Global Leaders in Procurement & Negotiations (PSCMInstitute.com)

Category: Purchasing Training

  • The #1 Deadly Mistake Purchasing Pros Make

    After twenty years of doing thousands of hours of purchasing training and seminars and consulting in 15 different countries, I think I’ve seen it all. Purchasing Training - Contract Negotiations

    There are so many lingering opportunities in our profession to do things better. Purchasing pros are deeply disconnected with what’s not working however.

    How do I know? People only want me to come talk to them about “negotiations”. That’s all they want to know about. They don’t want to hear about any other topics.

    Maybe because Intel Corporation named me “The Godfather of Negotiation Planning”, I don’t know. I do know that I started out just like you, but Intel allowed me to restructure how their entire purchasing process was done, from top to bottom.

    Because of that, I went from being stressed out and miserable with my profession, to quickly rising through the ranks and running Intel’s entire global purchasing operations organization, with $2.2 BILLION in total scope and responsibility. The stress vanished and I now had fun and made truckloads of money in our profession.

    Please don’t think that I’m being braggadocios, that’s not why I tell you this. It’s only to let you know that there is so much opportunity for you in this profession that in so many ways, still resides in the olden days of the 1950’s.

    You can change it all, so much for the better and that’s why I do my best to help you achieve that paradigm shift from the antiquated, useless industry standard, to the tested, proven, and highly effective strategies that my world-class purchasing students now use and enjoy.

    Our profession has been reading too many glossy negotiation seminar advertisements in airline magazines. I have no other way of explaining it.

    The ability to negotiate effectively is a gap, no question, but it is not the biggest gap. Not even close.

    Half of my job is convincing purchasing pros that they have bigger issues.

    The other half is then training with world class principles on these other areas, once they’ve actually understood that they have many other pressing issues.

    So what is the #1 mistake that purchasing pros make?

    I’m putting all my cards on the table. All in. The #1 mistake is unquestionable.

    HERE IT IS: Purchasing professionals, even the best of them, consistently write bad contracts. Really bad contracts. And worse yet, there is very little interest in getting better at writing them well. Worse than that, they don’t even know they are writing bad contracts.

    Why should you care about your contract skills? That’s what the lawyers are for, right? They approve the contracts, why do you need to care?

    Let me tell you a little secret: lawyers aren’t looking out for your interests. They are focused on legal liabilities. Maybe this pictorial will help out:

    Purchasing Training - Legal Liabilities

    Get the picture? And what % of the time are the areas in the overlapping section the ones that are causing your problems after the contract is signed? Something really close to .00000001% of the time.

    That’s right. All your purchasing problems with customers and suppliers is coming from the section on the left. Your section.

    Now I could have made this section on the left an entire book. I did in fact. But I had to stop here due to real estate constraints in this pictorial. The purchasing professional’s list is actually much longer.

    The point is this: almost every problem you waste your day chasing is preventable with a good contract.

    Bad contracts ensure you get “stuff”. Suppliers love to sell “stuff”. The reason is, they give them to you, and their job is done. Onto the next customer. Next!

    Good contracts ensure you buy PERFORMANCE RESULTS. Do you know how to do that? Do you really? Is your idea of a good contract one that is your standard Ts and Cs with the SOW or Specs attached as an addendum?

    If that’s the case, you are in a world of hurt. The standard contract template has no idea what you are buying. It’s just a piece of paper. It wasn’t written to give you very much protection. It’s written to help you buy “stuff”.

    And have you been lead to believe that a contract that has legal approval is a good contract? I’m sure the answer is yes. Well, look at what legal is looking for and tell me if that’s where your daily problems are with suppliers.

    You are killing yourself by lack of contract knowledge!

    It’s causing you to chase unnecessary customer and supplier excursions all day, every day. And is that what you got hired to do? How does that look on your status report? On your annual performance review?

    Are you getting promoted year after year because you put out fires better than anyone else? Highly unlikely.

    Here’s the Opportunity

    • You can be the only one in your department who doesn’t rely on the understaffed and overwhelmed legal department as a crutch.
    • You can be the only one in your department who has lots of spare time because you are modifying the standard contract to be a performance agreement that PREVENTS excursions and has pre-determined remedies for breach of performance.
    • The contract does it’s work while you focus on other more strategic things that actually build your results, your career, and your income. The contract, written correctly, puts 90%+ of your current unplanned daily activities on auto-pilot.
    • You will virtually eliminate supplier redlining.

    What’s that worth to you? You know how many flustered and frustrated purchasing professionals I meet? It doesn’t have to be this way.

    I’ve got a little surprise for you. I’m going to take you this promised land. I’m making you a totally risk-free, unprecedented offer.

    From today through April 1st, you can grab my newest membership training on this very subject for only $97. This is early-bird pricing that is no April Fool’s joke and is $300 off the regular price.

