Short daily negotiation skills’ refreshers

My son: Mom, let’s talk about hair.

Me: I am listening…

My son: It is too long! Look!

Me: We discussed this yesterday. And the day before that. And the day before that. 

My son: Yes. But that was yesterday. Then the hair was shorter! 

Me: One day is not enough to reach the required lenght for cutting.

My son: But it is enough for you to change your mind! Can we cut it? Please?

Five minutes every day CAN make you better. Better negotiator, better professional, better mom (or dad). This one is for our best teachers – our kids!

Short daily negotiation skills’ refreshers

Tips for ladies: how to use procurement techniques with beauticians

beauty

This one goes out to all the ladies. I know, I know – we are all beautiful naturally. And (almost) never need any beauty supplies or treatments. But if you accidentally (!!!) find yourself in one of such places – here is what I learned recently.

First and most important – they are all businesses. Smaller or bigger – everyone is in business for business. Therefore, the goals, that they have; problems, that they face and methods, that they use in every day work are the same as you have at work.

New customer attraction

Go there only if you really need or want a specific procedure. Beauty shops, which have more ambitious growth targets, will be more aggressive to get new customers. They will be more flexible with pricing of the first procedure – or even offer it for free. It is good if you, as a service buyer, already have a firm opinion if you need the procedure. Also, if this is a series of procedures – if you are going to use all of them. Then getting one of them free of charge, negotiating prices of the other ones – everything will be beneficial for you.

If you are only curious to try, you might find yourself in a trap, spending money when you had no intention in doing so.

There are some beauty specialists, who do not need any new clients. Or, to be more precise, do not need them at a specific moment in time. Everything changes. If you really want to get there – be persistent and / or patient.

Building dependency

Just like in “normal office business”, service providers like to create dependency. The same rule applies with beauty stores and services. You might be sold:

  • Very exceptional service (“only available in this shop in this country”);
  • Completely innovative product (and there are oceans of those – every store will have at least few of them. The “newer”, the better).
  • Follow up procedures: once you to have the procedure you came for done, you are told, that “follow up refreshers” are needed. Otherwise, “it won’t work”.

A quote from one beautician I know: “they have to need us. They cannot just stop coming”.

Cost and pricing strategies

Oh, yes, they are flexible! A lot. And these are the things you should know to be ready for the price conversation:

  • Rent of premises. Services in London will be more expensive than in Grimsby – sounds logic, right?
  • Investments into equipment. Service providers, working with old or no equipment at all, will have lower prices.
  • Investments into trainings. Self-educated “YouTube specialists” will have different pricing structure. I am not saying the latter is bad – on the contrary: I know some specialists, who are amazing at what they do without any fancy certificates. Instead – they have passion for what they do.
  • Ingredients, technology and materials used. The same beautician told me a story of a hardcore negotiating customer of hers: the customer convinced her not to use the local anaesthetic cream (because “she is very brave”) and reduce the price of the service…
  • Efficient time usage, bundling. Recipe changeovers for production lines are expensive due to cleaning, downtime. The same here: setting up for a new customer, cleaning up after – it is not efficient time usage, nobody pays for it. I mean – it is not a separate line on the bill. But someone must pay for it. If you can – consider doing several procedures in one go and do not forget to ask for price improvements. If you came to a tanning shop to buy your monthly pass – ask, if they are planning any promotions. Buy when the promotion is on (some places will apply it immediately for you not to run away with your wallet).
  • Perception. That works for both sides. Marketing is a very strong tool here. You might be ready to pay higher price because of references or the image that the beauty shop has. On the other side – beauticians are good sellers, too. They will evaluate how you look and will set the pricing based on that (do not overdress the first time you go there). They will observe your body language: if you show signs, that the full set of several procedures is too much for your budget – they will react and adjust to your budget. If you manage to sell the perception of bigger future business (“after this, I will want to do this and the other and then a little bit more”), they will adjust prices.

Easy for me to say. I learned all this already being on the procedure chair. Knowing things is not the same as being able to apply and applying them in real life situations. Care to try the tips next time you are in the beauty shop? Please share experiences!

