Question

You have been the VP of purchasing at ABC manufacturing in New York for a decade and already have established solid relationships with most of your suppliers. You are extremely happy and in close relation with one particular supplier, XYZ Company in San Francisco whom you selected as the supplier of the new personal computers for your company. The price you paid was 10 percent less than any other offers. Now the sales representative of XYZ has approached you about bidding on the new mainframe computer your company plans to lease. She has suggested that you and your wife fly to San Francisco for a special demonstration of the equipment for a week with all expenses including flights, ground transportations, accommodations and meals sponsored by XYZ. She has also said that the company might be able to sweeten the bid by including a software package with the deal. However, you know that funds for this particular software are not available and none of the other vendors has offered a free trip to demonstrate their equipment.

A) Should you allow XYZ Company to pay for you and your wife to go to the demonstration in San Francisco? Explain your answer.

B) Would you ask your company to pay for trips to see equipment from other vendors? Explain your answer.

Answer 1

From the background of the case, as a VP of Purchasing at ABC manufacturing company in New York, the role is to negotiate and take proposals from the listed suppliers of the company. The questions state that the supplier XYZ Company offers a paid trip to San Francisco for demonstrating the product, which actually required for ABC Company and the scope of ABC Company to pay trips to see equipment from all the other interested vendors.

A) XYZ Company to pay for you and your wife to go to the demonstration in San Francisco. The terms of the XYZ is appreciable, but as per the professional conduct and negotiation policies, the offer is not acceptable. As a VP for Purchase, no commitment for paid trips from the supplier, which too involved the family involvement for the company negotiation process is unacceptable, because, in the long timeline of dealing with all the other vendors, a special consideration to one party is partiality incomplete and unprofessional in nature. The best possible steps to choose the final quotation of the product and compare the same with the other potential suppliers based on the figures, and open a space for final level negotiation.

Understand that price isn’t everything in the negotiation, the other factors are more equally important when choosing a supplier, includes reliability and speed, quality of the product, transparency, post-service, and maintenance. Always keep the suppliers at a point, which will directly depend on a wide range of factors such as value for money, reliability, quality, and service.

B) After choosing the right two or three best suppliers, the granting of permission from the company to pay for trips to see equipment is highly relevant and worthy. The most important steps before finalizing the suppliers are (i) thinking more strategically when selecting suppliers, (ii) identify what the company should look for in a supplier, (iii) identifying the potential suppliers in the industry, (iv) drawing up a shortlist of suppliers from the industry, (v) negotiate on the prices and choosing a supplier is important, and (vi) getting the right suppliers for your business at the final step.

The granting of permission from the company to pay for company trips to see the equipment is highly relevant, transparent, and worthy. These official trips pay off through proper negotiation procedures, this helps to build long-term partnership approach, and efficient face-to-face discussions through experiencing the direct product (personal computer) from the supplier’s in a formal and professional way.