The AOP Buyer Power Score is a new content offering created in partnership with ProcurementIQ that rates the balance of power between buyers and sellers for a particular spend category.
Today we are reviewing elevator and escalator maintenance services.
The Numbers
The Buyer Power Score for elevator and escalator maintenance services is -0.9 on a scale of -5 to 5, with -5 signifying low buyer power and 5 meaning high buyer power. The more power a buyer has the greater leverage they have to get lower prices and better contract terms.
This Buyer Power Score comes with a ‘Buy Later’ recommendation. Since the cost drivers for this service category are relatively evenly distributed between labor, overhead, and components/materials, it is not just the labor market influencing this recommendation. That said, buyer leverage is expected to increase in the next year.
How to Use this Information
The market for elevator and escalator maintenance services is not concentrated, so companies that have not bid this category out may times or who do not have highly unique specifications may be able to create competition between providers to keep costs down. There are also moderate profit margin, creating another opportunity for procurement to negotiate with suppliers. In addition, these service providers offer an opportunity to work with women, veteran, and minority owned suppliers that is larger than the maintenance sector overall. If savings can’t be negotiated, procurement may be able to contribute to supplier diversity spend and contract targets.
Dig Deeper
We have partnered with ProcurementIQ to dig into their treasure trove of over 1,000 indirect category intelligence reports, with new insights every Friday. To dig deeper into the retail store fixtures category, click here.
