Air Balancing Market Procurement Intelligence Report

The market for Operation of Industrial Facilities and its sub-segments such as Air Balancing are at an interesting intersection. With advancement in technology, service providers are employing diverse tools in their operations to identify opportunities for optimization and greater collaboration with the customers.

Suppliers have historically gained handsome margin-on-margin by sub-contracting a part of their work to another contractor. However, Buyers are now delving deep into the business models of suppliers and negotiating hard to avoid further sub-contracting. In cases where it is imperative to sub-contract, category managers are employing should-cost models to keep supplier margins on sub-contracting to the minimal.

Suppliers are shedding the category expert tag and moving up the value chain to offer an integrated approach to their services. With this new approach, suppliers can offer a wide portfolio of services and position themselves for large contracts that go beyond just Air Balancing.

Trends like these and many others discussed in this report are necessitating a relook at the way Air Balancing is procured and the procurement cost saving opportunities that exist.

The report discusses in detail the best practices that have served well the category managers responsible for Air Balancing procurement.

For example, Buyers should set a baseline against which the performance of suppliers can be benchmarked along with setting measurable/quantifiable KPIs. Defined KPIs provides suppliers with clarity on the scope. Besides setting standards for operations, pricing, and performance, KPIs must provide tangible goals in terms of the quality of solutions.

Buyers must ensure the participation and collaboration of all related cross-functional teams (procurement, electrical, engineering, and housekeeping) in category management and planning activities. This is crucial, as these teams will be the primary end-users of the services offered by suppliers, and this step will ensure consistency in services.

Buyers should evaluate the true costs of each product and service within the scope of work for supplier, and also understand the hidden costs associated. This can help them to set accurate targets for cost reduction for their suppliers, and effectively monitor and evaluate their performance against industry benchmarks.

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Air Balancing procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for Air Balancing procurement. Some examples include:

• Workers may have to handle hazardous substances/materials. Non-compliance to the safety standards and working without using the personal protective equipment can result in accidents and affect operations. Workers are also required to work at heights while carrying out cleaning activities. Non-adoption of precautionary measures by workers can lead to fatalities or severe injuries, thus negatively impacting the reputation of buyers
• Pricing terms in the contract could prove to be inadequate to safeguard the buyer from impact of a sudden increase in supplier's cost, often arising from a lack of clarity on scope of products or services to be delivered
• When requirements of the buyers are not absolutely clear or usage patterns are not stable or predictable, suppliers often build in \"cost buffers\" for unforeseen risks due to a lack of complete understanding on buyer's requirements. This increases the risk of overspending on Air Balancing

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