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Friday, October 28, 2022

The Successful buyers guide

We live in a period of history when large corporations are more powerful than nations and governments. The United States of Wal-Mart hires 50 times more than the average Fortune 500 company, and adds up to more than the US army.

Why do I mention Wal-Mart? Because it is gigantic, and holds the #1 position In Fortune’s list of largest companies. It was sued some 6,000 times in 2002. That worked out to one case for every 233 employees, on numbers for that year. Its annual revenues in 2002 were US$245 billion, and losses due to theft amounted to $2 billion, which matched the revenues of corporation #669 on the Fortune 500 list - Plano, Texas, based Rent-A-Center, which employed 14,300 people! The revelation made me gasp!!

So, size does matter. Accept it - Big is Beautiful. Just as Wal-Mart is the biggest corporation in the USA [and the world] according to Fortune, Tesco is the most admired in UK, Carrefour in France, BMW in Germany, and so on.

Well, the practices of most admired companies must be worth emulating, I thought and decided to do some research. This led me to some very interesting facts. One of them is to do with how some of these great companies do their buying. I stumbled into the buyer’s guide of one of the above named companies. This is the document they give their buyers. It describes in point form what buyers should and should not do. Without further ado, let me share these guidelines here:

  1. Never show sympathy to a supplier, but tell him he is a partner.
  2. Consider the vendor an “Enemy”.
  3. Ask Ask Ask until they give in.
  4. Never ever accept the first offer, wait until the vendor begs: this gives us the best margin and bargains.
  5. Always say, “You can do better than that”.
  6. Always type in to the computer the lowest possible prices you can think of, and keep asking for more until the vendor stops giving.
  7. Always be subordinate to someone else [who makes the decision] and consider that the salesman always has a boss who can give a greater discount.
  8. When a vendor gives in easily, ask to “go to the bathroom” or make a phone call. Consider that he has already given in, and that he can give even more.
  9. Be intelligent, but act dumb. Ask a lot of questions to which you already know the answers.
  10. Never ever make a unilateral concession. Always ask for something in return.
  11. When a vendor arrives asking, know that he has something to give.
  12. Remember that when a supplier does not offer, he is waiting, hoping you do not ask something in return.
  13. Remember, a salesman who makes a proposal is generally more organized and experienced than the offer of disorganized suppliers, those who want to enter, or those who are afraid of losing the business.
  14. Don’t ever lose a single supplier, always play one against the other.
  15. Never hesitate to use the arguments, even if they are absurd, and repeat them until the supplier agrees.
  16. Never forget that 80% of the conditions and concessions are obtained in the final stages of negotiations, because, at the end, the vendor is afraid to lose the order.
  17. Remember that we need to obtain the maximum information about the personalities and the habits of vendors who visit us daily, discover their weaknesses and use them.
  18. Always convince a vendor to participate in the promotions. Promise high volume, get the maximum discount you can, get fast and immediate commitment.
  19. Destabilize the supplier, requesting impossible things, threaten to break off negotiations at any moment. Let them wait. Make an appointment and don’t show up. Have another competitor’s vendor pass in front of them. Threaten to remove his products from our line. Threaten to reduce shelf space of his products. Throw their promotional items away from the stores. Give them little time to decide. Make calculations, even false ones, until the vendor gives more.
  20. Remember that the word ‘discount’ has many names like ‘Bonus’, ‘Courtesy’, ‘Promotion’, ‘New Product Launch’, ‘Newspaper Inserts’, ‘Sales tax difference’, ‘Sales tax included’, ‘Anniversary sales’, ‘Re-launch’, etc.
  21. Never let an impasse in a negotiation drop. There is no worse thing for buyers.
  22. If a supplier delays to give an answer tell him that you have closed with a competitor, so he will give more concessions for another chance.
  23. Never allow a supplier to question any promotion you propose.
  24. Remember, whether you are buying or selling, only buy what is more important for us, only buy products that give us profitability, or products with high turnover and extended terms.
  25. Prevent the supplier from reading our information in our office; the more uninformed they are, the better for us.
  26. Never act impressed with a vendor’s new products. We never want to give the idea we are more prepared to negotiate.
  27. Whether a vendor is young or old, new or experienced, remember that the old and experienced think they know everything, and the young and new are inexperienced.
  28. If a vendor arrives with a superior, ask for more documents, more participation by promotions, threaten to throw them out; the boss will not want to lose the order or the customer in front of the salesman.
  29. Whenever another competing line is doing a promotion or has agreed to it, force the other suppliers to offer the same conditions.
  30. Finally, never forget the golden rules of a good buyer: ‘Don’t waste time with professional salespeople. Invest your time with the unprepared ones. Never be afraid of big name brands [behind a big name brand you may well find an unprepared salesman who only counts on his brand]. Invest your time with salesmen who never make calculations, who give in easily, who want to get in, or who are afraid to lose the business.”

I have maintained the original language as far as possible, unless the original language was too difficult to comprehend. These thirty commandments are straight out of the buyer’s guide. I have applied neither imagination nor interpretation. Barely four of these thirty have anything positive to offer.

Now imagine you, your spouse or a friend receiving this kind of guidance at work. What is the work environment likely to be in an organization that promotes such behavior? Does it resemble an inhuman money making monster or an organization? Hey, the very word organization originated from the word organism – which means ‘living individual consisting of a single cell or a group of interdependent parts sharing the life processes’, i.e. a living thing

Will people working in such environments lose their humanity after some time? You bet they will. Is this corporate responsibility? Even if such practices could lead to lower costs to consumers, what are the larger social costs of running businesses in this way? In my opinion, this is a buyer’s guide to hell. Remember the not so long ago case of a man who worked in a slaughter house for animals, and went berserk after a while because of the awful treatment meted out to the poor animals?

When such behavior leads to higher profits, the myopic world applauds these corporations and hands out trophies. Humanity needs to reassess the purpose of its existence. Yes, there may be money, but for heaven’s sake, where is the meaning

Written by Sam Swaminathan