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A failure to communicate

by Malcolm Mills and Frank Hurtte

Our popular dueling columnists tackle the topic of supplier/customer communications

In this episode of the Perception Factor, purchasing expert Malcolm Mills and long-time distribution consultant Frank Hurtte proclaim: “What we have here is a failure to communicate.” We start this story by waking up to find ourselves stuck in one of Frank’s parmesan, pineapple and pepperoni pizza-induced dreams. Loyal sidekick and purchasing guru Malcolm Mills has morphed into “Tiger the dog.” Based on what we overhear, Malcolm and Frank aren’t quite communicating. Join us now as we listen to Frank’s dream already in progress. (Can you think of another place on earth you just don’t want to go?) Anyway, why not listen for a minute and see how man’s best friend and “master” are communicating: Tiger (Malcolm the Dog): “For crying out loud, you Tin Pot dictator, what’s the deal with you forcing me to roll over every time anyone with a pulse drops by? In order for this “Dog-is-man’s-best-friend” relationship to work, there’s got to be some give and take here. And while we’re on the subject . . . why can’t you get your own flipping slippers? Why must I be the one who has to fetch that foul, fungus-ridden footwear every time you enter the building? Who do you think you are, the Queen of England? “So what? You give me a treat. Did I ask for a treat? And here’s another news flash for you Master Frank. I only pretend to like those cheap biscuits you buy. You want to know the truth? They’re crap because they’re the cheapest brand you can buy. “And no, I don’t want to play dead or bark twice. And I hate sitting pretty so as you can show off for your neighbor. And let me say it again, I really don’t want those athlete’s foot-encrusted slippers in my mouth anymore. Buy a new pair, you cheapskate. And fetch them yourself.” Frank: “That’s a gooood dog, now fetch.” Tiger: (Doing that doggie dance expected of him as he growls playfully and we catch Tiger’s real thoughts in mid-sentence. . .) “Criminy, it’s not like Frank ever says anything different. It’s the same old rhetoric and rote in the same old tones with the same old results. I tell you, every time I hear that nauseating ‘gooood dog’ speech I’m one tail wag away from vomiting on the rug. Yes, dogs can do that and get away with it because they’re cute and it’s expected of them . . . so watch it, Frank. “One more thing. I want to go for a real run Frank. Not the staggering, rambling, stumbling octogenarian shuffle you call walking while you wheeze and gasp like a hit-and-miss engine. I want to run, Frank. Is anything sinking in here, Frank? I’m doing stuff for you and from now on you’ve gotta do stuff for me. “And lastly, Frank, if you recite to me one more time how much ‘value’ you bring to your clients, I’m going to turn around and gnaw your leg off at the knee. I’m not your sounding board. We don’t even speak the same language. Are you understanding me? Are we communicating at all here?” Frank: “Gooood boy . . . Now how ‘bout a bite of pizza . . . ” Tiger: “Grrrr . . . ”

Malcolm: “So, what about it, Frank? As sales and purchasing professionals, are we still saying the same old things? Are we wearing the same old suits, using the same old philosophies and carrying the same old chips on our same old shoulders? Are we saying what needs to be said? Are we open to listening to our business partners? Or do we only think we’re addressing each other’s concerns when really we are not? Do you think you’re often treated like a dog, Frank?”

Frank: “Alright, I’ll take some of that bait. And I suppose you think YOU are treated like a dog? Right. Purchasers treat sales folk like dogs, not the other way around. I think a lot of it stems from that ‘buyer beware’ philosophy. I know you want to know how that came about, so I’ll tell you. It came about because, in the old days, hucksters by the zillion pontificated on shady negotiation strategies that led the other guy down the primrose path.

“Happily, those days are gone! Companies on both sides of the buy-sell divide have come to realize that improved communications means better business. And, better business is critical to both sides’ very survival. And today with Wall Street rumbling like a derailed roller coaster and Main Street rolling up the sidewalks due to lack of interest, it’s imperative that we transmit and receive our communications clearly.”

