Dappled sunlight spattered the auburn quilt beneath massive oak trees within fabled Sherwood Forest. Silence unremitting but for the twittering trill of a tiny chickadee or finch performing within the branches enveloped the sanctity of the hallowed land. Among the greenery, tranquil spirits basked unseen in the blessed forest sanctuary while invisible nymphs of Serenity and Peace flitted playfully within the undergrowth.

Or so it seemed.

Robin “Frank Hurtte” Hood crouched within the waist-high foliage flanking the forest corridor dividing Sherwood Forest. This was his day. After nearly a decade of oppression and subjugation, finally at last, his most hated mortal enemy on earth was due to travel this way on his way to Nottingham. Today, the tranquility of his woodland home may be shattered for a few short moments. But today justice would also prevail and heaven would rejoice. Yes, today victory would be his. On this day of all days, righteousness would succeed. Praise the Lord. True justice would reign again at last.

Sheriff Malcolm the Greedy of Naughtyham had robbed from the poor for the very last time. He had deceived and spun his last prevaricating lie. He had perverted and deviated, extorted and purloined the wealth of the working class to its final bitter end. Finally on this glorious day, the sun would not set without a full recompense for the evil deeds perpetrated by this source of inherent evil and wickedness. Sheriff Malcolm the Devious must be stopped.

Robin Frank Hood was not alone. Others, dozens of others, had joined him. There was Little Big John, Friar Pluck, Swill Scarlet and scores more. Today, when that carriage of carrion drew near to where they lay concealed, retribution would be theirs and this time it would not be the wealth they sought but the very heinous perpetrator of injustice himself. It would spell an end to the policies now inflicting the poorest peddlers of their great land. Today, they would capture that madman and ransom him for all he was worth and more. Included in that bargain would be a written promise of fair play, sealed upon duplicate parchments and signed by the King of Angle Land himself.

Today, Robin Hurtte would savor the sweetest victory.

Frank’s head bobbed once or twice, battling blessed dreamland while a band of weary Distributor Sales Reps whispered from beneath hotel lobby plant fronds discussing the latest evil Sheriff Purchaser’s diabolical and outrageous demands. Nothing had changed and the green tights didn’t help a bit. The sheriff’s demands are just too taxing for the good folks of the manufacturing distribution woodland to permit them to eke out even a paltry living. Sheriff Malcolm Evil Heart’s latest burden was simply too revolting to swallow. But now, Robin and his crew were planning some revolting of their own.

For too long, Robin and his merry men/women had toiled silently, toiled industrially, to support the needs of the nefarious Nottingham notables. Frank relived the days of old when good Earl of Purchasing ruled the fiefdom and they were treated fairly. Had they not always done their part to provide the Earl with venison and firewood? But last year the good Earl became King and a new Sheriff took control. Things changed. There was a new Sheriff in town – he was greedy. He would do anything to make himself look good – even if it cost the fiefdom their best supplier.

With effort, Frank resurrected his tired mind back to reality and brought the meeting to order with a cough.

Frank: “Gentlemen, this little fairy tale rings far too real and common to a number of us here in Distributor Land. Longstanding customers – the ones we have helped earn millions of dollars in profit – suddenly and unilaterally are demanding more and more and more.

“We distributors have legitimate grievance. Far too frequently, the deals have been inked, the agreements made and everyone thinks they know where they stand – only to find themselves facing a whole new set of parameters!

The merry band nodded in solemn agreement, far from merrily. “Here’s a perfect example,” continued Frank as he rearranged his quiver.

“One MRO distributor friend of mine has worked long and hard to develop a relationship with a Fortune 500 manufacturer. He delivers equipment of all kinds based on the quantities provided by the purchasing department. Suddenly that customer has demanded that the distributor take back surplus equipment...or else.”

Malcolm: “Er, excuse me gentlepeople. Mr. Robin Hurtte? I thought it was you. I just happened to be passing by the lobby and caught an earful of what could possibly be interpreted as a discourse of disharmony emanating from a gaggle of men in green tights. Not surprised to find you in the thick of it, I thought I should stop by and see if I might assist in some innocuous way.”

Malcolm smiles. “I recognized the lamentation my dear Mr. Hood (or do I mean Robin Hurtte?), I’ve heard some of it before you know.”

(Frank looks taken aback. The suits are for a company promotion. He hadn’t intended the Evil Purchaser to see him wearing it.)

Malcolm (smiling): “That was a fairly bold and broad statement you made, fair Robin. But you understand that I would have to see exactly what was written on the original parchment to side against you properly.

“The basis for the demand to remove equipment after such a time could be based upon a number of factors of course. For instance:

• Was it a significant product failure and now the customer wants the equipment pulled as a safeguard to further downtime?

• Was it a series of ongoing maintenance problems with the equipment which caused the change of heart? Have the units been reliable and trouble free?

