The Definitive Guide to Becoming a World Class Global Buyer

CHAPTER ONE

Thirteen Critical Skills Needed to Become a World Class World-Class Buyer

There are a number of skills needed of which many are not listed in most books or in any school you may have attended, including Harvard Business School. These are common sense to the experienced professional World-Class Buyer and I have limited them to the thirteen skills I think are the most important. I am picking thirteen because I feel lucky.

The thirteen skills are listed below and are not necessarily in the order of importance:

1. EDUCATION

2. PATIENCE

3. TOLERANCE

4. NEGOTIATIONS

5. TACT

6. DIPLOMACY

7. HONESTY

8. ETHICS AND MORALS

9. THE ABILITY TO DEAL WITH PEOPLE AT VERY HIGH LEVELS

10. MODELING

11. FORECASTING AND BUDGETS

12. PRESENTATION AND ORAL SKILLS

13. PERSONALITY

Education

A person desiring to be a World-Class Buyer must have the appropriate education as well as the skill set included herein. He or she needs a Bachelor of Science in Management, Finance or Accounting and a Masters of Business Administration in the same disciplines.

As you see when we get into modeling, total cost and price prediction, that this education is not just desirable, it is absolutely necessary.

The quality of the school does not matter as far as I am concerned because the degrees provide the framework and you fill in the pieces with experience and wisdom.

HINT: If you do not have these degrees and you are already a buyer, proceed in the fastest way possible to obtain them.

Patience

Patience may be defined as being able to wait as long as it takes to get or achieve what you want. Patience for a World-Class Buyer is extremely important and you must possess this skill in order to be successful.

In the United States we expect instant results in every aspect of our lives whether it is dining out, waiting in traffic, having your management approve your plans, goals or individual purchases/contracts.

We don’t always get our way but U.S. Restaurants cater to our every little whim and want you in and out of the restaurant so they can serve more customers and thus achieve greater profits. The only way around this is to ask the waiter to be patient and advise them you will be using your table for an extended time, thus you will be expected to provide a much larger tip than the standard 18-20%, so YOU MUST BE PATIENT. The U.S. Traffic system is under constant scrutiny and everything that can possibly be done is being done by the Department of Transportation, State and Local Governments. New lights are being put up, but are coordinated with all other lights in the system through IT to provide a smoother traffic flow. So YOU MUST BE PATIENT. Management does not always provide instantaneous approval of your plans, goals and purchases. It is management’s function to provide a system of checks and balances and play the devils advocate when reviewing your plans, goals and purchases. It is also their function to ask as many questions as needed to reassure them you are making the right conscientious decision. So YOU MUST BE PATIENT.

You will find that every country outside of the United States has a different culture and is very patient and very slow to make decisions. In most countries establishing a personal relationship with the World-Class Buyer is much more critical than actually negotiating a price or contract. Each country has it’s own style and etiquette as to how they proceed with the overall relationship, but they much be treated as equals in order to gain their respect. This means you will need to compliment them in their personal lives and achievements. This will go a long way in gaining that precious respect needed in successful negotiations. Also YOU MUST BE PATIENT.

Hint: Enough said about patience’s role in becoming a successful World-Class Buyer, but remember these words of wisdom, If you don’t be patient and be very interested in their personal lives, you will most likely fail. Many foreign cultures make a decision as whether to negotiate in good faith, based on your behavior at the first social event prior to negotiations.

Tolerance

What is tolerance one may ask? Tolerance is the ability to put up with as much as is possible in order to achieve your goals and objectives. Only the very best World-Class Buyers have the skill of tolerance. Tolerance is very different from patience. Patience is waiting quietly but tolerance is the ability to wait almost forever and subject yourself to what you may feel is punishment or obstinance from the other party.

Each and every one of us feel that our time is the most important thing in our lives. We like to schedule time and control it, at least those of us that are logical left-brained and somewhat anal-retentive. But we must realize quickly that the other parties we are dealing with have the same feeling of time ownership. No one completely controls their own time, even the President of the United States who has planners to assist in controlling and directing his time. Therefore BE TOLERENT!

Negotiations

Negotiating means two or more individuals exchange ideas, goals, concepts and cost/price information with the purpose to achieve as much as is possible personally or jointly depending upon the situation. We are all negotiators since birth and a great deal is connected to genetics. As a small person we negotiated with our parents and other elders to get what we want. This continues throughout our lives such as when we negotiate to purchase an automobile. We all think we are great negotiators because we got a great deal somewhere, when most of that success has everything to do with the other party giving in, sometimes just to shut us up. In successful situations, both parties meeting somewhere near the middle, in other words a win-win situation. In successful negotiations both parties walk away thinking the deal is fair, honest and that they won as much as they gave away. Successful negotiations are the absolute key to success in business. No negotiations… no business! In order to be the very best World-Class Buyer, one must practice negotiations with colleagues, your friends, your spouse or significant other or do it in front of a video camera for practice. And just remember winning is not the target in a negotiation, but fair honest exchanges between parties is. You will be a very successful Negotiator in the mind of your management if you impact the bottom line and meet budget goals (because coming in under budget provides larger bonuses to management). Management also has the very shallow idea that saving money and winning the negotiation is what we should be graded on. This is where the World-Class Buyer steps up and provides the big picture to management. You tell them The lowest price means nothing and should be way down on the wants list" when negotiating behind: QUANTITY, QUALITY, STRATEGIC ALLIANCES WITH LONG-TERM RELATIONSHIPS. In other words if you don’t have the products or services in the amount you need and the quality provided in specifications, the price might as well be free because you or the supplier cannot do their jobs adequately and the business will shut down once their inventories are depleted. These sort of assurances can only be achieved through partnering or strategic alliances guaranteed in the Sourcing Contracts or purchase orders. Remember great negotiations = great World-Class Buyers.

