AVVC Market Procurement Intelligence Report

Office Furniture, Fixtures and Fittings market around the world is undergoing rapid transitions that have a massive potential to influence the way companies strategize for AVVC procurement and the cost they have to incur. 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 AVVC.

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.

Buyers of AVVC are insisting on hard evidence to support cost reduction. Suppliers are responding with elaborate matrix of KPIs that provide managers actionable data on supplier performance and cost savings achieved.

AVVC procurement best practices are moving towards a level of sophistication which is typically seen in traditional procurement categories. Category managers now have an attractive opportunity to adapt the best practices seen within this category as well as those being leveraged in other non-related categories. This report summarizes the best practices picked from across multiple categories that could work well for category managers involved with AVVC procurement strategy.

For example, Investing in benchmarking studies that help category managers enhance their knowledge on pricing or billing rates of suppliers allows them to not only save costs, but also negotiate better with suppliers. For example, while negotiating for bundled services, they can save significantly on a single service by cross-verifying rates quoted by suppliers against industry benchmarks.

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.

Benefits of an integrated program are more apparent over a period of 5-7 years, and the goal in such relationships is to achieve cost savings and improve performance in the long run. Buyers should opt for suppliers that have a track record of long-term engagements as this will increase the probability of these suppliers sustaining in a mutually beneficial relationship for a longer duration.

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