Electrical Contractors Save Time & Money
On Purchase Orders with Spectrum P.O. Link
Contractors avoid double-entry of P.O. data
Electrical contractors face a common problem that unnecessarily adds costs and inefficiency to their day-to-day operations, and potentially limits their growth. They double-enter into their construction management software the same purchase order data that their wholesale supply house has already entered into its order-entry system.
The sheer volume of P.O. data can translate to the contractor wasting countless dollars and hours by duplicating the efforts that the electrical distributor has already performed. Plus, two different people entering the same info—at the construction firm and the supply house—is a recipe for error.
For an electrical contractor with thousands of P.O.s’ per year—and frequently dozens of line items on a single P.O.—the inefficiencies and costs of double entry can add up in a hurry.
Typical Scenario
After placing an order to their wholesale supply house or electrical distributor, the contractor typically waits to receive a faxed confirmation from the vendor before entering the P.O. information into their construction management software.
“In essence, we’ve turned our suppliers into part of our accounting system, where they’re actually doing the work for us”
Dave Garren,
Thoma Electric
Or maybe the contractor enters P.O. information into their system at the time they place the order. Perhaps its detailed information (“20 washers at $.02 ea. and 100 anchors at $.05 ea.”), or perhaps not (“Joe called the supply house to order $2,000 for materials on the XYZ Job”). And when the invoice comes in, it doesn’t match many prices or item descriptions. Even the order of the various line items is different.
The contractor, understandably, doesn’t have complete confidence in the quality of his P.O. information. The contractor’s cost to process an individual P.O. has become astronomical. And valuable time and money have been wasted by entering the same data in its construction management software that the wholesaler previously entered in its order-entry system.
Solution
Fortunately, there’s a solution to the “P.O. problem.” More than 40 Dexter + Chaney clients employ Spectrum™ Purchase Order Link, which enables the contractor to receive P.O. information electronically from its suppliers and avoid double entry. The supplier does the work of entering the detailed P.O. information into its order-entry system. P.O. Link then works with Material Management Software’s Power Order Confirmation system to format and transfer that data from the vendor’s order-entry system into Spectrum.
The result: the contractor saves time and money, because he doesn’t have to re-enter the information that the supply house has already entered into its system. The contractor knows he has quality P.O. information in Spectrum, since the vendor has provided the line-item and cost detail.
Tale of Two Clients
Two long-time Dexter + Chaney electrical-contractor clients—Thoma Electric of San Luis Obispo CA and Corbins Electric, based in Phoenix—typify the benefits of P.O. Link. Both companies wanted to solve the P.O. problem, and found the solution in P.O. Link.
Founded in 1962, Thoma Electric is a family-owned-and-operated electrical contractor with 70 employees. The company is well-known on the central coast of California for its commercial, industrial and institutional work. Its engineering division designs projects—from building renovations to entirely new facilities—throughout California.
The company handles about 2,800 P.O.s annually, averaging eight to 15 line items each. “Our P.O.’s can be anything from one line item, if it’s an emergency job, to a P.O. for hundreds of thousands of dollars for switch gear or fixture packages for larger contracts,” explained Rob Smith, Thoma Electric’s controller. “We have a P.O. for everything that we purchase for customer jobs.”
Before installing P.O. Link in 2007, Thoma’s foremen would place an order from the field with Thoma’s two-person purchasing staff at company headquarters. The office would enter the order into Spectrum, create a purchase order, and then fax that information to a Thoma supplier. Occasionally, they’d phone in the order. The suppliers would fax a confirmation back to Thoma, acknowledging the order and listing prices.
If the supplier’s prices differed from Thoma’s numbers, purchasing staff would modify the purchase order with the correct pricing. Occasionally, the price of an infrequently-ordered item would not be included in the P.O., creating extra effort for both the supplier and Thoma to track down and enter that number. Thoma would use the vendor’s fax to update quantities and prices in Spectrum and prepare the customer’s invoice. Thoma and the vendor duplicated efforts by entering the same data into their separate systems.