Tips for ladies: how to use procurement techniques with beauticians

OH-SH1T-NUMBER. Making humour work at work

oshitnumber

Ha-ha! Very funny! I bet everyone else (not procurement, of course) thinks, that procurement is all about numbers, cost and budget reductions, limitations, taking away fun and bullying suppliers. Surprise! It is not only that! First of all – its people who work as buyers of all sorts. And most of them do have sense of humour which helps at work a lot.

So how does it work and why should you smile and laugh more at work?

Humour has a lot of benefits:

  • Is joyful to yourself and others.
  • Keeps things light and breezy.
  • Increases employees’ morale and motivation, atmosphere at work.
  • Makes embarrassing moments funny (like this one here – when I completely messed when Portuguese won European football championship).
  • Helps with sales: builds relationships and keeps things in perspective.
  • Blocks stress: increases endorphin and blood flow in general, relieves tension.
  • Helps bonding – interpersonal, among team members. Sharing life stories, experiences which were funny, letting others learn from your misunderstandings – all of this brings people closer together.

There can be a lot of different types and forms of humour: verbal humour, physical humour, comedy in print. It is always important to choose best way to express yourself: as in any communication, there are some rules around it.

Do’s:

  •  Observe colleagues expressions and reactions – the joke in your head sounds funny, but people are different.
  • Keep it clean, short, subtle – jokes are different, people are different. So unless you know the people you are talking to very well – better safe than sorry.
  • Respect customers, employer, co-workers. Not much to comment – there is a place and time for everything. We come to work firstly to work.Customers, employers are people paying your salary. And unless you are a professional comedian – you are not being paid for joking all day.
  • Count to 10 and participate in moderation. Especially on the moments when you feel like “biting” someone with sarcastic joke – stop and think. And count to 10, if needed, until the urge passes.
  • Choose your wording, timing, audience carefully.
  • Practice.
  • Make mental notes. Just like I did during a meeting with engineers. We were discussing some spare parts suppliers’ changeover and they were concerned about their response timing possibilities. One of the business requirements was that the new supplier has a “hotline”. Only the engineers used different name. They said “o-sh*t-line” (fine, fine – I did not invent this word). There and then, it was an amazing moment of laughter and a silence breaker, which helped people to express their main concern aloud.
  • Select practical jokes VERY carefully. From being improper and distracting they can lead to health and safety disasters – and nobody is going to think it is funny.

And another part – don’t’s:

  • Sarcasm. No excuse for abuse.
  • Put up with insults.
  • Don’t be the only one laughing. Or – the only one not laughing.

Another powerful tool is a smile. Smile to people and they will smile back. I practice this a lot. During negotiations, simply in office or on the tube. During negotiations I can ask most serious questions. A question like “so can you tell me then where does your company earn profit, if you claim that your margin almost does not exist?” from a grumpy buyer could be perceived as a form of aggression. While if you do it with a smile – it will be a game of words, not an expression of aggression, but the question will still be there.

Sometimes people get confused – they are no longer used to people smiling at them for no reason. Try this exercise: during your morning commute (especially in crowded places), instead of trying to drill a hole in your phone with your eyes, lift them up, make an eye contact with a stranger and smile. I do that. Yes, i get different reactions. However, most of them smile back.

Most daring experiment that me and my team did with humour was presenting a very serious subject on a quarterly assembly of all centres of excellence. Imagine a hundred people sitting in the auditorium and waiting for a subject “Resisting supplier price increases” to be presented. And what do they get? Check this out…

price-increase-1

price-increase-2

The message was delivered very successfully. The feedback about that subject was best ever. The content was still serious and good. But at the same time it was not just an ordinary boring presentation:

  • our team had the best time ever while preparing the subject.
  • people in the audience related to the subject very well.
  • it was energizing, different, memorable – successful communication.

Procurement can be and is fun! Happy Friday everyone! Keep on smiling!

OH-SH1T-NUMBER. Making humour work at work

Single source and sole source suppliers. Is there really nothing to be done?

