attention to the specifications already agreed. We have lost tenders fairly which we have no problem with, but to lose out on a project and then find out all the equipment has been swapped for something much cheaper is very frustrating, particularly if we have been involved in the consultancy process in the pre-tender stage of the contract.”
Felipe Perez, export manager at fabricator Fricosmos chimed in: “Dealers should have a long-term vision when marketing their products. It is a very common problem for manufacturers, finding dealers often only care about their commercial margin, without taking into account the quality of the products. It is even quite usual that they sell low quality equipment as if they were high quality.”
However, Jeremy Byford, director of distributor Ceba Solutions strongly disputed the point, describing the previous comments as “a joke”. He said: “I cannot believe I’m reading that manufacturers are moaning about dealers who change the specification so they can make a small profit. Manufacturers are more than happy to give our profit away in the name of shifting boxes and the consultants are happy to allow their clients and main contractors to force the catering contractor to find ways of saving money (as long as they get paid).
“If you make your equipment with a unique design it can’t be value engineered. Work with consultants with some backbone!” [[page-break]]
Fricosmos’ Perez responded: “I do not intend to offend to honest dealers, of which there are many. But surely you know that there are others who are not so honest. And of course, we are also happy to give our hundreds of dealers all over the world a fair profit margin.”
Malcolm Morris, sales manager at Trak Hupfer, advocated a collaborative approach. “Many dealers have strong relationships with builders and contractors. In part, some of the issues lay squarely in builders’ and contractors’ hands as they play off the dealers against each other to get the best overall price for the catering aspect of the project. They are only doing their job.
“This process forces the dealers to ask for a price reduction in their specified product or seek an alternate product. Some of these products will be close to the specification and others not. The issue is with the builders and contractors, based on their lack of knowledge of our side of the industry. There is a vast void in knowledge between building, MEP works and kitchen design and installation.
“There needs to be a far better more collaborative approach to this, a little like we have achieved over the years in our industry by bringing the different bodies together; CESA, CEDA, FCSI etc. Our collaborative communication has vastly improved over the years with better integration at various industry body meetings. Can someone more knowledgeable than me work out how to get the builders/contractors on board or to buy in, so that they start to understand why certain products are specified to meet a certain applications?”
Phil Alexander, director of Olive Branch Catering Equipment, defended his company’s reputation. “In a situation like ours, going through significant change, we are constantly pressed for alternative equipment by our contractor-based companies. If other companies are doing it and we hold firm, our chances of winning the project are diluted.
“We have had over the years many a complaint that my company drops its prices and specifications to suit the contractors’ needs without caring too much about the client’s finished article. However we are very much aware that many of our ‘premium’ competitors also go to market on 2-3% mark ups to win projects, just to fight the required percentage back off the manufacturers so they can sustain the specification/project/profit, or a ‘valued bid’ will accompany the original submission, showing a saving to the builder.
“I totally agree that the consultants are employed to supply a specification to the client which is required to deliver their expectations, but if the usual suspects on the tender list are allowed to do as they please with specifications, smaller business like ours must compete somehow to sustain the business, rather than be priced out every time and fold. This suggested process does not allow the industry to allow newer businesses a fighting chance in creating a customer base and the fat cats will always hold the bigger piece of the pie.
“Give everyone an equal playing field; ensure the builder/architect/M&E consultants cannot deviate from specification and then put the opportunity out to market. Then it’s down to three things, customer service, relationship and professionalism.”
Cathy Wilcox, co-founder and director of Wilcox Burchmore, supported Alexander’s suggestion, but also believed Ceba’s Byford made a good point. “It’s all too easy for a tender to go out with those dreaded words ‘or equivalent’ with the specification. A recent design and specification we did is about to go out for tender and almost ‘by the by’ the builder asked if he could add ‘or equivalent’ to the specification. My answer was a resounding no. I’m awaiting the return of the tenders with interest but the fact of life is that there will always be someone who will undercut by substituting cheaper kit – sad but unfortunately true.”