Malcolm: “Okay, so we’ll switch species and recognize the elephant in the room. We are indeed in a recession. And, this one will also be a tough one. (They are all tough by the way.) And here’s another giant that needs to be recognized. Distributors and customers are symbiotically linked. But because we are in a recession, the stakes are much higher. In today’s economy, miscommunications can cost not only one account but a few lost strategic accounts could translate into the coup de grace for entire industries and industry providers. Want me to prove it in 15 billion ways, Frank?

“Historically in the world of industrial buyers and sellers, efficient or effective communication has never been a trouble-free zone. We pretend we enjoy that ‘Man’s best friend relationship’ with our suppliers when we’ve never really sought to accurately know what the other side is honestly and truly thinking. Sure, we understand each other in spurts and we get things done at great cost and confusion but eventually our lack of communication becomes the downfall of our relationship(s).

“And I know we all profess transparency and disclosure with our partners, government and customers but the condition of economy exemplifies that falsehood in spades. And in the industrial realm of life, sooner or later a link in your supply chain will fail badly due to miscommunication intended or otherwise. And I don’t think that now would be a wise time to have that happen.

“Now, I’m going to forget about gnawing your leg off and I’m going to say something which is critical to our recovery in this free enterprise environment.

“There are a few changes which just have to happen if we are going to extricate ourselves from this mess we are in.

1) In layperson’s terms, it’s time for buyers to stop patting suppliers on the head and getting them to roll over or stand on their hind legs for treats.

2) It’s time we all started showing mutual respect as partners, customers and associates.

3) And we really must begin being honest with each other and communicating openly and clearly. Let’s put all the cards on the table, shall we?”

Frank: “OK, now let me take a stab at one of the communication breakdowns – I call it partnering. I hear this term so much from customers. They want to ‘partner,’ they call us ‘Supply Partner,’ and they ask their ‘partners’ to take a price decrease to support them during these tough times. But for some reason I always end up being the junior partner.”

Malcolm: “You know what, Frank? Not only are you being way too one-sided in your thinking but you are assuming to know the circumstances of the price decrease request. I’ll bet you dollars to doughnuts you haven’t even inquired exactly why your customer reasons they should have that discount.

“Could it be that the customer has followed world commodities or base metal markets fluctuating over time and wonder if they are being overcharged under the circumstances?

“Could it be that they believe that due to the increased volume of purchases, they should see some offsetting decrease in costs?

“Could it be that another supplier has undercut your pricing and now they don’t trust you anymore?

“It could be any or all of the above. But you don’t know do you? All you know is that you are being forced to prove your value and you don’t like the extra work.”

Frank: “We earned your business by providing the best cost/value relationship on the planet and you make it sound like you did us a favor. It seems sort of one sided to me.”

Malcolm: “Ships don’t sail on yesterday’s wind. You did earn the business. They selected the best partner they could – you. Times change; circumstances change. Just look at the dollar. A lot of you folks are now changing price lists every two weeks.”

Frank: “How about helping your partner out then? How about a plan to utilize some of your organization’s clout to help us attract other customers or maybe an opportunity to streamline both of our operations? That’s what I call partnership.”

Malcolm: “Okay, but would it be possible for you to investigate ways to reduce your own costs by improving purchasing methods or streamlining inventory flow? And here is the kicker: show me what you’ve done to reduce those costs so I know you’re on the level.

“I know what you are saying and it makes good sense. All parties must be not only very specific in improving our communications but transparency has to be inserted into the equation. Saying we will be ‘partners’ doesn’t communicate diddly unless it is backed up with a description of what our ‘partnership’ means.

“You’re right and you aren’t the only one saying it. Customers must step up and help suppliers to reduce costs.

“So, how will we communicate? Give me some specifics on your definition of a partnership – something that works because it communicates.”

Frank: “Since I mentioned a couple things before, I will provide details around the second one – streamlining our operations.

“First – Let’s look at the order process.

• Orders for broken carton quantities cost a whole lot more to handle. Is there a way we can minimize these to provide for easier handling? I would suggest a plan to build a procedure to eliminate these wherever possible.
• Electronic order entry via EDI eliminates the need for human interface during the process. Can we maximize the number of EDI orders? What can we do to make sure incoming orders are accurate and clean? If training is required on either side of the buy-sell equation, what should we be doing?
• Administrative costs. Handling invoices costs both of us money. Can we work to remove cost by providing summary billing, electronic invoicing or some other process?

