Looping the Hen

Generally a Dollar, 1

I don't blog much about my job. I enjoy it a great deal, and never want to risk saying anything that might breach confidentiality or even suggest a hint of an ethics issue.

Today, however, a prospective vendor had me frustrated beyond comprehension, and I just have to share a little of it. For those who don't know, I supervise the Purchasing Department for a Fortune 250 company with over $8b in revenues. Basically, my department's job is to buy stuff, cheap. And we do it pretty well, reducing our annual budget by over 25% in the last 36 months, while increasing the overall amount of stuff we buy. And those are 'real' numbers, not fudged. Meaning, if I spent 10 bucks last year on something, I bought the same stuff this year for $7.50. Yes, we're cool like that!

Anyhow, since last week I have been trying to acquire an item (cheaply!) we were in short supply of at some of our facilities. We'll just call them widgets. So, our prior widget provider decided to move their plant from one location to another this month, but didn't let us know. When folks started complaining they weren't getting their widgets, I investigated and found out what happened, and that our widgets would be a month late. Not even so much as an apology. Needless to say, I was not amused.

So I started a search for an emergency provider, and almost immediately found one through Google. It is a company that has a strong rep, and has actually quoted for me before a couple years back. Big, over $300mm, reputable. Their quote came back at a great price and we issued a PO, indicating the three locations I wanted our order shipped to. And there started a migraine-inducing argument with people who apparently have no clue about their business. (Or any business, for that matter)

So say I have 1000 Little People that Tammy wants to buy from me because she loves them so much and wants to play with them. I offer her a deal at $1.00 per Little Person, and $10 for shipping and handling. Ok, so far so good. Now, Tammy, being the particular shopper that she is, decides she needs the Little People to go to 3 different locations (Bethany and Tarpy both need Little People also, apparently). Well, being that I want her business, and she told me she was going to buy 10,000 Little People from me later in the year, I want to cultivate the relationship. So I say, ok, I'll charge the same $1.00 per Little Person, and 3 x shipping and handling for $30 to cover my additional costs. Make sense so far?

To you and me, yes (I hope!), but not to this vendor. Here's how the vendor wants to play that situation. I want to buy 1000 Widgets from them at $1.00 each and $10 shipping, for a total of $1010. Then I tell them I want those widgets shipped to 3 locations. I expect to be charged a little extra for additional packaging, freight, etc., or in these terms anywhere from $1030 to $1100.

Their response? Ok, because you are shipping to 3 different places, we're going to charge you $3.00 per widget, and $10 shipping each to 3 locations for a total of $3030. Umm, huh? Iniitially I figured someone just got their wires crossed and I wrote an email asking for them to review my order. No mistake, they said. Hmm, maybe I didn't word my question very well.

Umm, Mr. Customer Service Guy...I'd like to buy 1000 of your widgets, please tell me why you are going to charge me $2000 extra dollars to put them into 3 boxes and have the UPS guy ship it to 3 places? I even wrote up some detailed examples of how this was crazy, and the Customer Service rep writes me back and says. I'm sorry, I don't understand your question. You want to ship to multiple locations, so we're increasing your unit cost.

Now, I guess I don't expect everyone in the world to get exactly why this is wrong (though I bet most do). Unit cost is based on volume; shipping and handling is the amount of effort it takes to get the order out the door. My unit quantity was the same, just being shipped to multiple locations. Not only were they going to charge me additional shipping and handling, but they were also going to charge me a higher (double actually) unit cost.

Does this make sense to anyone? If I am missing something, someone please let me know. I know Saint works in an industry with lots of freight movement...does this make any sense to you?