Buyer Bits – Freight

vinny02Negotiating aka haggling does come easier for some people. For example, my parents are from Europe and although I was born and raised in North America, my family was comfortable negotiating on both major and minor purchases.  This was part of their upbringing and they are more accustomed to this form of trade or commerce. As a result of having witnessed this growing up they managed to instill these traits in all their children.

Looking back, after over 30 years in the Materials Management field, I have come to realize becoming a Purchasing Agent had much to do with my upbringing.  My parents used every opportunity to expose their children to real life financial transactions and nurtured the importance of achieving the best possible product at the best possible price. To be honest, for our family, negotiating an acceptable unit price on a major expenditure was a necessity.

One of these real life transactions — my Father had me actively involved in the negotiation of my first major purchase. An automobile and at the tender age of 16. Yes I had a car, which I bought and paid for with my own hard earned cash!

Watching my Father grind the Car Salesman sitting on the other side of the desk was an experience or life lesson I will never forget. On one side you have an eager yet scared Buyer (me cause I had to make car payments), on the other side is the wily sales manager. Representing the eager buyer was a man that understood the value of a $dollar and if he had to walk away from this deal and disappoint the eager son he was prepared to do so. The whole process was a roller coaster ride, just when the deal appeared to be ready to close Dad would make the ask for a few extras… like floor mats, mud flaps or some other incidental. It seemed like the process took forever but finally all parties were happy and I was able to sign on the dotted line with Dad as co-signer. Dad ‘s timing for an ask was impeccable and his patience was what ensured we achieved the best possible price.

When I first started out in purchasing as a junior buyer I made a commitment or goal to pay for myself each and everyday I worked for my employer.  In other words, I wanted to save hundreds of dollars daily in addition to performing my regular duties. I would make note of how and when I saved the company money and reported it monthly. This created a real sense of accomplishment. I was doing my part in making our organization more competitive, impacting the bottom line and contributing to earnings.

As this eager junior buyer, one area of responsibility was managing freight movements for products purchased by the procurement team. When we would place an order I would look at the goods, the routing and see if it was a candidate for a RFQ.  Non-routine shipments were not under contract or part of our everyday consolidated freight run so they were prime candidates for testing freight rates in the marketplace. I found the time to generate a RFQ and took on the responsibility. Just by quoting these non-routine shipments we managed to save thousands of dollars every month. An additional benefit was we quickly conditioned our freight carriers to tighten up on their rates across the board.

You might not have time to issue a RFQ or to get two or three quotes on requirements but does that mean you should avoid taking the opportunity to ask your suppliers? Absolutely not…the following approach has worked for the last 30 years and if handled correctly still works today.

Call your favorite carrier first and attain a rate, then make the ask….”Hey Bob, Freight Transportation Guy, I have to buy my kid some shoes this month so can you give us a break on this shipment?” If your freight movements are not under contract and you are not asking for a price concession every once in a while then you are doing your company a disservice.  Make sure you wait until you have a transaction worthy of an ask before you employ this tactic!

If they come back with a NO then ask them to sit tight as you will have to tender it and that you will be in touch. Under these circumstances and when using this approach, I cannot ever recall getting a NO.  The trick is knowing when to make the ask and how you do it. Save your breath if it is a low dollar transaction, wait for a shipment with some value and catch the supplier when they are not pulling their hair out. Each and every time you do this you will improve your spiel and along with saving money you might even make your supplier laugh.

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Reference RFP for Freight Services – Best Freight RFP Sample