A good friend of mine called me 2 weeks ago to ask my advice related to a purchase she had to make for her marketing team: a brochure for their forthcoming new brand launch. She has little commercial purchasing experience and wanted to get the most for her money, while avoiding potential pitfalls. So here are my condensed advices I gave her – which I hope will help you too! They refer to purchasing goods and also services and will help you know better what and how to buy what you need.
- Know what exactly you need to buy. Be clear in your mind what exactly you MUST get (mandatory) and also on the nice to have things. In my friend’s case, she must know what are the mandatory techical specs of the brochure: nr of pages, dimensions, specific weight of the inside paper, specific weight of the covers, whiteness degree of inside paper, number of colors to be used, type of binding, etc. Nice to have may be things like UV coating of the covers, selective coating of portions of some pages, higher whiteness degree of the inside paper etc. Don’t buy “extra features” (that imply a higher price) if you don’t need them, no matter how persuasive a supplier is!
- Do a thorough market check on suppliers for your needed good or service. While you may know some of them, it is always better to search more thoroughly, as you may find better options that you were not aware of.
- Select 3-5 suppliers that are the closest match to your needs. Contact the suppliers you selected at point 2 above and ask for their references (credentials) in the field you need. Then select those that you believe offer the best fit for your needs.
- Do a VERY through due dilligence for all selected suppliers. Spend quality time to evaluate the shortlisted suppliers from all aspects, starting with relevant references, seeing actual work delivered for other clients, but also at their financial stability (at a minimum look at their P/L results in the past 3 fiscal years). Also, check their total business value and what %age your order would represent out of their business. For example, I would be worried to give a 50,000 Euro order to a supplier that had a total business value of 100,000 Euro in the previous year. And I would definitely not work with suppliers that had a negative bottom line result in the past 2-3 years.
- Write a brief that even a 10 years old kid would understand. Never assume the supplier knows what you want! Write a brief so thorough that a school kid would understand. In this way you will avoid misunderstandings at a later stage. I know a case when the brief for a booklet did not include all specs of the inside pager except for the specific weight. But, while the client wanted a double-coated glossy paper, it never put it in writing in the brief, so the supplier produced the bookled on single-coated glossy paper, that looked less premium. And you can imagine the disappointment of the client with the end result, but it was his fault, as the briefing was sloppy.
- Offer suppliers the opportunity to ask clarification questions – and answer them thoroughly. In this way you ensure all expectations are clarified and also all technical questions from the supplier are also answered. And do this in writing (you may do it in a meeting, but afte the meeting you must summarize it in writing, for the record). It will save you lots of energy and nerves if things go wrong in the implementation phase.
- Select the winner following the BEST TOTAL VALUE concept, not on price alone. Many people want the cheapest product/service, which is not necessarily wrong, but you must be clear about what the price includes and does not include. So, besides ensuring that you get what you want from a techical specs point of view, look at delivery time, delivery place, payment terms, insurances etc. Pay special attention to payment terms and, especiallty when working for the first time with a supplier, be careful about advance payments. If absolutely needed, keep them at the absolute minimum.
- Sign a contract with the winner in which you include all techical specifications, deadlines and KPIs based on which you will acknowledge the goods/services receipt. A contract is highly recommened for any purchase because it is enforced by law in case the supplier messes things. If you only base the commercial relationship on emails, for example, it may get tricky to ask for damages in a court of law. Also, include the full specs of the good/service and penalties for partial delivery, faulty deliver or total miss-delivery. Think about the opportunity to add a clause that covers any damages generated by the miss/faulty delivery / total undelivery, including damages to 3rd parties.
- If you buy goods, ask for a mock up of the good before the supplier goes into full production. Keep this mock-up as the reference in quality for the mass production. I cannot stress this enough! In the same case I mentioned at point 5 above, the client did not ask for the mock-up and the supplier did not offer it. If a mock-up would have been asked, the client would have noiticed the issue with the paper specs.
- Also in the case of goods, check a random sample of the produced goods against the agreed mock-up. After delivery, you must take random samples of the goods and check them against the mock-up. For example, if printed materials, check the specific weight of the paper used (this is one of the most frequent cheting methods emplyed by suppliers – using paper of slightly lower specific weight that you cannot notice unless you use a scale to measure the weight).
- In the case of services delivered, whenever possible, try to use “mystery shoppers” or random, unannounced checks during the implementation of the service. “Trust is good, but control is better” was the motto of one of my General Managers at P&G. When you buy a service (for example an instore sampling), go unannounced to check the implementation. If you cannot do it yourself, use a mystery shopping agency.
These advices are the absolute minimum things you must do to ensure that you buy exactly what you need, at the best value possible, no matter if goods or services. For more details, you can find thorough info in my books “The Elite Negotiator – The Essential Edition” and “The 10+1 Immutable Laws of Elite Negotiation”, both sold worldwide on Amazon.
