Purchasing Ethics: The Lies We Tell

As a buyer that was keen for big cost savings on behalf of the companies I’ve worked for, I crossed over to the dark side more often than not in my purchasing functions. I am not proud of it and I personally gained nothing from it except a feeling of accomplishment that I was able to help keep the cost of goods sold (COGS) down from a materials and outside services perspective. I so completely identified with my employers’ needs, that I compromised my integrity to manipulate sellers time and time again. Looking back, I wish I had had more integrity and used the alternative phrasings suggested above.

I really thought about this subject matter because it is like a written confession to a group of strangers. However, I feel that this subject deserves some attention as it is part of our day-to-day experience as we attempt to get the best deals for ourselves and companies. So, as I open the kimono, let me first state that specific instances of trespass will not be mentioned but I would like to speak more to the tendency to deceptively manipulate the supplier into providing a better sales price than first offered.

Here is a list of things we shouldn’t say followed by the things we can say. Let me remind the reader, I have done all of the “should not say” and am not proud of it. Maybe you will recognize some of these and hopefully consider the alternatives offered.

1. Dishonest: “I just need 10 pieces now but I will be back to buy 1000 next month.”
Honest: “I just need 10 pieces now and as we ramp up, I will definitely include you in the volume Request-for-Quote, (RFQ) emails.”
Comment: Any sales person with any experience has been jerked around with this dishonest approach and can see right through it. They know that the future of your company and product quantities and schedules are uncertain and you are ultimately going to go with the supplier that offers the best pricing and delivery when it is time for your volume purchases.

2. Dishonest: “I can get this for $1.20 from XYZ vendor so you need to beat that price if you want this order.”
Honest: “I would like to get pricing below $1.20 if possible as it would reflect a lower price than any of your competitors are offering.”
Comment: Your sales person knows what the competition can offer to maintain a profit based upon OEM costs and online instant verification techniques. If you do have a lower offer, don’t give the price to beat along with the vendor’s name to the prospective supplier. If you do, that will definitely cause them to realize you will do the same with their pricing. Once you lose trust, you can be sure that your negotiating leverage will be reduced, not to mention any respect you had prior to the negotiating transaction. I like to think of the quote: “Those who gossip to you about others, will gossip to others about you.” Keep your confidences and you will keep your vendor’s confidence in you.

3. Dishonest: “The other supplier is offering a one week turn around without an expedite fee or non-cancellable-non returnable, (NCNR) stipulation.”
Honest: “Can you possibly expedite this order for a one week turn without an NCNR?”
Comment: The NCNR stipulation is usually a mandate from the original component manufacturer, (OCM) and is not subject to dispute or modification at the distributor level so don’t ask for a waiver if this is the case. An expedited order requires additional personal attention from source to end-user. You should offer to pay an expedite fee to cover the express freight charges of the cost. That way, it is not a win-lose transaction disfavoring the supplier, but rather a compromise where both parties share part of the pain and part of the gain.

Due to the limited length of this article, I cited only three examples. Please take a moment to add a few that you did not see listed here. Your comments will help us all. If any seller has been victimized by these verbal charades, then please tell us how you handled the various misrepresentations by posting your comments below.