Seth Godin suggests that big companies make the buying process "screamingly inefficient"- too many layers of approval, endless meetings, and so on. He believes that when you make a vendor an ally you both benefit.
Yet I've read multiple annual reports over the last five years where the purchasing department has been praised for beating up vendors and reducing overall costs. When everything you buy is viewed as a commodity, price is all that matters. But its not. Are you being sent the best quality product? Does it get shipped to you on time? Do you have to pay top price for service as a penalty for demanding a low unit price? Does the added time spent negotiating justify the discount?
It's easy to view negotiations as a zero-sum game, but not if you look past the deal you are negotiating today.
Peter
Showing posts with label negotiation. Show all posts
Showing posts with label negotiation. Show all posts
Wednesday, April 20, 2011
Tuesday, March 29, 2011
The Leverage of Baggage
By charging for every checked bag, the airlines have changed the relationship with their customers in unexpected ways.
The game is now to avoid checking and getting as much into the cabin as possible, which has led to comical scenes of travelers like myself trying to change the laws of physics in the overhead bins.
But once the passenger carries a large bag through security, they have some leverage. It is in the airlines interest to get as many bags in the belly of the plane as possible. Often passengers can simply "gate check" their bags- as their boarding pass gets scanned a gate check tag is attached to their bag, which they leave at the end of the skyway before boarding. The bag goes in the belly with no money changing hands. Passenger wins.
On my last flight I witnessed the following exchange at the gate:
"I'll give you a drink coupon if we can check your bag."
(Clearly and experienced traveler) "I'll check it for two drinks and the snack box."
"Sold."
Coupons were exchanged, the bag was checked. Experienced Traveler then enjoyed two drinks and a box of random snacks while the his seatmates (including me) nibbled their peanuts and drank their sodas. E.T. used his leverage- a checkable bag- to increase the quality of his flight. Well played.
Changing the rules has unintended consequences. In this case turning gate agents into Monte Hall. Probably not why they got into the business.
Peter
The game is now to avoid checking and getting as much into the cabin as possible, which has led to comical scenes of travelers like myself trying to change the laws of physics in the overhead bins.
But once the passenger carries a large bag through security, they have some leverage. It is in the airlines interest to get as many bags in the belly of the plane as possible. Often passengers can simply "gate check" their bags- as their boarding pass gets scanned a gate check tag is attached to their bag, which they leave at the end of the skyway before boarding. The bag goes in the belly with no money changing hands. Passenger wins.
On my last flight I witnessed the following exchange at the gate:
"I'll give you a drink coupon if we can check your bag."
(Clearly and experienced traveler) "I'll check it for two drinks and the snack box."
"Sold."
Coupons were exchanged, the bag was checked. Experienced Traveler then enjoyed two drinks and a box of random snacks while the his seatmates (including me) nibbled their peanuts and drank their sodas. E.T. used his leverage- a checkable bag- to increase the quality of his flight. Well played.
Changing the rules has unintended consequences. In this case turning gate agents into Monte Hall. Probably not why they got into the business.
Peter
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