Why – because material costs won’t stay still, and you do not want to be locked into a quote, where materials have belted through the roof, and you are left subsidising your client’s job by paying out more materials – a lot more for materials than you quoted.

1. A few months ago, a client told me that a $30,000.00 order for crushed rock on a project in South Australia doubled overnight. The demand for material because of infrastructure spending has meant that Quarries can ask almost anything for rock. In reading reports on the Construction Materials Processors Association (CMPA – they represent quarry owners in Victoria), there is a massive shortfall for materials as few permits have been given for new quarries.
2. Nick, a friend and client of ours who manufactures and serves the caravan industry, has been telling us that he is shopping for raw materials every day. Prices have sometimes doubled and trying to work out where to get the subsequent delivery is an ongoing problem. Suppliers are hardly giving credit.
3. All our plumber clients are telling us materials have been rising, and it’s hard to get a handle on the right price, even for PVC piping. While there is an ability to shop around and cut prices, that option is disappearing.
4. Big Jim, who runs a workshop – said prices have eased off, but he put himself in a position to get better discounts, but that comes with seven days or fewer accounts.

Considering most “stuff” we use is imported, transport costs are going through the roof, and you can assume that your suppliers will be paying not only more for goods bought into Australia, but higher transport costs that will add to the charges.

The same goes for exporting; below is an extract from an article on ABC online today.

Farmers and exporters struggle to sell their products overseas as freight costs soar and shipping containers end up “in places they shouldn’t”.

The National Farmers’ Federation (NFF) claims average freight costs for Australian exporters have jumped six times over the past 18 months.

NFF trade manager Ash Salardini said the costs could make Australian farmers less competitive.

“That’s the equivalent of a Big Mac going from $6 or $7 to about $35,” he said

Be aware, be very aware of what materials may cost you, no matter what industry. Adjust the way you quote so that you can vary your price with wild and even small price rises and place a time on your quote.

In the construction industry, where quotes may hand around for six months, the variation in the process may then mean that your quote is well below cost.

Also, find a link to a Q and A about this with the MBA; I appreciate the situation is changing all the time.

Do you want to have a chat about this, how to approach this? Call your client coordinator, and we will make a time to have a conference call with the client coordinator and a member of YBA management. We can help with tactics to get through the difficulties of dealing with price variations, especially in the building industry.

Please don’t get caught out; let us help.

Supply Shortages: Supplier Q & A

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