I am jealous to those who never had to deal with true sole suppliers. I think IT buyers will understand me best. It is just not that much fun.

The difference:

  • if you could be buying from quite a few suppliers on the market, but choose to stick with one supplier (leaner supply chain, eliminated duplicating logistics and management, administration costs) – you have a single source situation.
  • If you cannot buy from any other supplier – you have a sole supplier situation.

What are the real-life examples?

There are many office cleaning services providers out there in the market. However, for a list of very good reasons, you choose to outsource it to one service provider. That would be single sourcing. Now… imagine five different suppliers working on your ERP system creation and implementation at the same time, doing the same job for the same part of scope. Not fun. Or imagine that your supplier came up with exactly the product you need for your manufacturing process and… patented it… and keeps on asking price increases on every logical and illogical opportunity. Even less fun.

How does it happen? 

For single sourcing the option is deliberate choice. There are many advantages to it:

  • You keep the competition, because the supplier can be easily replaced. Negotiation leverage is at its maximum level like this.
  • At the same time, you spend less time for supplier management and supply chain administration.
  • You have consistent quality of items or services delivered. Or, if not, deal with it in one go.
  • You eliminate all non value adding activities (short example mentioned here).
  • The supplier will be more willing to work with you on various cost reduction/ services improvement initiatives.
  • The threat of losing business in the future will be a big motivator to not overcharge you.

For a sole supplier situation to form, there can be various reasons. Some of them are more to do with perception and resistance to change while others are truly sole supplier situations. I separate them into three categories. Please see explanations and lists below.

    1. Category I: true sole sourcing situations, where the company might be depending on one supplier without any escape routes.
      • Market monopoly (central heating in some locations, governmental services and similar).
      • Various patents: design, chemical formulae.
      • Lack of supply.
    2. Category II: high exit barrier single source situations – there are situations when due to various barriers (most often – financial: costs of switch) competitive situations turn into sole supply situations.
      • Equipment investment (when supplier provides plastic granules storage and supply systems; cleaning chemicals’ supplier provides funds for equipment).
      • Digital solutions – and the switching costs, related to them. Similar with the above. You might have had big negotiation leverage during initial buying process, but once initial contract period is over you catch yourself in a huge hangover. You find yourself depending on a source which, technically, is not sole, but switching costs are so painful, that it gradually turns into one way street of constantly increasing maintenance bills.
      • Manufacturing supply chain integrations. Some happen naturally (historically): imagine few factories being owned by one company, where one of them is internal supplier of work-in-progress items for another one. And some time along the way the first one is sold to other owners and becomes external supplier. While their manufacturing lines are tide-in with each other (line technical parameters, product and work-in-progress technical specifications). Similar integration can happen based on business’ decision to become partners with a specific supplier.
      • Industry regulations (or agreements). For instance – to be able to insure cash in a safe, insurance company might require specific quality certificate from a very specific certification organization. In this case, you cannot negotiate much and are being put into situation where you are given only one option.
    3. Category III: pseudo sole sourcing situations. A lot of times, business situation evaluation is more about perception and will, rather than pure statement. Identifying these would bring biggest benefits.
      • Business users’ preferences. Surprisingly enough, there are quite a few categories of spend, industries and companies, where business users are permitted to have preferences.  Next time you will be complaining about big number of resistant stakeholders (while you think about 10… fine – 50 people), remember your colleagues who work with personal health and safety products and serve factories with thousands of people that they must please. And yes, over the time, people tend to give preferences to brand name products. Implementing any change might be challenging.
      • Historical heritage. “We have always been doing it this way” – or buying from this supplier. And only this supplier.
      • Business’ requirements list. Those lists, that make one or the other supplier unique. Technical specifications, prepared by engineers. Delivery requirements, set by business users. Packaging requirements, defined by operations or logistics or marketing.

Can you do anything about it? How?

