Thursday, April 22, 2010

Day 97 - Cutting Edge Negotiation

          If my wife and I are going to move in with our son, we’re going to have to downsize—a lot. We’ve got a 4 bedroom house filled to the rafters with stuff. This includes the attic and the garage where we haven’t been able to park a car for as long as I can remember. There is stuff in the garage, still packed in boxes that haven’t been unpacked since we moved from Arkansas to Alabama 9 years ago. The task is daunting. The garage sale will be the stuff of which legends are made. It’s already too late to start planning it. We are going to have to pray for and get a miracle. A job would be good too.
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I had an interesting exchange during the strategic sourcing negotiations with one particular vendor. It was a hose and fitting company owned by two brothers. They made all kinds of hoses for a variety of applications—hydraulic lines, fuel lines, water lines, vacuum lines, and all the associated fittings.
They had bought a building close to our plant specifically to service the Albatross account. They went beyond normal bounds to provide us what I considered to be stellar service. If we needed something in a hurry, they would fabricate it on the spot and drive it over to us in a matter of a few minutes. They made Albatross proprietary parts to our specifications as well as providing aftermarket and replacement assemblies made by other hose and fitting manufacturers. Their price structure was very competitive. They were committed to doing whatever they had to do to keep our business.
Negotiating with this company was a trip. The two brothers came along with the fellow who managed their local facility and dealt with Albatross on a daily basis. The manager wore a suit and kept a business-like and professional demeanor. The brothers wore jeans and knit shirts and cowboy boots. They were personable and relatively well focused, but they were anything but professional.
They were a couple of hard-scrabble country boys who were having a good time with their modest success. They weren’t trying to grow their company or groom it for a public offering or a sale or merger. They wanted to keep our business, but their primary concern it that regard was that they wanted to be able to buy bigger fishing boats and spend more time on the water.
What I’m suggesting is that their goals were modest and very concrete. They didn’t translate what they wanted into percentage increases in annual volume or improvements in margins or better overhead absorption. They wanted fishing boats and pick-up trucks.
They knew what they wanted and they knew what they needed to get from us and what they could afford to give up in order to get there. To my thinking this made them a lot easier to deal with than some of our other vendors who had grander schemes and better calibrated yardsticks, but no clear picture of what they hoped to gain.
The brothers were neither ignorant nor naive, although that is precisely what most of my colleagues thought. The younger brother actually pulled a knife on our materials manager during a break in the negotiations. It was meant to be a joke, although it wasn’t received very well, and no one thought it particularly funny. Other than a deranged low-life (or Bill, the last division president to fire me, or a fat chef), who brings a knife to a business negotiation? That was the consensus in our group anyway. It didn’t bother me that much, but then he hadn’t pulled the knife on me, and, in any event, I had already been desensitized to knife lore and cutlery flashing in my past working life.
In a couple of days the event, stripped of its context and amplified in its implied threat, had become company legend. Ringcomme and Boome in particular liked to hold the knife pulling incident up as a prime example of why we had to reshuffle our vendors and start doing business with professional business people rather than crackers and rodeo clowns. 
As it turned out though, in spite of their lamentable social graces, the brothers were excellent vendors. When we started talking numbers, they showed themselves to be astute and to have a large amount of quantitative data committed to memory. They were emphatic without being hardnosed. They were more than willing to horse trade, but they knew exactly how far they could go and when we got them there they dug in with all four heels.
I thought we did very well by them, and they were so far ahead of their competition across the board that they became our vendor of choice for all our hose and fitting needs in spite of the ‘knife pulling’ incident. They were so far ahead in the rankings that not even Ringcomme could undo our recommendation. And boy, he really wanted to.

1 comment:

Comments are always welcome. Tell me what you like and what you don't. Information, encouragement, criticism--I don't care. A day where I don't learn something new is a day lost to me.