From supply chain and buying habits to maintaining relationships and adding value, Light Link founder Jaspal Bal tackles three of the big questions facing lighting design and supply specialists in the current market.

Relationship or price? What will win moving forward?

With so much pressure on budgets, there is an expectation that offering the biggest discounts will win the contracts. However, several factors mean there is more to consider than just price. Even before the pandemic, pricing was a big issue, and some suppliers reduced their margins as low as possible to stave off the competition. That strategy is not sustainable anymore, and most won’t be able to survive with the approach long-term. Costs such as air freight and materials are increasing alongside supply chain challenges, and rates need to be maintained at a certain level to continue to operate.

Evaluating projects primarily on price has always been a risk, and contractors and PMs need stakeholders they can rely on to go the extra mile now more than ever. It’s about balancing short-term cost savings with the overall gains to be had from a successful project. As suppliers, we should look for ways to add value and ensure a smooth delivery in the current context, rather than slashing prices and reducing service. The strongest companies that have built trust over time will prevail, especially when they have demonstrated consistency and commitment during a crisis.

How will buying habits change?

It’s a difficult time for manufacturers dealing with the ongoing effects of production delays and raw material shortages. Manufacturers in Europe may turn to sourcing more components locally rather than from Asia, which will drive their prices up in the short-term, and premium lighting could become an unaffordable luxury for many. As a result, suppliers in the Middle East will be looking for more cost-effective options, such as sourcing solutions from Asia and Eastern Europe. We don’t expect to see as many exclusive distribution contracts and suppliers should take responsibility for buying smarter without compromising on quality.

The key takeaway from the current situation is the importance of visibility. If central European manufacturers are buying the majority of their components from elsewhere, this needs to be transparent so that we can anticipate delays and manage timelines. Providing this information upfront will allow suppliers to weigh up cost versus speed and find substitutes if necessary. At Light Link, we have a wide network of global supply chain partners and our priority is always to recommend the right product for the specific requirements. In recent months, we have also taken on a dedicated warehouse to streamline the logistics process for clients as much as possible.

Are suppliers going to work together to stop margin erosion?

Unfortunately, I think things are going to get more aggressive between competitors rather than less in the short-term. Everyone is evaluating pricing and winning more work is the ultimate aim, but maintaining a sense of integrity is crucial. Now is also a good time to focus on connections with manufacturers and suppliers in different fields who hold the same values as you. Knowledge-sharing and mutual respect are how we can emerge stronger as an industry on the whole.