Definitely – yes. Depending on what you are dealing with and which stage in the process you are in:

  • Firstly, if you can avoid buying – you should.
  • Be involved in a process as early as possible – to prevent from any pitfalls.
  • Make it yourself – if it is an option. You can also find a provider who has similar services or products and convince them to adjust their offering to your requirements. Integrate vertically by buying your supplier and making them your internal provider.
  • If you are on a tender (or category strategy review) to buy a product / service:
  • Check full life cycle, related to the product and / or service. Analyse what kind of additional costs will be related to object you are purchasing.
  • Study alternative sources (make or buy decision, again: even if you choose to buy, when the time comes to create negotiation leverage, you will have your homework half-ready).
  • Choose the right way of buying. If it makes sense – maybe you can buy machines and servicing / maintenance separately? Or the other way around – bundle, if that makes sense.
  • Prepare a good contract in advance and communicate it upfront – with built-in price review mechanisms and no-penalty exit.
  • Invest time in developing full SLA – and following in through to the end of the relationship.
  • Share the information (technical, legal, commercial) early in the process with all suppliers; cross-validate with specialists, 3rd party service providers.
  • Analyse proposals with the purpose to identify “unique” solutions.
  • Analyse the supplier’s business needs and decision drivers:
    • time of the year (when does their financial year finish? Is there a reason to believe that tendering on a specific time frame might give you better or worse conditions – like buying grain just after new harvest data is clear and not based on assumptions; like negotiating software giants closer to their financial year end, when they are likely to be more aggressive with pricing).
    • geographical aspect: if you are negotiating with huge multi-country covering supplier, perform market test of their pricing policy in different countries. You might be surprised, that your branch, located somewhere further away from central function would get a better group deal purely because of the location.
    • sales strategy: are they more aggressive with the pricing of new solutions / new technology? Are they interested in growth? Market entry? Stopping their competitor entry? Can you invite someone new, who is not yet in the market? Does the size of the contract matter?
    • do not forget to negotiate small value adding add-ons and other benefits to the contract.
    • “sell” positive references, feedback and referrals.
    • reduce their risks and become a better customer (implementing electronic ordering and invoicing tools, consolidating POs).
    • threatening with an alternative supplier – or bringing one in.
    • juggling the timing of signing contract.
  • Consider change to business strategy – move the location of your HQ, give up of markets or products.
  • Invest in in-house R&D, work with laboratories and universities.
  • Re-evaluate short term switching costs and compare them against long term business losses if you decide (once again) not to change anything.
  • Educate business users. Re-think and challenge old ways of working. Eliminate all pseudo-sole suppliers.

Should you do it at all?

That is the question, too. The saying goes “nothing personal, just business”. Procurement should also be business oriented and invest its resources where they matter. Should you start any project? Depends. If this is something that you must do routinely (review category or contract) anyway – you might just consider how much time and effort to invest. And similarly, if the prize, that you are after, is big enough – it means it is worth spending time with it.

Based on the situation your business is in, you should perform opportunity analysis and evaluate your expectations. It is not only about the size of the spend. With sole suppliers, there is another level of complexity to be evaluated – the nature of the business situation. Yes, you can do this for sole supplier situations, too. Per the categories mentioned in the article above, approximate ratio of effort / success can be shown as per graph below. Required effort is a relative number – it can vary in units of measurement (days / weeks / months / people involved)

roe

 

That is one part of the equation – it performs a sense check from Procurement’s perspective: you have size of the spend, adjusted by situation complexity. Another big part to the projects like this is implementation. In many cases, it can (and will) end up in a change project. If you want Procurement’s credibility not to suffer, you must make sure, that savings promised and savings landed (or benefits) are as close as possible. So, if you decided, that procurement is interested to pursue an improvement project, perform another quick sense check: change equation will help you (Beckhard-Harris’ model).

d-x-v-x-f

What this says is if the dissatisfaction with sole supplier situation is big enough (bigger than the resistance), if the benefits anticipated also play a role in the game; if you have a plan how to act (discussed above) – you increase the chances of success and delivering benefits to the business. At the same time, it suggests what you can do if any side of the equation is not favourable: increase internal dissatisfaction among key stakeholders (clearly communicate risks and losses of the situation to finance people), reduce resistance to the project (get the buy-in from engineering, technology, sales and other departments).