“Second – The quotation process.

“Quotes cost money – if we look into the whole inter-workings of the quote, we might be able to improve.

• The annual quote policy can be redundant. Sellers build detailed price lists for products you might buy. A whole lot of work goes into just proving we plan to be fair. Would it make sense to relook at this ancient process?
• Quotes on spot buys should also be eliminated. Either you plan to buy it or you don’t. Why make this a two-step process? We quote – you review – then you send us an order. Why not make this simpler?

“Third – The sales process.

“We typically pay our salespeople for growing their gross margin. If we paid our salesperson to find savings for you, would you be willing to share some of your savings back to our organization – to encourage more savings?”

Malcolm: “It’s a start, Frank. But we’re still not communicating until both sides contribute. You’ve presented some pretty valid discussion points on how partners can reduce costs. But how many of your partners will let you move forward from here?

“I hate to admit it, Frank, but there are more antiquated purchasing procedures and guarded secrets out there than even you realize. For instance, purchasers don’t want you to know the mark up on the materials you sell them once they’re processed. They don’t want you to see how often you rush things in for them only to find it’s no longer an emergency. They don’t want you to see that they are partially to blame for not checking the expiry dates before an item was issued to the manufacturing floor. There are a few things we just don’t want you to be privy to on an ongoing basis. How do we overcome that?

“How do you convince people who secretly don’t want to be transparent for fear of losing that ultimate trump card called control?”

Frank: “I can see where you are coming from because on the sales side we’re the same way. We don’t want you knowing our true mark up. We don’t want you knowing the deals we’re making with other customers on the same material. We don’t want you to know how often we screw up in shipping and invoicing and back orders, etc.

“So here we are, both sides at a stalemate. You want to know what this whole scenario reminds me of? Remember the fat-bellied warden in ‘Cool Hand Luke’? I’ll never forget it when he looked down at Paul Newman and said, ‘Son, what we have here is a failure to communicate.’

“Well, Malcolm, on an industry scale, I’ve got that exact same feeling now.”

Malcolm: “Frank, that’s exactly what I’m talking about. We’ve got to get rid of the Wardens and the Cool Hand Lukes. We’ve got to agree to get along, show our cards and make that first move, take the initiative. Here might be a few ways to make that happen.

• Be specific – forget trying to put a spin on everything. Get down to the facts and present them to clients and potential clients. Now isn’t the time for jargon and jolly words. Create a list of specific benefits tailored to that customer. Include measures of success, time tables and data. Bottom line? Prove how it all saves each other money.
• Research and document your findings regarding how you are able to reduce your pricing. Show your hand but do it in a manner that encourages the customer to show theirs too. Come right out and ask questions regarding their manufacturing methods, specifications, etc. Ask the question, ‘Where do we have to be to make this work?’ Get involved, record the answers.
• Document what you discuss from both sides. Take and publish notes on the important points. List where you agree and disagree as you both become more and more transparent. Don’t walk away until you’ve identified mutual options and actions for the future.
• Involve the right people. I don’t have authority for every decision and neither do you. Encourage your customer/purchaser to involve other departments in the interest of improving a process or saving money.”

Frank: “You make sense. But sometimes I fear this approach might not be palatable to some of my customers. How do I approach this whole thing without endangering the relationship I have worked so hard to build?”

Malcolm: “Frank, if they won’t listen now, they’ll never listen. And if they don’t listen, move on to someone who does. Be honest, open, up front and clear. Here is what you are buying from us. Here are our costs, here is our margin and here is our value. We can save you this much. Now what else do you want to save money on?

“You’re no longer a salesperson, you are a partner. You care and you have just proven it.

“Lastly, be first to open up. Your competition will catch on quicker than you think.”

Frank: “That all makes great sense, but you know what? I liked it better when you fetched up my slippers. GRRRRRRRR.”

This article originally appeared in the January/February 2009 issue of Progressive Distributor. Copyright 2009.

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