    Here’s what you need to do right now:

    1. Click Here to learn about everything you’re going to get with your membership to have the paradigm shift I’m talking about.
    2. Grab your early-bird coupon code (68d2ad4ea6) to save $300 and get your instant Membership for only $97.
    3. Click the Add To Cart button and you’ll go to a page with a button that says, “Have a coupon? Click here”. Click that button and enter the coupon code and you’ll see the price automatically change from $397 to $97 and proceed to check out.

    Why am I making such a crazy offer? Simple, since this is a new product I need your testimonials. All I ask is that you take the Membership for a full 30 day test-drive. If you love it and experience the new-found freedom and total control over your contract dealings, please send me your testimonial.

    If for any reason whatsoever you don’t like it, just let me know and I’ll refund every penny, no questions asked.

    This new membership program really will set you free from the stress and hassles of contract dealings. You’re going to learn some awesome secrets.

    Click here to find out exactly what you need to do differently, starting now, to put your career on the fast track. You’ll be glad you did!

    I personally guarantee your success, and I can’t wait to hear from you with your success stories.

    Talk to you next week!

    Omid G

  • Supplier Negotiation Strategies, Part 4

    Purchasing Training - Counter Intelligence
    Purchasing Counter Intelligence

    This is the last in this series for now – a series about supplier negotiation strategies. It’s all about counter-intelligence, and knowing what suppliers may do, and being able to anticipate, respond, and diffuse such strategies.

    Of course I have a multitude of content on such counter-intelligence strategies, but there is only so much I can do in a blog. Consider this an appetizer. The main course can be found in my Award Winning Online Training Solutions.

    The topic we’re going to focus on today is a big one. “Value based pricing” is what sales people spend hours, days, months, years, and eventually decades trying to perfect in their careers.

    Suppliers know the only way to do this is to appeal to the right hemisphere of your brain. The one that is responsible for emotions.

    For instance, when was the last time you saw a soft drink commercial that talked about their product having more bubbles per cubic inch? No way.

    They want you to buy their product based on them showing people having the best time ever while consuming their soft drink. It makes no sense at all. But guess what, it works.

    In order to sell you something based on its value, then the perception of value has to be built up. This is what salespeople excel at. Marketing and perception management.

    Ever compare a supplier glossy brochure to what the product or service actually delivers? Now you know what I mean.

    In order to maximize value based pricing, suppliers can’t sell you goods and services, because goods and services can be benchmarked. They will start calling their goods and services “solutions”.

    To quote Dilbert creator Scott Adams, “a solution looks suspiciously like a good or service, except it costs a lot more.” Right on the nose, Scott.

    There are a few ways to deal with this. And all of it has to do with letting the left hemisphere of your brain take over.

    Think of that gum commercial.. “nine out of ten dentists recommend chewing our gum”. That’s data. You need to make decisions with data. Salespeople are masters of manipulating the perception of value, but they can’t argue with facts and data. It’s their kryptonite.

    The first strategy is to make sure your supplier selection matrix is performance results and specifications based. Glossy brochures and marketing pitches and fancy suits should not be a part of the consideration model.

    Counter glitz with data, and negotiate pricing and total cost based on the documented and measurable performance results you will be receiving.

    The second is to take the supplier’s glossy brochures and marketing presentations and tell them “I’m sure you won’t have any problem if I make this an addendum to the contract and make it a material breach of contract if any of these capabilities are not met by your solution, right?”

    Don’t say it with attitude, just be matter of fact. What should the supplier be afraid of? Their solution is supposed to do all these wonderful things, right? If they get nervous and start to jumble their word in response, it’s because you caught them.

    They are not used to anyone connecting the dots and making their sales pitches a part of the contract. This is your right. They are trying to pitch a powerful solution and they want you to pay for a powerful solution. So what you should receive is a powerful solution, right?

    The third way is to bring them down to earth and say something along the lines of “here are the specifications we are measuring. Can you please confirm for us how you are committing your product and service support will perform to these? We’re going to compare suppliers based on price competitiveness to this criteria.”

    What you’ve just done with this third strategy is to take them out of solution space and pull them straight into specification space, which is where they don’t want to be. Let that left hemisphere take over.

    Take control, and don’t let marketing presentations and fancy hype and glowing testimonials bias your negotiation and decision making process. Put that left hemisphere in high gear and force the supplier to negotiate with you on your terms.

    From now on, every time you hear suppliers use the words “solution”, race back and read this blog again.

    I have a special announcement. I’ve launched a 5 hour Purchasing Contract Law online training series, personally taught by me. This is the last few days for special Members Only pricing.

    In addition, I will also give you a free e-copy of my latest book on the same topic – Purchasing Contract Law (227 pages). World Class Contract Management

    Click here to find out all the details. Prices go back up in a few more days. Don’t miss out!

    Omid G

  • Supplier Negotiation Strategies, Part 3 – Supplier Time Pressures

    Purchasing Training - Supplier Negotiation
    Negotiation Shenanigans

    We are doing a blog series here focused on supplier negotiation strategies.

    This is an appetizer for the kind of “main courses” I teach in my online and face to face training solutions.