• Were the units purchased and never used for some reason? If so, was it due to a shortfall on the distributor’s part? The buyer’s?

• Was it an issue regarding documentation? Acceptance? Certification? How about test or analysis reports? Industries such as gas and oil, government, etc., require the whole package prior to acceptance of goods and, yes, sometimes it may even take a few years.

• Did the customer order an excessive amount?

“There are a number of reasons why the Sheriff may have had no choice but to pull away from the transaction.

“What exactly did the purchase order/contract specify? Are the terms and conditions clear and is the document signed?

“Gentlemen, this is most likely to be the crux of the situation. What did you both agree to at the outset of the agreement? What did you specify and write down? What did you sign? These are the issues left to debate. Not what anyone said or implied. At this point nothing else has relevance after two years have passed.”

The wicked Sheriff looked over his eyeglasses at the men in the room. Each squirmed in discomfort.

“Just remember this. A purchase order is a legal document; it is a contract with legal and valid ramifications. Perhaps that’s where the real answer lies.”

Frank: “All these are good points, my Purchasing Pal. In this particular case, and in far too many other cases, the issue landed in your final category. The customer’s own people simply ordered too many parts – then stored them in a project trailer for two years – now they demand that we take them back. I haven’t heard the end of it yet, but on the last go around the customer simply stated, ‘This was an expected part of being a supplier.’

“We all know that transactions cost money and those of us in distribution know that returns cost more (about 8X more) to process than normal outgoing orders. In my humble opinion, this kind of exchange needs to be associated with an offsetting restocking charge.”

Malcolm:  “Hmmm, an interesting development, my fine woodland friends. Apparently the babouche has been transferred to the other foot! You’ll recall how incessantly I have howled at you over the high cost of returning goods sent damaged, over incorrect items shipped, over shipments, yadda, yadda, yadda by yourselves. And now at last you are grieved at encountering what we purchasing folk have been experiencing so often, so repetitively and so long without resolution.

“Eight times more, you say? I can see how aggravating that must be for you. I was thinking somewhere around four times more but you know best. Yes, I see your dilemma. Aggravating isn’t it? So what exactly did you explain at the time of order? Were you clear and understood? Because you are right, we do expect our suppliers to accept returned goods. Haven’t we always, and haven’t you always?

“That said, gentlemen, let me say this. As the evil Sheriff, I shouldn’t be telling you this but there are ways to prevent these ugly situations from occurring without breaking the bank or causing antagonism to develop between customer and seller.

“‘My benefit?’ you ask. Why, I want you to make lots of money so I can tax it back out of you, of course.

1) First and foremost write it down. You may think that you understand each other at the consummation of a contract or agreement, but believe me, at least 50 percent of the time you aren’t both on the same page on at least one or two important points.

2) Whatever is written, read it well. I’m fairly certain that most outside sales reps rarely read the P.O. after it’s sent in and, if they do, they skim over it hastily. The buyer/customer wrote what he/she heard. He/she may even have favored themselves or flavored it with a little something sweet for themselves (like net 45). I know it’s old fashioned, but READ!

3) At the very beginning, before you sign off, call the customer and clarify each tiny point that doesn’t agree with what you thought you both agreed upon. Don’t wait, do not delay. Do not pass Go or you will go directly to jail.

4) Be prepared at the beginning. At the negotiating stage, know your business.

5) If corporate policy states that you will only accept back 10 percent of the order, state this before the contract/P.O. is printed.

6) If corporate policy states that you will accept any or all of the order back with a 50 percent restocking charge, then tell your customer up front. This is where you’ll learn if you’re a real salesperson or not.

7) If restocking charges are part of your own personal discretion, spill your guts and make it clear what you expect. Rely on past experience with that customer. Compare it to similar orders with other customers. Do what you must do but get it in writing, take them for a beer and all will be well.”

Frank: “To your lucky seven points, I would add a single additional point.

• Never, ever – (even if it is a juicy order) accept consequential damages as part of the terms without speaking to your company’s legal counsel. Consequential damages equate to handing over your checkbook if any kind of issue transpires.

“I know one distributor salesperson who received a nice order – around $25,000 – from the local university’s generating station. The terms and conditions attached included acceptance of consequential damages. In his excitement to move the order through his company, he signed the terms (and returned them to the customer). Everything went well until one of the parts failed. The distributor did the right thing – air-shipped a replacement and hand-delivered it just six hours later. The salesman and one of his support people even hung around to help with the installation. Would you call this great customer service? They did. Unfortunately, the university looked at it as a $100,000 loss. And, they expected the distributor to foot the bill. That’s what you call consequential damages.

“Malcolm, while we are on the subject of terms, another area of friction with distributors comes with payment terms. You (purchasing guys) decide to move our mutually-agreed-upon terms from 30 to 45 then 60 days – no warning – no discussion. The check just comes late. Period!

