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If you have never been on both sides of the procurement table, I don't think you can appreciate the art of procurement. I have been fortunate enough to spend time on both sides. Today, I want to talk about being on the buying side. If you have been reading my writings for a long time, there may be some repetition here.
In the early 1980s, I was involved in rebuilding a fine paper machine. It was a good time to be doing this, as the markets had been flat for several years due to high interest rates of more than 20%. The supplier's shops were empty, so we had suppliers coming out of the woodwork.
My role was that of assistant project manager and I was sitting at the knee of the best negotiator I ever met in my now nearly 50 years in the business.
His secret? He had a poker face like no other when we got around to discussing pricing with our suppliers. That was not his most important skill, however. He made everyone, and I mean everyone, work their prices up from zero. He had no embarrassment with the idea of opening talks with the question, "Why don't you just give us your offering for free?"
Except that he did not use this question. He was far more skillful and far more subtle than this. Sometimes, if there was a room full of people for a major equipment presentation, he would go at it this way. It helped that they had been presenting all day, starting about 9 a.m., with only a break for lunch. Now it is about 6 p.m., and we would finally get to pricing and terms and conditions.
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Perhaps he would start with a statement like this, as they started talking about pricing. "Now let me stop you right there. I am trying to understand how you build up your pricing."
Long, pregnant pause, when the other side would be forced to ask what he meant.
He was more than happy to tell them after they asked. "Well, for instance today. You have seven people here and they all flew in from your supplier company headquarters. Did they all fly coach?" Wait for answer. Since they are all there, no one on their side dare lie. My boss was just hoping they would admit that their top people flew first class.
"Wow! We aren't allowed to fly first class." Or, if they did not: "Glad to see you being frugal."
"So, tell me, how do you cover your costs for a day like this? Will they be built into our price if we buy from you? Yes, I see. So, if we don't buy from you, are you going to charge us for today? No? Of course not. Let me understand this, we get penalized with your sales costs if we buy from you and we don't if we buy from your competitor?"
You see how this is going. By now it is 6:30 pm and all we have discussed is their overhead for coming to see us in the boondocks. This goes on for hours. The pace never quickens, and my boss is always very polite.
You can see why after a while, they just wanted to give us their stuff to stop the agony.
There is a downside to negotiating this way. We'll talk about it next week.
By the way, once I used this technique to buy a vehicle. I set aside an entire day, told myself I didn't need to buy a vehicle (several times). In the course of the day, I got as far as the doors to leave three times and they kept calling me back in with a better deal. When it was all over, they told me I had gotten the best deal they had done on that vehicle.
In negotiations, the party who is not in a hurry, wins. I am sorry to say, I am not the person who originally said that.
For safety this week, a cost savings can be had by negotiating all the safety purchases you can visualize well in advance and then acting on them well in advance.
Be safe and we will talk next week.
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EMPLOYMENT OPPORTUNITIES:
* We are looking for a Production Shift Team Leader to maintain high standards, plus ensure safety policies and regulations for a company located close to Chicago's Midway Airport. If you are experienced team leader who has a four-year degree in an engineering/technical field (paper science degree preferred, and experience in recycled linerboard or corrugating medium paper mills is a plus), we are looking for someone like you! If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.
* A family owned and operated corrugated packaging solutions company in Illinois is looking for an experienced Maintenance Technician to maintain production and quality by ensuring operation of machinery and mechanical equipment. Relocation and other perks are available to the right candidate who is committed to working third shift. If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.
* Are you an experienced Maintenance Mechanic and would like to work for a family owned and operated corrugated packaging solutions company that invests in the best equipment and technology? If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.
* A leading company in the corrugated solutions packaging business is looking for a experienced Electrician. The right candidate will possess the following skills: electrical; hydraulic; automatic drives (basic component machines 122 to 440 volts). If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.
* An expanding company is looking for a Corporate Industrial Electro-Mechanical Engineer near Allentown, PA. Relocation is available. Do you have a storied list of unique electrical and mechanical engineering skills you're ready to take to the next level? Do you envision yourself in a corporate-level leadership role that your experience finally merits? And do you relish any opportunity to troubleshoot and solve real-time problems, all while designing and installing new services and systems that will not only ensure safety, but also turn a potentially hazardous work environment into a continuously thriving one? If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.
* An expanding company is looking for hands-on Electro Mechanical Maintenance Techs in Conyers, Georgia. Preference will be given to candidates with higher education and additional certificates or training. You must be able to work any shift. Pay is negotiable with excellent perks and benefits. Relocation assistance is available to the right candidate. If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.
* We are a large automation company that has a line of consistency transmitters, sample valves and sheet break detectors that are marketed through a rep. network. We are seeking someone with a strong background in consistency control to facilitate start-ups, provide troubleshooting and technical advice. The individual should have experience in all major types of consistency measurement technologies (blade, rotary, microwave and optical). Knowledge of sheet break detection technology is desirable as well. Willingness to travel to paper production facilities across the US is a must. Travel & Living Expenses to be reimbursed along with an agreed upon daily per diem rate. For more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.
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