    We are learning counter-intelligence about how sales people prepare for negotiations and what tactics they use.

    Guess what happens when you know their tactics? You can anticipate and diffuse them.

    The next one in this series is “Supplier Time Pressures”. Suppliers know that purchasing professionals are overwhelmed. You know it too.

    In speaking to thousands of purchasing professionals in 15 different countries, I’ve yet to meet the purchasing professional who has time to spare.

    So let’s start with that premise, because your suppliers start with that premise too.

    Suppliers will look for opportunities to put you in a time pinch. This happens most famously when negotiations are held at their facility, which we covered last week.

    Suppliers will look for an opportunity to paint you in a corner. It can be something like this:

    “Welcome to Singapore! Now let’s negotiate.” This tactic attempts to force a negotiation when you actually need more time and are in no mood to negotiate.

    Another one is where you schedule several days to negotiate with a supplier, at the supplier’s facility, because you want to see their operations (or because they convinced you).

    The supplier then fills the agenda each day with other activities. These activities can be business or non-business related. They might give you a grand tour of the city and sights, take you to fine restaurants, and treat you like a celebrity.

    It’s a great ride, but it doesn’t come with a happy ending. Suddenly, you find that you have two hours left to agree on a deal. That’s exactly how they want it.

    Are you really going to go back to work and tell your boss you couldn’t get anything done in three days? I think not. And the supplier knows that.

    Something I’ve seen Chinese suppliers do is to make a celebratory public announcement regarding a deal having been culminated between the two of you before you’ve ever started negotiating.

    On top of that, they have a big event prepared to celebrate that they’ve put together just for you. What are you going to do, show up at this celebration event and inform everyone that there actually isn’t a deal done?

    That’s like showing up to a massive birthday bash scheduled just for you and telling everyone your birthday isn’t for another 8 months. Awkward.

    Or suppliers will try to impose their own timelines on getting a deal done, and pretend like they are the ones who have the power of choice.

    Guess what, suppliers don’t have power of choice. It is a privilege to do business with your firm. Don’t ever forget it, and don’t let your suppliers ever forget it either.

    You need to turn the tables. Tell the supplier you are not going to rush to make a deal, that you have timelines, but you are willing to push them if you are not getting the kind of TCO deal you are looking for.

    Then you need to ask the supplier when their fiscal cycle ends and if there are any target dates they want to hit internally for financial or incentive reasons.

    And believe me, those are real, hard dates that every sales professional worth his or her salt has committed to memory. Their financial livelihood depends on it!

    This is when you start to turn the tables.

    Hold firm on your positions and trade TCO concessions on the supplier’s part in return for you allowing them to book revenue by their target dates. It works, and it creates a win/win deal. Both parties get what they wanted.

    Always be in control, always exude confidence, and never let the power of money shift to the supplier’s hands. YOU are the one with the money. THEY are the ones who want it, and YOU have the power of choice.

    Do you want to learn more of these powerful and eye-opening secrets and put them to work for you?

    To Get Started Click Here Now

    Want to know one secret clause that isn’t in your contracts now that will save you 75% time in your negotiations, and how to include it?

    Want to learn how you can virtually eliminate redlining?

    Click Here and get that plus much more

    These are YOUR negotiations, be in charge!

    All the heartache and headache that comes with negotiating contracts is preventable.

    Don’t fall victim to supplier shenanigans! Use these strategies to take complete control of supplier negotiations.

    Next week, we will talk about “Value Based Pricing” as a supplier negotiation strategy.

    There is no better place to be than in this profession. Be your best!

    Omid G

  • Supplier Negotiation Strategies, Pt 3: Location Control Strategy

    Purchasing Training ~ Supplier Negotiations
    Don’t Split the Pie!

    So we are talking about supplier negotiation strategies. This is a counter-intelligence series.

    Instead of talking about what strategies are in the purchasing arsenal, we are talking about what is in the supplier’s arsenal.

    In doing so, we will learn how to anticipate and respond to such tactics. It’s a critical skill. Recognize though that I can only go so far in a blog.

    My online training solutions and face to face seminars are what provide true “deep dive” analysis.

    Let’s say you go to a virtual stranger’s house for dinner, somebody you’ve recently met and don’t have an established comfort level with.

    How does that feel? Are you comfortable opening their refrigerator? Their food cabinets? Strolling to the restroom without asking permission first? How about taking a spin in their car?!! None of that is very comfortable.

    Well, suppliers are no different. They don’t like having negotiations at your office or facility. It’s not comfortable for them. On top of that, there’s a lot more than dinner on the line – their entire financial livelihood is on the line!

    So it should be no surprise that suppliers want negotiations to happen at their facility. Of what benefit is this to suppliers? Let me count the ways.

    There are logistical benefits. Access to conference rooms, free access to roam the facilities, access to hard copy files, and so on. There is also control of the agenda and what gets covered.

    There are psychological benefits. Suppliers are in their “house”. They are comfortable. Relaxed. At ease. They are intimately aware of and in control of their surroundings. They can also overwhelm you with large numbers of people from their end, and they can even control where you sit.

