Whenever a market booms for industrial products the risks of investment disappointment tend to rise as more and more suppliers enter the market, some from overseas, and so quality and warranty issues should concentrate minds more. A good example of this is LED lighting, which now accounts for most of the new lighting in warehouses owing to the cogent business case that usually sees a return on investment in under two years.

Given the much higher investment costs of LEDs compared with other lighting forms like TL5s, cost issues exercise minds of potential buyers most, followed by reliability concerns. But it is important when comparing supplier quotes to beware of red flag signs of big promise warranties. It is often the case that where quote prices are closely similar it is the warranty claims that decide who wins the contracts. Equally so, the financial stability of the supplier needs careful attention.

LED quality varies widely as do warranty conditions. This is in part due to the boom in LED production, leading to substandard quality of components, poor quality control and therefore much higher failure rates than should be expected. An added cause of concern is that many cheap, untested LED luminaires from the Far Eastern countries, in particular, can be expected to fail EU standards.

If buyers feel that the quote prices are not too low then what should be looked for in the warranty where variations could raise the cost of ownership? Find out who pays for shipping costs to and from a site. Do suppliers offer any compensation towards the cost of the exchange? What restrictions and caveats could invalidate the warranty? If one warranty contains a 20-year guarantee it could be a sign of desperation to win the quote. If the warranty has reams of terms it might be better to steer clear.

All warranties, of course, are only as good as the company behind them and given so much competition in this booming market it is hardly surprising to see that LED lighting now has the highest rates of business failure of any technology market sector. Sound investigation into a supplier’s pedigree, therefore, should give buyers peace of mind. A good start could be to access the Carbon Trust’s ‘green’ business directory that features LED suppliers who have been independently assessed and accredited via the Carbon Trust accredited supplier scheme.

Suppliers’ financial stability and their ages can be checked through online services who take information from Companies House to create a credit score. Apart from the financials, check the directors’ historical data, where any of their past business failures will be highlighted.

Other due diligence of a potential supplier could include getting a list of clients from your supplier so that you could arrange a site visit to discuss how pleased or displeased they are with the installation. A good supplier will also propose a full business case, setting out the full, true ROI which is complicated by the fact that every building is individual.