Defective Merchandise

[Pennylady]

I am happy to report that my company just finished 2 of the biggest jobs we ever had. A $288,000.00 job and a $185,000.00 job. We are currently debriefing. We are celebrating some wins and grieving some losses. Also muddling through a "never to do again list" of mistakes we made along the way.

One of the sharp thorns on both of these jobs was dealing with a rash of Defective Merchandise from suppliers. Stuff that was junk right out of the box. I am not talking about one or two items, I am talking about dozens of items. Switches, fixtures, receptacles, ballasts, surge protectors, special order equipment etc. And it's all name brand high dollar stuff.

I have about 80 hours logged on the two jobs in troubleshooting (is it the switch, the fixture or both), uninstalling, reinstalling, returning the crap, etc. Further, when the supply house provides me with a replacement they charge me for it even though I have returned the defective junk to them. They are waiting for the manufacturer to credit them before they credit me. This credit process takes weeks to literally months.

How to you deal with the crew labor expense (several thousand $$), indirect costs (administrative) and being charged double for the merchandise till a credit finally comes through.

 

[satcom]

I am happy to report that my company just finished 2 of the biggest jobs we ever had. A $288,000.00 job and a $185,000.00 job. We are currently debriefing. We are celebrating some wins and grieving some losses. Also muddling through a "never to do again list" of mistakes we made along the way.

One of the sharp thorns on both of these jobs was dealing with a rash of Defective Merchandise from suppliers. Stuff that was junk right out of the box. I am not talking about one or two items, I am talking about dozens of items. Switches, fixtures, receptacles, ballasts, surge protectors, special order equipment etc. And it's all name brand high dollar stuff.

I have about 80 hours logged on the two jobs in troubleshooting (is it the switch, the fixture or both), uninstalling, reinstalling, returning the crap, etc. Further, when the supply house provides me with a replacement they charge me for it even though I have returned the defective junk to them. They are waiting for the manufacturer to credit them before they credit me. This credit process takes weeks to literally months.

How to you deal with the crew labor expense (several thousand $$), indirect costs (administrative) and being charged double for the merchandise till a credit finally comes through.

After over 3 generations of contracting, we know upfront, these problems are part of a project, and load these costs, in the estimate, to avoid any losses.

 

[cadpoint]

After over 3 generations of contracting, we know upfront, these problems are part of a project, and load these costs, in the estimate, to avoid any losses.

Care to share that percentage?

 

[macmikeman]

After over 3 generations of contracting, we know upfront, these problems are part of a project, and load these costs, in the estimate, to avoid any losses.

And after three generations, I bet you could tell us that these type of problems became decidedly more prevalent once the factories moved offshore.

 

[satcom]

And after three generations, I bet you could tell us that these type of problems became decidedly more prevalent once the factories moved offshore.

Yes, the general quality in many product is down, loading an estimate to allow for defective material, increases everyones cost, and as the OP noted, the supplier waits for the manufactures to make the adjustment or refund, years back, the supply house, replace material or refunded on the spot,

 

[rodneee]

you are my hero....you do not realize how good you have it....you did gross sales of $288,000 and $185,000 for $473,000 total AND ONLY HAD 80 HOURS OF TROUBLESHOOTING HEADACHES...we have well over 10,000 hours wasted each year and just accept it as a cost of doing business...

 

[satcom]

Care to share that percentage?

We do not use a set percent figure, all out estimates are assembled using actuals data recorded over years of job tracking, so we have a good snap shot of project costs.
I was just looking at, some time and motion records, from an industrial project done in the late 30's

 

[petersonra]

I think it is important to track this kind of stuff so that you have some basis for figuring your costs in the future.

I have not noticed an uptick in defective merchandise.

I would point out that unless you agree to it, that it is not your responsibility to pay for defective merchandize.

The UCC general covers this kind of thing in virtually all states. You might want to ask your lawyer about it if it really bugs you.

Most times all we have to do to cover defective merchandize is issue a P.O. for the replacement that gets canceled when the defective part is returned. All of our suppliers operate that way AFAIK.

