Any apparel professional on the supply and manufacturing side of the apparel industry has heard the dreaded words- 'Let the vendor air the goods'.
The usual supplier reactions are-
'But the buyer did not give comments on time, how can they ask us to air the goods?'
'There is no way we can air the goods. There is hardly any margin on the order. In fact already the FOB is based on bare duty drawback advantage.'
'They made so many spec changes which pushed the schedule haywire. Buyer must take responsibility for their part of the job.'
'The lab dips submitted were in acceptable range, we even submitted spectrophotometer delta readings. They kept asking for resubmits, which ate up all the lead time available. How can we be made to air the goods, if they could not decide the color they wanted to buy?'
So on and so forth, depending on the various situations one encounters in the apparel world.
The typical buyer responses are-
'We cannot afford even a day's slide. This is our best selling style.'
'We need to get the right product to market. Spec changes were necessary since the vendor was not able to get the fit right in the first place.'
'Vendor should be able to match the color standard within the time frame they require to keep schedules on track. We are being generous by even accepting the goods with off standard color, instead of simply cancelling the order and claiming for loss of sales.'
'They took ages to turn around the first fits. Due diligence should have been done from the beginning to prevent any delays.'
We often get stuck in this tricky and conflicting situation. The vendor feels that buyer is partly responsible for causing the delay and buyer feels that vendor owes it to them to ship the goods on time, no matter what and should proactively manage the deadlines. What is the best way to handle such situation is the focus of this paper.
Decidedly, each situation is unique and will call for a unique resolution. But for the purpose of this discussion, let us assume the common theme that vendor is not internally convinced about being held responsible for the delay in question. Some part may have been played by the buyer in contributing to the delay as well. So what do you do to put across your point, without appearing to be playing the blame game?
Some things to consider thoroughly before embarking on the negotiation-
A). What's your track record? If you have a reputation for shipping on time, you may have a stronger case. If out of the 15 Pos shipping this month, 14 are on track and only one PO is affected, again you have a strong case. Conversely, if the situation is such that many Pos are facing delivery delay threat and this happened last season as well, then you as a supplier do not have much of a platform to bargain.
B). Sample turnaround timelines. It often happens that the momentum and speed with which samples are turned around reaches its crescendo towards the end of the approaching PCD. In the beginning of the purchase order cycle, the tendency is to be a bit slow and slack in the time taken to turn around the samples. This is a typical student's syndrome which is prevalent in the industry. (Remember the last minute frantic mugging before the exams as a student, while taking it easy throughout). This is more often than not picked up as a basis by buyers to put the ball back in the vendors court. So watch out for this one while presenting your facts.
C) What are your options? Do you have any alternative options or suggestions to still get back on track and avoid delay? For example, you may want to take an exception to submit the fit as a PP or request for an exception to use substitute trims for the purpose of getting past an approval cycle, or you may offer to do split shipment etc. These would then be used as gambits while negotiating delivery extension.
D). How far are you willing to go? Sometimes, the pricing is so tight that you simply cannot afford even a 5 % discount, leave alone an air freight situation. There might be other situation, when there is enough buffers built in the fob to concede a bit by way of discounts. A clear understanding of how far are you willing to concede in a situation is a must before getting into a negotiating situation. This will prepare you to present your case appropriately. Though any smart negotiator knows not to lay his cards out too quickly, and keep them for last stages of closing any negotiation.
E). What's on stake for your buyer? If your style concerned happens to be a best seller for buyer, you hardly have any chances of getting any extensions. Similarly if it is part of a special selling line or occasion, for example 4th July Collection or Christmas Collection, with limited shelf space and huge potential of loss of sales, in the event of delivery slide, there is no way that you will get an extension. On the other hand, if the style in question is part of a core selling which ships on a regular basis, you might be able to negotiate an extension. This knowledge of whats in it for your buyer is crucial for effective negotiation.
Being armed with this knowledge, keeping a cool mind and thinking from a buyer's perspective, you should be able to do a very good job of negotiating. When I was in college I used to participate in lots of debates, and to prepare myself for or against a topic, I would focus on what my opponent is going to speak, rather than what I would speak. This counter focus would help me to prepare a fool proof case for or against the topic I was to represent. I strongly recommend the same strategy for the vendor. Think of what your buyer is likely to counter you with and prepare your case in advance to cater to them.
The strategy you employ will depend on what kind of situation you are in. However a few golden rules to keep in mind while putting across your points are:
- Speak the buyer's language. Make them feel you understand where they are coming from. Example: We realize this style is meant for a special promotion and on time delivery is very crucial for meeting the business objectives. A statement like this in the beginning is most likely to put your buyer on ease and make him feel that you are on his side, and not his adversary. This will bring down defenses and prevent a situation from deteriorating into a war like conflict.
- State the facts in simple, clear and succinct fashion. There is no room for writing long winding complicated communication. Remember, your words, your tone, your silly mistakes are all going to be used by your opponent to fight back with you. Even innocent intentions will be twisted to sound like malignant insinuations. It's a war and everything is fair in love and war. There is simply no room for emotion in your communication, which will make you vulnerable. Attack is the best form of defense and especially when your opponent is guilty even remotely, they will look for your weaknesses and attack you there to break you. Prepare thoroughly before you press the send button on that important email!
- Present any alternatives or suggestions to fix the situation. It is very important to come up with some options and suggestions to deal with the situation at hand. It will steer you clear of any blame game scenario. It will clearly show your focus on resolving the situation rather than on pointing fingers at who is to be blamed. At the same time, it sends a signal that you are willing to make concessions, and expect the same from your buyers. They in turn will be less likely to get adamant and stuck in a deadlock like situation. However, caution must be exercised in not making the concessions all at once. This is a very subtle game and must be played intelligently. You want your buyer to think that they played a great role in resolving a conflict. Each party makes one concession at a time and comes out feeling like a winner. Each party had it their way in the end.
- Make an appropriate justification for your case. Look for things which will be positive reinforcements of your commitment to serving the customer well. It could be your on track performance on other POs, or past seasons. It could be highlighting your going out of the way to shorten the lead time on samples or production schedule to squeeze in as minimal delay as possible. This will reflect professionalism and customer centric commitment on your part. Your buyer is likely to respect you more and take you more seriously than they would any other non performing or average vendor. After all they buyers also need to build good relationships with good vendors to achieve their business goals.
- Sometimes it's better to lose the battle and win the war. You must know which battles to pick. Remember, your relationship with the customer is much more important than the air freight you are going to pay on any one PO. There might be situations when no resolution is forthcoming. You need to make a call at such times on what is more important in the long run. A good relationship with customer will ensure you will have much more business coming your way which will present means of covering up for the loss encountered now, at a later date. Never lose the long term vision of maintaining good customer relationship for a short term gain of delivery extension by getting into unending arguments.
In the end I want to focus on a few mistakes to avoid.
- Do not ask for delivery extension just to cover your back. It serves no purpose and creates unnecessary bad taste for the parties involved. Go out with such a request only in very genuine circumstances.
- Do not nag or irritate a customer with a delivery delay threat, too frequently, every time an activity on TNA goes a bit off track. It is very annoying to be asked for delivery extension 75 days ahead of the delivery date, just because fit comments came in a day or two later than the planned date on TNA. It should be understood that there are enough buffers built in the TNAs to cater to slight deviations from the planned dates.
- Do not ask for an extension and then ship the goods on time. Such cry wolf behavior will undermine your credibility despite your good performance.
These were some of the requisite tips on how to deal with delivery extension negotiation, without antagonizing the buyer. Go ahead, put them to use next time you are facing a similar situation.
Here I refers to the author of the article