“It could be a four-step process to ensure that we had accurate P.O. information,” Rob explained.
A Better Way
With P.O. Link, Thoma has a better way to track P.O. information. Here’s how it works:
Thoma Electric’s purchasing staff faxes or phones most orders to the supplier. For larger jobs, the foreman electrician contacts the wholesaler directly to place an order, using one of the P.O. numbers pre-assigned to that job. “Our field electricians are responsible for placing those orders,” Rob explains, “and we in the shop are responsible for reviewing and approving them.”
The wholesaler enters the order into their system, and transfers the P.O. information (including price and quantity per individual line item) to Spectrum at Thoma headquarters via P.O. Link and Power Order Confirmation.
Among the benefits of P.O. Link for Thoma Electric:
Rob Smith and Dave Garren, Thoma purchasing agents, estimate that Thoma has reduced—by at least 75 percent—the amount of time that the company previously spent on the P.O. process. They don’t waste time entering the same information into Spectrum that the supplier has already entered into their software.
“In essence, we’ve turned our suppliers into part of our accounting system, where they’re actually doing the work for us,” Dave explained.
They have a strong partnership with their suppliers. “P.O. Link really creates much more of a partnership between us and the supplier,” Rob explained. “With P.O. Link, we can electronically link our purchasing system with our supplier’s order-entry system. We communicate an order to the supplier via phone or fax, and then they key in the order, including the quantity and part number, into their system. The supplier electronically transfers that information to Spectrum via P.O. Link. That creates the P.O. essentially automatically.
“With the combination of P.O. Link and Power Order Confirmation, everything that we order from our suppliers gets priced and sent back to us electronically,” Rob explained. “Then the P.O. is created in Spectrum without re-entering any data. Because costs are updated daily, we can then produce our Time & Material invoices without delay, helping to speed our cash collections.”
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“All we have to do is review prices and assign a job number and a phase code,” Rob continued. “That’s a very short process, compared to creating a purchase order from scratch and typing in quantities and looking up and typing in parts descriptions and prices.”
Thoma suppliers like the P.O. Link system better, too. “There are fewer issues that come up down the road, like double invoicing,” Dave said. “In the past, we’d occasionally say to a supplier, ‘We’ve already paid for this order on another invoice.’ And then we and the supplier would have to go through our records to verify that. Another benefit is that, since the P.O. and the invoice are both generated by the supplier, items are exactly in the same order instead of being ‘chopped up.’ That helps us in receiving and accounting.”
Customer invoicing is enhanced. Thoma no longer experiences this situation: an invoice from a supply house arrives after Thoma has sent its final invoice for a completed job. Because Thoma has accurate information about open purchase orders and committed costs, the company knows which expenses are still outstanding.
“With the combination of P.O. Link and Power Order Confirmation, everything that we order from our suppliers gets priced and sent back to us electronically,” Rob explained. “Then the P.O. is created in Spectrum without re-entering any data. Because costs are updated daily, we can then produce our Time & Material invoices without delay, helping to speed our cash collections.”
Thinking Ahead
Because P.O. Link saves time, that enables foremen and company management to think beyond their day-to-day activities. A foreman on a large job, for example, can ensure that he’s procured enough material in advance for that job. When an item is back-ordered, the company can respond to be certain that the foreman has the items he needs in time. “This saves us a lot of down time on jobs,” said Dave.
Likewise, P.O. Link has allowed managers like Rob and Dave to devote time to more productive pursuits than “baby-sitting” purchased materials. Dave can now spend time working more closely with Thoma estimators. Also, Rob and Dave can now monitor jobs more efficiently to ensure that they stay within budget.
As Rob explained, “P.O. Link has enabled us to stop putting out fires and instead sit down and spend time on more important tasks, like long-range planning or managing expenses to keep jobs under budget. That helps increase our company’s profitability.”
Corbins Electric
Since fall 2007, Corbins Electric has used P.O. Link in partnership with a key electrical supplier, Border States Electric, for consignment orders at trailers at six customer job sites (five in the Phoenix area, and one in New 
Mexico). Corbins’ 300-plus employees perform commercial and industrial electrical contracting services in Arizona and New Mexico.
