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Merchants slam OGC plan for online savings

Critics say Government 30 per cent cut target ignores need for established distribution networks

BUILDERS' merchants have hit out at plans by the Office of Government Commerce to make vast savings by buying materials direct from manufacturers using controversial e-auctions.

The OGC is looking to save up to 30 per cent on buying goods from manufacturers under a new £1 billion commodities framework deal.

But builders' merchants said the plans could founder without the backing of their established distribution networks.

Travis Perkins chief operating officer John Carter said: 'With pure commodities I could understand e-auctions, but if you want an end-to-end package with a just-in-time delivery service it is not just about a nickel and dime process.

'If manufacturers choose to go direct and cut us out then it puts us in a precarious position.'

He added: 'I believe the best system involves the manufacturer customer and distributor working together.

'Without the distribution network, manufacturers will struggle to get their goods to places like Inverness and Penzance.'

Wolseley business development director Matt Nichols said: 'There seems to be a conf lict here between the principle of lowest overall service cost and lowest price. The merchant can offer an existing infrastructure which provides a service. You need somebody between the manufacturer and contractor who can deal with bulk receipts.

'If housing associations start buying stocks where are they going to put it?

We have five 300,000 sq ft distribution centres within our network.'

Jewson sales director Tony Newman said: 'If you were dealing with a large greenfield site you might be able to deliver in bulk to it, but you couldn't do that with t ight brownf ield sites.'

Builders' merchants said the plans also risked alienating installers who make a profit on materials supply.

Mr Carter added: 'A number of plumbing and heating contractors I have spoken to about this say they will be looking to do their business elsewhere.'

Construction Products Association chief executive Michael Ankers said: 'This kind of procurement is completely at odds with the integrated approach we saw set out last week in the 2012 Construction Commitments document.'