    There are human resource benefits. Suppliers can access anyone they want, in person and on the spot. They can also decide who attends and who does not, and where and when they attend.

    There are schedule benefits. Suppliers can control the schedule and cadence of activities, who attends, and what gets discussed – and what doesn’t.
    Don’t underestimate the importance of these factors. And suppliers work very hard to get them to work to their advantage.

    However, suppliers are also very smart. They will never actually say “let’s negotiate at our facility” (unless they are completely untrained).

    What they say instead are things like this:

    “This deal is unprecedented. Our COO wants to personally meet you. We’d really like to have you at our facility, as a sign of our commitment to making you and your company successful.”

    “We run world class manufacturing lines, and we really want you to see them. We’ve arranged for a VIP tour of every facet of how we run them. You can bring your engineers too.”

    “I want to put every resource at your disposal. I have players in operations, manufacturing, planning, and logistics that I want at your beck and call. I can’t fly them all to your facility – it just wouldn’t make sense – but I have arranged for them all to block out their schedule to have a full day dedicated just to meeting your needs and requirements.”

    All of these are comments that are designed to make you think going there is all to your benefit. And since they own the agenda, they will naturally work negotiations into them.

    Do you want to hear a story?

    In my first year as a purchasing professional, I naively agreed to meet at a supplier facility. The goal was not to enter into negotiations, but location control allowed the supplier to work that in.

    This was a Fortune 50 company we were meeting. No games were expected.

    It was me and my engineering manager, who was my customer. The day was packed. We were moved like sardines in a packing facility from one room to another, jumping from one topic to another.

    Every meeting was packed with strangers, all of them evidently important to these discussions, but none of them saying much. It was all a part of their strategy.

    When it finally came time for negotiations at the end of the day, we were both tired from the whirlwind of activities. They had put us in a large and long room. They managed to separate me from my customer, and he sat far away, so I couldn’t even confer with him. I was alone on an island.

    The VP of Marketing sat in the “power position” at the end of the table, and bellowed across to me, where I was sitting off on the side, surrounded by his employees, where I was barely even able to make eye contact with my own customer.

    Where was my finance manager? My go-to-guy in engineering? My logistics person? My laptop and all my files? None of them where there, because we were there for a “VIP tour”. They weren’t needed. But there I was in a negotiation room.

    All the forces were working against me. Somehow, despite my lack of experience, I realized something was very, very wrong. I got my wits about me called the negotiations to a halt. I told them that negotiations would resume at our (my) facility and I would let them know then.

    If this strategy doesn’t work, suppliers will then say “let’s do this fair for both sides, let’s pick a location neutral location”. They are trying to say that the pie should be split down the middle to make it fair for both of you.

    The problem is, this isn’t their pie to split. This is your pie. YOU are the one with the money, and they are only one of a parking lot full of suppliers trying to get it. They don’t have rights to split the pie. They don’t even get to pick what type of pie it is.

    Do not pick a neutral location for negotiations, and if it can at all be avoided, do not negotiate at a supplier’s facility. Separate the issues.

    If you need to do a manufacturing tour, then separate that from negotiations, and hold the negotiations back home. They are two different things. There is no need to “kill two birds with one stone”, because one of those birds will be you!

    Next week, we will talk about “Supplier Time Pressures” as a supplier negotiating strategy.

    Meanwhile, Click this link and join our Power Purchasing Pro Group now. You’ll be glad you did!

    Be your best!

    Omid G

  • Purchasing Training – Supplier Negotiation Strategies, Pt 2 – “Puppy in the Window”

    Purchasing Training Puppy Dog Trick Puppy In The Window Trick

    OK, so this series is about counter-intelligence. In this context, that means knowing exactly what tactics and strategies suppliers like to use, and being able to anticipate, recognize, and diffuse those attempts.

    Mind you the goal is not for you to win so they can lose. The big name courses out there pushing this concept are still stuck in the 1950’s.

    I cover how to achieve your biggest TCO objectives while still allowing the supplier to win in my award winning training solutions. For now, we are focusing on how suppliers try to shift negotiation advantage to them.

    Last week, we talked about “Nibbling” as a supplier negotiation strategy. This week, we will talk about the “Puppy in the Window” supplier negotiation strategy.

    Puppies are cute. There is no denying it. They just have a teddy-bear like quality and an innocent and clumsy behavior that makes them absolutely irresistible.

    When you buy a puppy, the left hemisphere of your brain – the side that is responsible for logic and reasoning – is on vacation. It’s a complete ghost town on that side.

    The right hemisphere of your brain – the side responsible for emotions – is meanwhile working in overdrive. It’s swimming in emotions and even releasing chemicals that are making you excited.

    The last thing you are thinking about is the total cost of owning a puppy, which is sure to become a dog, which is sure to have vet bills, breed specific issues, behavior problems, and more.

    If it’s a Dachshund, back problems await. If it’s a German Shepard, hip dysplasia is highly common. Bull Dog? Respiratory problems. And so on.