 

[satcom]

I think it is important to track this kind of stuff so that you have some basis for figuring your costs in the future.

I have not noticed an uptick in defective merchandise.

I would point out that unless you agree to it, that it is not your responsibility to pay for defective merchandize.

The UCC general covers this kind of thing in virtually all states. You might want to ask your lawyer about it if it really bugs you.

Most times all we have to do to cover defective merchandize is issue a P.O. for the replacement that gets canceled when the defective part is returned. All of our suppliers operate that way AFAIK.

Right, they should not have to pay for the defective material. and the loss of time, does need to be tracked

 

[macmikeman]

My supplier refused returns on defective combination arc fault circuit breakers. Their supplier refused returns on defective combination arc fault circuit breakers. I switched brands and suppliers.

 

[Cavie]

I have about 80 hours logged on the two jobs in troubleshooting (is it the switch, the fixture or both), uninstalling, reinstalling, returning the crap, etc. Further, when the supply house provides me with a replacement they charge me for it even though I have returned the defective junk to them. They are waiting for the manufacturer to credit them before they credit me. This credit process takes weeks to literally months.
.

Time for you to get a new supplier. Mine works on 100% commission. He works for me. He keeps me happy or I go someplace else. My credits come imeadeatly. His company takes the hit. Then again I do over $1million a year with him. Fine a salesman that works on 100% commission and you'll be happy camper.

 

[mxslick]

I have had some issues with projection equipment, but I have good rapport with my supplier so returns and exchanges are never a problem. My local electrical wholesale house is also good about returns and exchanges...so far.

But on the other hand, I went to a local "Blue Tag" electronic store to purchase a Denon AV Receiver for my video installs. I ordered it online, to be picked up at my local store. It was called in as ready for pickup. I got to the store and it wasn't. Over an hour later they found it and brought it out to me. Took it to the jobsite and it wasn't working..no audio or video outputs at all.

Went to exchange it, store initially refused to do so. I had to BUY another one and get credited back for the defective one..(and ONLY because it was bought online) or so they thought. I raised "heck" very loudly and firmly and they exchanged it finally after over an hour of arguing. Needless to say I won't be buying anything from that chain ever again.

I probably won't be buying anything Denon again either..they used to be made in Japan and very high quality, guess where they are made now? :roll:

 

[brian john]

Not sure what type of job you are doing but we just finished 500,000.00 job 0 defects, no call backs, no trouble shooting.

 

[haskindm]

I hope the gentleman that has been asked to work for labor only with the GC supplying the material reads these posts. This is the reason that you must supply your own material AND make a decent profit on the material. If you had this much problem with material that you supplied, can you imagine what it would be if someone else supplied the material that was only interested in getting the cheapest price? The profit on your material needs to be high enough to pay for these expenses. You also need to learn what material and suppliers should be avoided and which ones provide superior products and service. Rarely is the lowest price the cheapest price in the long run....

 

[petersonra]

My supplier refused returns on defective combination arc fault circuit breakers. Their supplier refused returns on defective combination arc fault circuit breakers. I switched brands and suppliers.

On what basis can they do this? There is contract law in every state about this kind of situation.

They can generally elect to replace defective equipment, rather than return and refund.

 

[ceb58]

I hope the gentleman that has been asked to work for labor only with the GC supplying the material reads these posts. This is the reason that you must supply your own material AND make a decent profit on the material. If you had this much problem with material that you supplied, can you imagine what it would be if someone else supplied the material that was only interested in getting the cheapest price? The profit on your material needs to be high enough to pay for these expenses. You also need to learn what material and suppliers should be avoided and which ones provide superior products and service. Rarely is the lowest price the cheapest price in the long run....

First I do not agree with customer supplying all the material but.... if some one dose agree to those terms then that is when language is put into the contract that you are not responsible for defective material, the clock will still be running for trouble shooting, removal and reinstallation. The clock will still run if not supplied with the correct material or amount specified.