Tact

What is tact? Well the Webster addition may look something like this: Tact is using graceful diplomacy to convince the other party to follow your recommendations and aspirations proceeding, and during the negotiation. However, the layman’s version in order to become a Professional World-Class Buyer, is as follows: Tell the other party to go straight to hell and have them looking forward to the trip! Some people are very reluctant to look at it in that manner, but the alternative is to be tactless, rude, obstinate and never achieve what it is that you are set out to do.

Now here is another hint for you: If the other party is intelligent enough to attempt to tactfully lead you to agreeing with them and their version of the negotiation, here are some responses that are guaranteed to work:

Inform them: I know what you are trying to do but your supposed tactful approach will not work with me or my corporation.

Inform them: "Your method of approach is rude, obstinate and insulting to my character.

Inform them: My management will not let me proceed in the negotiations until they have a talk with your President or CEO.

Inform them: "If you would like to proceed with the negotiations you are going to have to change your behavioral attitude.

In summary, tact is required to be a successful World-Class Buyer.

Diplomacy

A successful World-Class Buyer is a fantastic diplomat representing their company very well, to the point that companies look forward to doing business with you. You are pleasing, polite, studious in your approach and are eager to learn about the other party and their history and personnel. In other words, take a hands on personal approach with the other company.

HINT: You will know you are a successful World-Class Buyer Diplomat when the other party urges other individuals and companies to deal with you.

Honesty

Be completely honest with a third party, really? Your management wants you to keep information to yourself and only let enough out info to seal the deal in your favor. Management also generally condones stretching the truth or telling little harmless white lies. Management also wants you to review your negotiating strategy prior to negotiations. You can give them an outline of the strategy and goals you want to achieve. Another hint: DO NOT provide them with any detail. The more detail you provide the more details they will ask for, to the point they will want to advise you on your negotiation tactic or join the negotiations. Both are Complete Disasters. Just tell them you will play it by ear, which is the truth, it will be your ear and not theirs. As long as you continually bring home the bacon, or in professional terms, perform as expected, you will do just fine and satisfy Management’s curiosity.

You must be honest and forthright when a third party asks for information, correct? To a certain point. Things you cannot compromise on are the following, for example: Cost of Goods, Profit and identifying the Competition. When the other party asks you for this information advise them that these are things Management has not allowed to be discussed in negotiations unless you are negotiating with Strategic Alliances. Remember, HONESTY IS STILL THE BEST POLICY!

Professional World-Class Buyers always are always successful in negotiation if they are honest with their own Management and the Management an Sellers personnel from the third party’s company!

Ethics and Morals

Ethics and morals are very often confused with one another. Rather than spend a chapter wasting your valuable time attempting to explain the definitions and differences, I decided to insert a summary table:

HINT: When you meet a seller for the first time, bearing gifts or favors, do not accept them unless they are in advertisement form with the company’s LOGO and information on them. (Gifts are often mistaken to be bribes). When offered a gift or favor, one should respond It is against company policy and my morals, to accept gifts. Instead of the gifts, please provide a discount on your products in kind. This is how I got my stellar reputation and reputation is everything.

The Ability to Deal With People at the Very High Levels

As a World-Class Buyer you will be dealing with Senior Directors, Presidents and Vice-Presidents and CEO’s from both your company and the Seller’s company. One must use all of the skills listed in this chapter, especially diplomacy. Brevity and respect are critical as well since Senior Managements time is very valuable.

When speaking with, to, or among senior managers, one must be direct, open and honest, choose your words correctly.

Do not say: "I have made a decision as to how I am going to structure the seven year agreement with the new supplier. Instead on no more than one slide with bullet points state the following:

I. The reason I am in, or asked to be in this meeting is… .

II. I sent you a summary of my bullet points prior to the meeting

III. I ask your approval or consideration prior to proceeding with my recommendations

Management buy in is critical to a World-Class Buyers success. Don’t be afraid to ask for approval while in the meeting.

HINT: Remember, Senior Management has been in your position before so they are aware of the approval process from your standpoint. They demand honesty and politeness. Also, they are just like you away from work and they put their pants on the same way you do. Chances are you have more education and experience than 90% of the managers, so don’t be afraid or humble. You have your chance with Management… use it!

Business Modeling

The superior World-Class Buyers know how to use computer technology to create models that will allow their procurement groups worldwide decrease their workload through Purchasing Models instead of negotiations, create cash-flow for the Finance Group in the Global Corporation and assist Accounts Payable by making the Billing Terms decision very easy through Billing Terms Models.

As I had experience with purchasing Computers, PC’s computer software for both types of computers and the overall technical savvy needed in Global Sourcing. When I joined the Procurement Group at the Bristol-Myers Squibb subsidiary Mead Johnson in November 1991 I assumed I would be joining a world class procurement group, because I had been told so in my group interview (Six people interviewed me), and since all thirty-two buyers had earned M.B.A.s’ just like me, although only one other was a Certified Purchasing Manager named Carol and she too had recently joined the company coming from GE. I had already gained twenty years experience and knew how to use a Personal Computer (PC) very proficiently. I quickly found that although everyone had mainframe terminals at their desk, only two of us had knowledge of exactly what a PC is and its’ capabilities were.

The department had recently purchased a PC placed in a common area where