Thank you for reading! Would be happy to hear from you and learn from your experiences on this matter.

 

Single source and sole source suppliers. Is there really nothing to be done?

The benefits of supplier relationships management: real or fictitious?

srm-benefits

I must admit I am not the biggest fan of fluffy things in the world. Theories, tools, systems by themselves are neither good or bad (that is why i say “fluffy”). It is about what you do with them and how good you are in what you do. Claiming, that a company has SRM in place or that you have supplier evaluation and feedback system in place does not mean much. “So what?” is a crucial question to answer. Does it bring benefits to the business? Does it REALLY make a difference?

There are companies who implement tools because someone “said so”. It might be certification organisations, big customers, auditors. Others rush to adopt new systems, because they are chasing the fashion: competitors, “market”… “Just because” can also be a reason. The systems become deeply embedded into the company. Well, at least, drawers of the desk. And the biggest benefit it brings – prevents from more systems and tool being implemented into the same drawers – because they occupy space.

On the other hand – do you need SRM in place to treat your suppliers like human beings, like business partners – with respect and honesty? Probably not. If you really put effort into any relationship – it works. It works better, when communication is proper, when information exchange is consistent and open, goal-oriented.

And here is the trick – as soon as you start working hard with a bigger number of suppliers to maintain and develop relationships, to achieve mutual goals – you start needing help. This is when tools and systems come into hand. They are there to help you do the job that needs to be done. Or the job that you would be doing anyway, without even having a system.

Let’s get back to the initial question: can we measure “good relationships”? Do they give any benefits?

Let me give you an example. We were having negotiations with global services company.  We needed several Europe-wide spread businesses to be put on the same pricing matrix – let’s call it “special”. Unfortunately, two of our twenty-many locations had signed a deal before the central procurement got their hands onto the subject. Therefore the supplier’s global account manager implemented the “special” pricing for everyone BUT those two (biggest spend) locations. Where is the “good relationships” you ask? Well, one of our team members had good relationships with the supplier’s local account manager. He did not use any systems or tools – simple calls, honest conversations, open position regarding the overall situation. The outcome was very creative: the local account manager proposed to review the contract that was signed three months ago and was supposed to last for three years. She could not put “special” price list in place – because it would have to go through central sales team for approval and we were once rejected there already. However, she agreed to match the prices of the “special” price list. In other words – we got everything we wanted, but under a different name. And everyone was happy. So here is your answer – Ka-ching!

Do you have any samples of situations when good relationships with supplier brought you benefits? Please do share them in comments!

Thanks for reading!

 

 

The benefits of supplier relationships management: real or fictitious?

Capex buying: another clue for leaning supply chain and finding savings

engineers

I love technical staff. Engineers, architects. Who doesn’t, right? But procurement has always had special relationships with engineering. Sometimes it goes all wrong, but sometimes – the other way around. Working together can bring benefits where nobody expects them. This blog is about one of such occasions: finding standard pieces in bespoke piece of equipment and benchmarking the margin that the main contractor is making.

Reducing costs and leaning supply chains is a challenge not only for procurement department. Technical department, logistics, operations – everyone is under pressure.

CAPEX is always one of the most difficult categories due to complexity of the projects and people involved. It is difficult to benchmark the price of the equipment if it is bespoke:

  • If it is somewhat standard, you can try to find some information from your colleagues, working in other markets.
  • You can always go for “material weight value” strategy and negotiate hard.
  • Another option – google. Google will tell you “market standard” markups and profits (only due to the quantity of information it is up to you to decide if you want to believe 12%, 6%, 3%, 0,5% or “cost only” margins – there are no “standards”), which, again, you can use for negotiations.
  • “Should cost” model. Be ready for good sales people in engineering / constructions companies. If you choose to push them for “costs only” pricing model and reduce their prices, motivating with “being overcharged”, prepare for a push back. They will ask you, what do you think “real cost” is. Therefore, studying cost models will give you better understanding of true costs AND will keep all your arguments within reach.
  • Decomposition. I used this one recently and had quite good results – please read on below.