    The goods and services you buy are no different, except it’s the *suppliers* that come with different problems.

    And these problems almost always arise AFTER the supplier has received full payment. And that’s when the heartache begins.

    And while the right hemisphere of your brain goes on vacation, because it was satisfied a long time ago, the left hemisphere of your brain now has to figure out how to solve this mess.

    So what does “Puppy in the Window” have to do with all of this? Well, when you take that cute puppy in the window and put it in your arms, you’ve pretty much already bought it.

    If you’ve taken it home for a 24 hour trial, that “trial” lasts a lifetime. Who can return a cute innocent puppy?

    So how do suppliers use this concept to their advantage? Simple: they put the good or service in your hands for a trial, even a free one.

    Suppliers know that it takes time and energy, on your part and your customer’s part, to use their product or service for the first time.

    They know that you can’t resist just trying out their product or service for free, with no obligation to buy. What have you got to lose?

    They also know that once you’ve taken that puppy home, you’re not bringing it back, and you’re not even going to look at other puppies. Other puppies don’t exist anymore.

    Once you’ve taken the supplier’s puppy home, the search is over. This is no longer a trial. The supplier has just won your business.

    Even if you keep a cool head, your customer probably won’t. They’ve already gotten attached to this puppy, and of course they needed this puppy yesterday, or your company’s doors will close – right?

    From your customer’s perspective, time is short, and this puppy will have to do.

    You are stuck. The “Puppy in the Window” strategy WORKS MIRACLES for suppliers.

    So where does this happen in purchasing? Everywhere! Capital equipment, software, site services, technical support, staff augmentation, hardware, and so on.

    So how do you handle this? It’s simple. You have to hold your customer accountable to do complete evaluations of the product and service offerings of ALL target suppliers BEFORE supplier selection.

    In other words, you force the left hemisphere of the brain to make a rational, in depth, and data-based evaluation of the strengths and weaknesses of ALL supplier offerings (not just one supplier’s offerings, in the form of a free trial), and then make a decision.

    In puppy speak, this means you would have done enough research on breed specific behaviors, illness, hyperactivity levels, exercise requirements, vet requirements, etc. before ever putting yourself in the highly vulnerable position of holding one in your hands inside of a pet store.

    Recognize when suppliers offer to do this and make sure if you are going to do an evaluation, the evaluation is happening with all target supplier offerings and not just one.

    Use the left hemisphere of your brain and make a rational, logical, data-based decision.

    If you don’t, be prepared to have that initial excitement and feeling of victory followed up by the polar opposite experience of coming down like a roller coaster when reality hits.

    That’s a terrible place to be as a purchasing professional. Don’t let it happen. Recognize and diffuse supplier “Puppy in the Window” negotiation strategies before they ever start.

    Next week, we will talk about the supplier “Neutral Location Negotiation Strategy”.

    Be your best!
    Omid G

  • Supplier Negotiation Strategies, Pt 1: Nibbling

    Purchasing Negotiation Secrets
    Purchasing Negotiation Secrets

    You’ve heard me say it many times before: I’ve virtually stopped reading books on purchasing negotiation strategies, mostly because there’s very few good ones.

    It’s why I wrote my own, and it’s also why I almost exclusively read sales books on negotiation strategies – to get counter intelligence.

    Counter intelligence. What a concept. It’s of so much value in our profession.

    So I’ve decided to start a series of blogs on Supplier Negotiation Strategies. This is the first one, and it’s going to focus on “Nibbling”.

    What is Nibbling? Picture a mouse eating away at cheese. Or better yet, picture the person who eats unnoticeably thin pieces from a cake, in the hopes that nobody will notice.

    And sometimes nobody does notice. That’s the whole idea behind Nibbling.

    Nibbling happens in areas where you are not paying attention. I once had a car dealership sales manager tell me that’s how they make all their money.

    People focus so much on certain things such as base price or monthly payment that the dealership can sneak in costs elsewhere that nobody catches.

    Nibbling sounds cute and insignificant, but reality is that it can be like a Las Vegas feast for suppliers if you let it.

    Purchasing professionals tend to focus most of their attention on price. Nibbling therefore happens everywhere BUT price. The whole point is to do it without anyone finding out (see the cake ex above).

    So suppliers will divert the pack. They will agree to a price that makes you happy. Your guard is down and you’ve already started claiming victory deep inside. Meanwhile, they are just getting started.

    The supplier will try and slip in costs for everything. Warranty deductibles, late payment penalties, adders for various product features, change order costs, spares and replacement parts, overtime costs, and on and on.

    And then there are costs that they don’t include anywhere that they know your customer will need to incur later. Those are the worst.

    A good example is buying software (and getting a killer deal on it) only to later find out that your customer has incurred a huge consulting and training bill with the supplier – something that never even came up in negotiations.

    I know, because this exact situation happened to me early in my career! Let me tell you, I came down like a roller coaster. It was my first real experience with nibbling.