In essence, Border States operates the trailers as stocking warehouses, where Border States—rather than Corbins—owns the items until Corbins orders them for immediate use at the site. Border States issues one P.O. per trailer every two weeks; each P.O. has anywhere from 20 to 500 line items, encompassing everything from 2-cent washers to $300,000 gear packages.
As Corbins orders an item from a trailer, a Border States employee uses bar codes to scan the phase code, quantity and pricing into their system. P.O. numbers are attached to materials for the specific billing period for each Border States trailer. Twice a month—on the 10th and 25th—Border States sends their invoices to an FTP site, where Corbins retrieves the information and imports it with Spectrum P.O. Link.
“Border States essentially does all the work,” explains Heather Wilson, Corbins Electric purchasing administrator. “Their system includes everything that we use in Spectrum that would be allocated to a P.O. It puts in the quantity and uses our item code. It puts in the price, our job number and our phase code—it’s all there. All we have to do is receive the information, which is simple, and then pay the Border States invoice.”
Corbins Electric doesn’t waste time entering the same info into Spectrum that Border States has already entered into its system.
Prior to the Border States/consignment trailer/P.O. Link combination, Heather estimates that entering P.O. information for those six locations required more than 12 hours per month. “I was doing all the entry, and it took a lot of time because we were issuing so many P.O.’s,” Heather said. “It wasn’t like we entered a single P.O. and then entered the balance. Every time I entered a P.O. I had to enter the vendor and all the other basic info and scan all that information. It was very time-consuming.”
Now the P.O. process for those six locations takes only 20 minutes monthly—10 minutes each when Corbins imports Border States P.O.’s from the FTP site on the 10th and 25th of each month.
Practical Reason
Corbins Electric had a practical reason for implementing P.O. Link. “Before installing P.O. Link, we had inventory at the job site that we owned,” Heather explained. “We’d purchase materials on a P.O. and Border States would stock them at the job site for us, but we owned all that inventory. We had to keep track of the materials that we’d used, and the items that needed to be re-ordered.
“Now that’s all changed,” Heather continued. “Border States tracks the materials that we’re using; they check it, stock it and scan it for us, too. Because Border States owns the inventory, that saves us a lot of money.
“I no longer have a Corbins Electric employee in the field writing up orders, which saves time. And I don’t have to call that employee because I can’t read his writing or I want to quantify what he’s asking for. Instead, all the information is downloaded, and it’s done by item code so there aren’t errors or phone calls to double-check what he’s really ordering or asking for.”
She adds that, because billing backlogs are eliminated, Corbins customers are always invoiced for materials in a timely fashion.
Like Thoma Electric, P.O. Link has helped Corbins Electric solidify its relationship with its supplier. “Border States has been very willing to work with us on the P.O. Link system,” Heather explained. “It helps them serve our account, which benefits both parties.”
Corbins Electric has now installed Power Order Confirmation, where it works in concert with Spectrum P.O. Link on P.O.’s from the Border States trailers and from other electrical suppliers including WESCO International and Independent Electric Supply (IES).
About Thoma Electric: Thoma Electric was founded in 1962 by Clarence W. Thoma. Originally a contracting business, Thoma Electric formed its engineering division in 1982 after recognizing the distinct advantages that both divisions could offer one another. Our engineering division has enjoyed dramatic growth over the past two decades, and currently designs projects -- from building renovations to entirely new facilities such as; retail outlets, offices, new schools, fire stations, and many other types of institutions -- throughout the state of California.
www.thomaelectric.com
About Corbins Service Electric: Corbins Service Electric was established in 1975 by Mr. William T. Corbin. Corbin's founding principles of integrity, quality and service, coupled with an overriding commitment to the customer, has earned Corbins Electric a reputation for consistently exceeding customer expectations. Over the following 25 years, Corbins Service Electric progressed into a full-service commercial electrical contracting company, working throughout Arizona, as well as the Albuquerque, New Mexico area.
www.corbinselectric.com
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