It is rarely a case, that the main supplier (contractor) will manufacture all bits and pieces that go into the fully assembled unit. And the items, that they will use – surprise! – are very often standard. If you can get hold of the item breakdown list and price against items that were not manufactured by main assembler, you can have insights into their general pricing policy. An example follows below.

During one of the brainstorming session with technical department we were discussing everything that came to our minds. Suppliers, types and categories of spend, purchasing and contract renewal calendars, people and processes. And we found some repeating names. Conveyor system supplier was buying belts from the same belt manufacturer that we also had as a strategic supplier. We asked conveyor system supplier to work with us to find some improvements in supply chain for that piece of CAPEX equipment. When you get replies, that “managing director is uncomfortable and fears to damage relationships”, you realise – there is more to this than just that. At the end, this exercise brought us better control and visibility and… 20% savings – after negotiating down from initially required 25%.

Thank you for reading – if you are still here. Please do share / comment if you liked it or would like to know more.

 

Capex buying: another clue for leaning supply chain and finding savings

Time relativity: if you had battery indicator for your career

time-battery

This post is only relatively about buying. It is about a thing that you CAN NOT buy – the time. How worried do you get, when you see your phone (laptop) battery running out and have no spare battery / charger / power source? For me every single percent on those moments is the worth of gold. Recently I had to make some decisions and evaluated time importance. I got slightly worried.

I’m 35. Say, i want to retire at 65. In such case, every six months of my time are worth 1,6% of the rest of my full career. Look at it from a different perspective. Every career has a maturity cycle. I would like to think i will be at my best all the way through to 65. Have you heard the phrase “statistically plausible, but highly unlikely”? Right. Let’s get back to reality. Say, I will be at my best until 55. That changes the value of my time: suddenly every 6 months are worth 2,5%. Every year – 5%.

Think about a business case you are writing. Pieces of equipment you are buying. Private equity investment you are consulting. Most of them have one or the other shelf life. Have you been in a sourcing project for a piece of equipment, which lasts 3 years when life expectancy (yes, for the piece of equipment) is also 3 years? For me that now sounds strange.

Time puts a very different perspective to everything. Sometimes, the worst thing to do is to do nothing. Not to make the decision. If you make the decision and it turns out to have been not the best – you can always fix it. You will never be able to turn the time back. Stop and think. It is Monday. How much can you do before Friday?

Time relativity: if you had battery indicator for your career

The value of longer warranty for the goods you buy… and of a question “so what?”

warranty

Super-duper-all-inclusive-lifetime-premium warranty. Sounds familiar? I’ll give you another example: most daring warranty agreement that I have seen (and, by the way, the items bought were commercial refrigerators) was 17 days. Yes. S-e-v-e-n-t-e-e-n DAYS!

I’ll try to save your time and put logic simply. The company did the research: break-down frequency during the lifetime of these units. and they found out, that if there is anything wrong with the item itself and the fault lies with the manufacturer, 95% of all breakdowns happen in the first 17 days. Afterwards – if the maintenance is done properly – the unit works as it is supposed to work. While the “Super-duper-all-inclusive-lifetime-premium warranty” costs additional €500 per unit. And that is 10% of the price. That means, 95% of 500 Eur are simply spent to cover the risk of events that have a 5% chance of happening. Company chose to save €475 for each unit. And a lot of millions annually.

I have seen some some tender evaluations, where additional scoring is given only for longer warranty. Do not get me wrong – sometimes it might be a smart thing to do. For instance, you do not have data about the break-down frequencies, reliability. Or you have exactly the same items for exactly the same price and one of them offers a much better warranty terms.

But, whatever you do, do not take for granted, that longer warranty is worth more money just “because”. Questions are the tools available for everyone. Ask “so what?”. Thanks for reading, if you are still here. Hope this serves as an idea for your future buys!

 

 

The value of longer warranty for the goods you buy… and of a question “so what?”

Why is it important for buyers to know work norming principles?