    If you use a supplier contract template, then you can forget about it (and I don’t mean in a good way!), because a supplier contract is not looking after your best interests…. It’s going to have all these “supplier goodies” already baked in.

    One good way to counter all of this is to have an Entire Agreement clause in your contract, basically stipulating that this is the entirety of the agreement between the parties and any other changes need to be done by amendment or addendum.

    Point them to this clause and tell them you don’t want bills for anything outside of the contract down the line.

    Another good way is to catch a supplier in the act of trying to nibble and tell them the following:

    “Look, it’s in my best interest for you to be successful. I want you to make money, believe me. However, you aren’t going to make money on every aspect of this deal. You need to make money overall, and that’s where we need to keep the focus. The kind of thing you are trying to charge me for here is not something I pay for with other suppliers. This is just part of the cost of doing business with our company. I don’t want to get a bill from you every time I need something from you. So let’s focus on making sure the price we negotiate is all encompassing, ok?”

    Both of these strategies are preventative in nature and get in front of supplier nibbling. One is used as an insurance strategy after the contract is signed (the Entire Agreement contract clause) and the other is used when you catch suppliers in the act.

    Are you ready to put more of these powerful and eye-opening secrets to work for you?

    To Get Started Now Click Here

    Don’t fall victim to Nibbling and use these strategies to avoid it. When you catch suppliers trying to do it, call them on it and tell them you want all cost components on the table and negotiated.

    All the heartache and headache that comes with negotiating contracts is preventable.

    Want to know one secret clause that isn’t in your contracts now that will save you 75% time in your negotiations, and how to include it?

    Click Here and get that plus much more

    These are YOUR negotiations, be in charge!

    Next week we are going to talk about a supplier negotiation strategy called “Puppy in the Window”.

    Be your best!

    Omid G

  • Purchasing Training ~ Are You Managing Contract Spends?

    Purchasing & Supply Chain Management LawJust about the worst thing that happens in our profession every minute of every day is the overspending of contracts.

    If you ask me what’s one of the biggest sins that purchasing commits, this is the one I’d pick. Busting your tail to negotiate a great contract and then letting the contract get overspent… throwing cold water on all your efforts.

    When you let a contract get overspent, meaning you negotiate for one amount but you end up spending more than that, you are basically giving your supplier an out of cycle Christmas present, wrapped in a pretty red bow.

    And suppliers love you for it. Don’t think for one minute that they are going to tell you a contract is overspent.

    And why should they? They are in the business of making money.

    And contracts don’t expire when they are overspent. Expenditures against a contract do not affect its legal validity, unless you put some provision in there that expressly states so, and no standard template contains such a provision.

    What’s really bad is that I’ve yet to meet a buyer that’s not plagued by this issue. There’s probably billions of collective dollars being left on the table, with thousands of suppliers laughing all the way to the bank.

    Make it stop, please. It’s so avoidable.

    I know the problem. Your systems don’t easily track spends. Pulling the data is difficult, like pulling teeth. And then finding your supplier in the system may be difficult too, because one supplier could have 5, 10, or 20+ listings. Which one do you pick? And do you add up the expenditures for all of them?

    On top of that, you have 50 other responsibilities and deliverables that seem higher priority. It’s a hot mess in reality, and don’t think companies with multi-million dollar ERP systems are better off.

    So what to do? It’s really simple. Start holding suppliers accountable for tracking spends against contracts. Tell them that you want a monthly report stating spends against contract value, and for them to advise you before a contract is ever exceeded so you can act on that.

    Better yet, make this supplier monthly expenditure tracking mechanism a contractual requirement. Failure to do so is a breach of contract.

    And don’t forget, you can always renegotiate a contract. It’s your right. You don’t need to wait for it to expire. You don’t need to wait for the supplier to agree.

    You don’t need to wait for anyone to agree. It’s your contract!

    If you’ve overspent it, you should renegotiate it.

    If push comes to shove, that’s what the termination clause is for, but you really shouldn’t have to go there.

    It’s really simple. You tell the supplier that you negotiated those terms for $x and now you are spending more than that. They are getting economies of scale above and beyond what both of you bargained for, and so they need to come back with a revised proposal that reflects this increased amount of business.

    In my breakthrough skills courses, you will learn contract clause language that will force the supplier to track such expenditures for you, relieve you of detrimental reliance lawsuits if you underspend your forecasts, and also the biggest thing of all…

    …I have the mother of all secrets, which is how to extract savings from the money you already overspent the contract by. I’ll reveal this HUGE secret to you in my new training you can find here: https://purchasingadvantage.com/purchasing-contract-law-training.

    Anyway, the money you already overspent the contract by is not “water under the bridge”. I cover how to retroactively get additional savings on those monies. Money back to you, from checks the supplier already cashed and put in the bank!

    It’s not too difficult, but it is what I consider one of my member’s only type topics and it’s beyond what I can get into a blog entry.

