The dirty tricks of the buyers of large corporations
Over the past few years, I have been following the practices of buyers from large automotive companies when it comes to purchasing engineering services with some disconcertment. One bad habit particularly disturbs me:
More and more frequently, large hourly quotas are requested and negotiated with correspondingly high discounts.
The rude awakening occurs when only a part of the services is called off and the rest expires at the end of the year.
Whoever thinks this is a bad thing?
I wonder how an OEM would behave if I negotiated 30 vehicles with a corresponding discount, but then only kept 3 vehicles and let the rest go back. I would then come up with some sensible justification.
Reduced prices for large delivery quantities make perfect sense, as I then have less sales effort and a secure workload is guaranteed for part of my team.
But if only part of the service is called off, I have a double problem: The team that I have kept on hand to handle the apparently large project is partially without work, and those who work on the project have a lower cost recovery contribution.
Every unproductive engineering hour is lost forever.
True to the motto "where there's no plaintiff, there's no judge", some buyers use their market position to push through their little games. Of course, they cannot be reached by phone for inquiries, and they do not respond to e-mails.
This may all work in the short term, but actually this is no longer a bad habit, but simply fraud at the expense of the suppliers.
At the same time, I am expected to complete and sign one voluntary commitment to sustainability, compliance and fair dealings among business partners after another.
I like to orient myself to the values of the "Honorable Businessman". The honorable businessman is true to his word, his handshake is valid. He grants and demands commercial trust. He negotiates fairly, delivers on time, and settles accounts correctly. The principle of "one man, one word" is one of the universally recognized ideals of commercial business transactions. The handshake between the contracting parties is a symbol of this. Even if there is no direct personal contact on the phone, in correspondence or on the Internet, the message associated with this symbol is clear and understandable.
When large engineering companies go into tenders with dumping prices and get their margin via claim management, when specialist departments do not defend themselves against unfair practices of purchasing and let projects go to the wall so that purchasing pays more attention to the quality of the offers in the next tender, I see these values in the distant future. Because what is negotiated is not what was requested and ordered.
What helps against this?
Purchase quantities and discounts based on them should be recorded in writing. Otherwise, a sales rebate (also called kick back) is a sure thing. In this way, the discount is granted retrospectively, so to speak, on the basis of the sales actually achieved.
Do you see it differently? What is your opinion on this? I look forward to your feedback.
Your Stefan Merkle