No, not that simple norming from team development model. The other one – which is also called predetermined time standards, automated microelements projecting and work norming, estimates, stop motion analysis and similar. Yes, buyers have to be a little bit of everything – operations or manufacturing specialists including. And yes, this is how you bring benefits to your company. 

Time, cost and quality are three primary factors to determine overall budget. The number, that procurement specialists aim to reduce. Very frequently, when you are dealing with low cost tasks (cleaning, maintenance), hourly cost is protected by laws and there is not much you can do. So where do we find benefits?

Option 1. Challenge “quality”. If you are looking into cleaning contract – you will most likely review areas to be cleaned, frequency of works, potentially – procedures, which are offered to you by the supplier. And that is a very strong tool to be used. I have seen contracts, where simple management staff chairs are beeing “deep-cleaned” off staines three times a week. Would you not have doubts about such assumptions? 

Option 2. Challenge “time”. How many times have you checked all seventeen (or however many) pages of the contract and analysed it line by line? And I cannot blame you – especially if those contracts are worth £100k a year while you have other things burning which are multimillion deals. However, there are differences. Some suppliers will tell you very precisely all the numbers. Area to clean; norm of area, cleanable in one hour; and a calculation of manhours needed to do full cleaning according to the agreed SLA’s. Others will not. Others will just give you the round number of FTE’s (full time equivalents), that you “need”. Do not take it for granted, challenge, if you can. This is where understanding about work norming comes to help. Many times it is not difficult to do a common sense check to understand, that “desk wiping” takes 1 minute instead of 15. 

This post is not here to make you think that you now need a sophisticated system to check your  contracts. Companies are different. A solution, which is good for company A, will be completely useless for company B. And it is our call to choose the right tool. 

If you are in services based area, you might want to google ANABES, MTM-1, MTW-1, MODAPTS PLUS. Especially, if you are looking to acquire a lot of repetitive, low value work. Think about IT systems, where a “small” part of testing can be valued in several millions. If you are not – expert judgement will always be good enough. 

And don’t get me wrong – option 3 is always there: If you notice, that you are being charged unreasonable fees or prices – that is the first and fastest thing to go for. 

Again – thanks for reading! Please do comment if you have different views or find this useful! 

Why is it important for buyers to know work norming principles?

The strenght of habits. Or: the unexpected cost of change at any price

Do you know how easy it is to preach various truths to others? And how hard it is to actually live according to them when no-one is watching? That is one part of the story. Another is expert judgement. To be wise enough to know, which habits are there for a reason and which could or should be changed. To be wise enough to distinguish, which rules are there to avoid bigger problems and which are there purely because “it was always like this”.

As a procurement specialist, I always say, that the most expensive words are “we have always done it that way”. I did not invent them and this is no news for any professional. And yes, that was the trigger for me yesterday. 

I came for a regular visit to my hairdresser’s. You know – root touch up, some trimming. She was asking me about colours and tones and I asked for my normal blonde. When she asked the magic “why?”, I said – “because I always have it this way”. The difference was, that this time I actually heard myself saying it. And, of course, at that moment my principles made the decision for me: CHANGE! Whatever happens, you cannot have it the old way. To cut the story short – from now I have purple hair. And no, no photos attached.

Thankfully, it is just hair and I’ll get over it. But take a moment to think how many samples like this you can find in your business:

  • Implementing new purchasing system for the sake of simply implementing it (because your pride does not allow you to not implement something. Because everyone is implementing something – why would not you?).
  • Buying new piece of equipment because “sales said so. And it have always been like that”. Or on the contrary – not buying it, because your principles suggest you to break the closed circle. 
  • Extending contract only because “the supplier has been here for ages”. Or… Not extending the contract purely because of the same reason.

A lot of decisions are based on feelings, emotions, principles. And that is normal. We are humans. As humans, we also have brain. Therefore, thinking is (should be) human. Thinking before acting, that is. Unless you are ready to face the consequences – whatever they are. Purple hair, for instance!!!

Have a nice friday!

The strenght of habits. Or: the unexpected cost of change at any price