    Suffice it to say that you should

    a) know exactly how much the value is of every contract you negotiate (and make sure your supplier knows too),
    b) know how much is spent against that contract on a regular basis,
    c) have measures in place to prevent over spending, and
    d) have measures in place to address circumstances where a contract is overspent so you don’t leave money on the table.

    Doing world class purchasing doesn’t have to mean that you are solving supply-chain world hunger. Sometimes the basics bring the biggest TCO value propositions. Don’t mess them up.

    In terms of low hanging fruit, this is watermelon. Go get it.

    Don’t forget to take a look at the brand new Purchasing Secrets of Contract Law Training  I’ve put together for you.

    See you next week!

  • Are You Operating in Your Comfort Zone?

    Purchasing Training - Time Flies
    20 years experience, but only 1 year experience 20 times?

    The comfort zone is, well, comfortable. That’s why it’s so easy to stay in.

    I was speaking to a large group of government purchasing professionals this week regarding this very topic.

    The problem with the comfort zone, as I put it to them, is that “20 years will pass, and you will suddenly find out that you don’t have 20 years experience, but rather, only 1 year experience 20 times!”

    This is a huge risk in our profession. We get so caught up in customer excursions, supplier excursions, email, meetings, presentations, and everything else that we forget that we got hired to make progress happen.

    Nobody ever got put on the fast track to becoming the next director of corporate purchasing because they were so good at putting out fires. You have to demonstrate that you can drive change.

    And if you wait around for someone else to drive that change and for you to follow, then you are on the “1 year experience 20 times” track that I mentioned above. It’s a very long road to a very small house.

    Don’t wait for someone to crown you. You can crown yourself. Figure out what’s broken in your department and make it your new project to fix that problem.

    I know that’s what I did. I was 23 years old, fresh with an MBA, and I figured out really quickly that my company, a Fortune 50 company no less, had great deficiencies in their negotiation skills and legal knowledge.

    Guess what, I spent time perfecting that craft, and pretty soon, 20 year industry veterans were coming to me for advice. Management took notice, and I started getting moved up the ladder. They also had me start training their purchasing departments around the world. Things just took off from there.

    I crowned myself, and you can do that too!

    Look around you. What are the one or two problems that everyone in your department is struggling with? That takes up their time and makes them frustrated? This has to be a problem that nobody likes, but everyone has just gotten used to, the same way you might get used to a headache.

    Figure out how to become an expert in that area. All you have to do from there is to start implementing what you’ve learned and getting better results than everyone else.
    Then the magic happens.

    Other people figure it out. They start to come to you to ask questions, to ask advice, to ask how you solved that problem.

    Now don’t make the mistake of hoarding information. Share. It’s not enough to perform well if you want to catapult your career. You also have to bring everyone else up to your level.

    Make the department a better place because of your presence. Out-perform your pay grade. That’s when management will take notice.

    Now’s the perfect time. Last week we talked about setting your job goals for the year. Bake these ambitions into your annual goals, and make sure you have actions to back them up – otherwise, nothing happens.

    Here are the kind of areas that you can look at getting really good at:

    • Negotiations
    • Contract Law
    • Post Contract Management
    • Supplier Management
    • Supplier Selection
    • Requisitioning Processes
    • Supplier Expenditure Tracking
    • Shipping Practices
    • Multi-Sourcing Models
    • etc

    I have lots of training products on all of the above, if you ever find you need my help. If you haven’t read my first book yet, go grab your copy by Clicking Here now.  It’s been called “required reading”.

    If you want to know breakthrough purchasing techniques that have been painstakingly gathered from the best of the best in every industry and geography over a 20 year period, married with powerful insight and strategies that you won’t find anywhere else, you should get and read a copy of this book.

    Packed with process steps, templates, checklists, tips, and best practices, you will know *exactly* what to do differently when you get back to your desk.

    Key chapter focus areas include:

    • Total cost analysis
    • Win-win negotiations
    • Sourcing models
    • Complex negotiation pitfalls
    • Key elements of purchasing contract law
    • The process of preparing for and holding negotiations
    • Key behavioral and data based negotiation methods that crack cases
    You could spend 20 years trying to gather this information yourself, or you can make these world class strategies a part of your arsenal right now when you get your copy of this internationally acclaimed book. Check it out by clicking here now.

    The most important thing though is to get a little better every day. Pretty soon it adds up.

    Be careful though, because in our profession, the days are long and the years are short. Take advantage of every opportunity you have, be your best and crown yourself!

  • Have You Completed Your Purchasing Expenditure Plan for 2014?

    Purchasing Training ~ Goals
    Smart Goals

    It’s a new year, and everyone is setting their annual goals. You need to be doing the same. But first, a quick true story:

    I have a very good friend who sets all sorts of goals for himself every year, none of which ever get achieved, and he always wonders why.

    I constantly tell him that the reason is that he identifies the ends (the goals), but not the means – i.e. what specific actions must he take to achieve these objectives.

    Purchasing professionals fall victim to this same mistake all the time.