“The really unfortunate part of this whole deal is: many times this is the result of a single rogue employee. We know it’s not company policy, but for some reason this guy sees delaying our payment or holding back on a retained payment as a way of improving his personal numbers. The implied threat is, complain to my boss and I will fix your wagon later. I’m not saying these people are totally evil, because totally evil means they have no positive purpose in life. Most of their victims would agree they do have a purpose – without them there would be a shortage of bad examples.”

Malcolm:  “Excuse me, Mr. Hood, did I hear you say rogue? Ironic somehow, how you and your motley crew of industrial forest vagabonds, who have been robbing the rich and giving to the poor (namely yourselves) for eons, are now up in arms because a table or two has turned on you?

“Who changed the rules in the first place? We all know that at one time invoices followed a week or so after the order was received. This was logical and understood, as it permitted the customer to receive the goods, unpack the merchandise and inspect it prior to use.

“But suddenly without warning or advance notice from ANY supplier, invoices were suddenly catapulted out the very same day. Before the ink could even dry, your invoice was in the mail, postage paid. No wonder it costs you 8X as much to process a return! Your invoice speed went up in equal proportion to customer service and satisfaction declining! Gee, that sounds like a fair trade, Robin.

“Furthermore, you now lay in hiding to attack me while in reality you have brought much of your problems upon yourselves. And don’t forget, the point is that suppliers changed the rules first. Customers were unable to meet net 30 (which was the norm for decades) at least partly due to the lightning bolt invoices which strike before the rain hits the ground. Your customers were compelled to move the payment dates out to compensate for that little sleight-of-invoice trick.

“Now, like a snowball, everyone is using invoices as a tool to assist their cash flow numbers. I guess we should really be thanking you.

“And I see that you are stabbing in the dark again regarding just who to aim your arrows at. Typically, Robin, it is not the buyer, or the purchasing people who set the terms of payment. Just as it is in your own company, it is most often the accounting department that dictates 30, 60 or 90 days. Why not try to negotiate better terms? Your buyer can help with that. Really. In just about any industry (but manufacturing) you can usually negotiate your preferred terms.”

Frank: “Well, my procurement pundit, I like the idea. Salespeople, purchasing and customer accounting sitting down to explore ways of doing business better. I see a trilateral negotiation hammering out a tough but fair win-win agreement.

“My vision of Camelot (sticking with the Medieval English theme) paints a picture of a vendor relationship that develops into a business partnership. The companies on the upstream side of the supply chain understand their customer’s goals, visions and long-range business problems and deliver a never-ending river of ideas and improvements to move toward those goals.

“Like any business partnership, the deal balances the long-range needs of both organizations. I make something, you make something, but a single individual can skew the deal. To illustrate, here’s another fairy tale (you purchasing guys like fairy tales). Returning once more to the emerald green forests of Sherwood – the present situations remind me of the fox riding across the river on the back of the goose. Midstream, the fox decides to eat the goose. The fox enjoys a tasty morsel of goose flesh. Is this a good thing? No, because our fox can’t swim.

“Squeezing the life blood from your partners sounds good in the short haul but you might choke on the toothpick after eating the goose that lays the golden eggs.”

Malcolm:  “I couldn’t agree with you more. Business partnerships can be a wonderful thing if everyone is on board. And that means from RFQ to invoice closure.

“Unfortunately, for the arrangement to work, everyone needs to sit down and look the friction points straight in the eye. We must attempt to reason out what is beyond the other’s actions, not just react to what we don’t like others doing just for the sake of reacting. We also need to be clear, concise and professional when entering into an agreement.

“I don’t like goose, Frank. It tastes too fowl and leaves me feeling down.

“What I really like is asking too much from a supplier, and getting it! People push until they are stopped. Push back but do it nicely. We’re all consumers, Frank, and we all want as much as we can get for our buck (buck, venison — get it, Frank? I thought you would, you old poacher.)”

Frank: “It sounds like all we really need to do is communicate. To this end, I would suggest that every sales pro out there clip this article, and take it to their next call. Read it with the procurement professional you deal with. Then talk. How can we communicate better?”

Malcolm:  “I can’t believe it. I’m actually getting the last word in here.

“I agree with Frank. Bring up the subject of communication at your next tailgate meeting. Talk among yourselves about customers and their policies and their terms. Talk about the possible pitfalls of supply. Anything worthwhile is rarely at the end of a smooth road.

Also talk openly to purchasing folk. Communicate clearly. Ask questions. Don’t be embarrassed. Even in business, to those who ask, much will be given.”

Send us your comments. We welcome your input. We usually feature the ones we receive the most of, but surprise us and send us your incidental ideas too.

And yes, before you ask, Frank often wears green tights.

This article originally appeared in the January/February 2008 issue of Progressive Distributor. Copyright 2008.

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