    It’s not enough to just tell management how much cost savings you will achieve in 2014. If that’s all you are doing, you are making the exact same mistake as my friend – focusing on the goals, but forgetting to specify what specific actions you must take to achieve those goals.

    The way we do this in purchasing is with an annual Purchasing Expenditure Plan (hereafter, PEP). It’s time to do your PEP for 2014. Don’t put it off!

    If nobody else does one in your department, be a leader and start. Don’t wait for someone to tell you to do it. Complacency is a killer in our profession.

    The PEP can be regionally focused, customer focused, or commodity focused. It all depends on how your organization structures its purchasing function.

    At a minimum, you should be looking at the following types of things:

    1. Supply base structure – how much of your business is going to what % of your suppliers, and are you aggregating your expenditures with the fewest # of suppliers possible
    2. Market factors – analysis of costs related to labor, materials, currency fluctuations, supply and demand fluctuations, relevant legislation, etc.
    3. Sourcing strategies – how are you sourcing today for your most critical and high dollar needs. Do you have ONE strategy or do you have many.
    4. Planned expenditures – by commodity, customer, or region. You should look at trend data as well.
    5. Savings strategies – given the above, what concrete and specific actions are you going to take to bring your total cost savings to another level.

    #5 above is the big one of course. Everything else is analysis and information that helps you make better decisions and commitments for achieving your cost savings goals and objectives.

    The PEP does not need to be a long document. In fact, the shorter, the better. 1 page is perfect. You want people to be able to quickly read and internalize exactly what you want to achieve and how.

    Just as importantly, you want to be able to reference it yourself, regularly. Put it on your cubicle wall, in fact. Remember, the PEP document is a TOOL for you, not a deliverable to management.

    The PEP document should guide your schedule for the year. You need to break your goals and the strategies into actionable activities you need to engage in over the course of the year to ensure success.

    For instance, let’s say one of your goals is to achieve $150K savings by aggregating all of your global cafeterias to be managed by one supplier. What does this mean to you? Break it down!

    January/February – align with internal customers and with corporate services organization to understand key issues with aggregation of this business with one supplier. Make sure all concerns are understood so you can address them.

    March – come up with a standardized SOW that addresses all concerns and requirements and captures them to the satisfaction of the internal customer base.

    April – scour the market to see who are the top 5 qualified companies out there who can support this business. Contact them and send an RFP.

    May – go through RFP assessments. Select a supplier by the end of the month. Notify existing suppliers and process terminations with sufficient notice per contract terms.

    June – Manage global transition to new supplier. Ensure score card in place for continuous quality improvement.

    There you go! Now, this is still not enough detail. You need to nail this down to what you need to work on *and complete* each week to support these objectives. The aggregation of activities from your various PEP commitments then comprises how you spend your time.

    Sound like too much work? Here’s what too much work is:

    Going into the office every day without a plan, and letting your day be run by phone calls, voicemails, emails, instant messages, and text messages that you get, while also reacting to customer and supplier excursions that were caused by lack of planning.

    That’s what you don’t have time for, and that is the kiss of death in our profession, because you will have happy customers and partners, but unhappy management, because you won’t have accomplished anything strategic that you got hired to do.

    Go put your PEP strategies in place now for 2014, and share them with your management, customers, and business partners. Most important of all, make it your guiding light for all of your activities throughout the year.

    Talk to you next week and be your best!

    Omid G

  • What Purchasing Professionals Have to be Grateful For

    Supply Chain Management Training
    Happy Holidays!

    It’s the holiday season, and I’m going to keep this short.

    What you have to be grateful for is working in the greatest profession on earth. I mean it. Just think about it.

    You have power that comes with your position. You have the power to give, and you have the power to take.

    You are a people manager, because you have a slew of suppliers and their personnel at your beck and call. If they are not, you are missing an opportunity. There are no individual contributors in our field.

    You get to learn contracts and cost analysis, both of which have huge carryovers to your personal life.

    You get to learn and practice how to influence people. How to make them want to be with you, instead of them feeling like they *have* to be with you. This applies to work, friends, family, and all aspects of life.

    You get to learn how to not achieve what you want without using authority. Beyond workplace benefits, this makes you a better parent – or grandparent – as well.

    You are one of two departments in the company who directly generate profit – along with the sales department. And if your company can’t buy, then they can’t sell. Purchasing is critical. Your department is at the center of it all.

    Even so, you still don’t have to hinge your livelihood on swinging deals or not like sales people do. You have the money and they don’t. It’s that simple. And all you have to do is manage it right and help them win too.

    And the most important thing of all that you should be thankful for as a purchasing professional: The biggest thing to hit business since the internet and the industrial revolution is happening, and that is Supply Chain Management.

    And guess which group inside your company will get catapulted to the forefront in leading this new journey?

    You guessed it.

    There is no better place to be right now than in the purchasing profession.

    So take time to appreciate what you have with your job and this profession. It doesn’t get any better than this. Who’s got it better than us?

    Happy holidays to all of you, and thank you for giving me the best job in the world.

    Be your best!

    Omid G