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Management Side
Week of 20 June 2022: Purchasing and Gifts

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This is an old and touchy issue. In the past five years, one of my clients adopted the policy of accepting nothing from suppliers. This included calendars, pens, meals, tickets and so forth.

I've grown to think this is the correct policy to adopt.

Fifty years ago, when I worked for Procter & Gamble, the policy was $25 for meals, period. I can't buy lunch for two people for $25 today, so that is out the window.

P & G also had an interesting policy for tickets to major sporting events. The employee was not allowed to buy them from a supplier, even at face value, for they recognized the ability to even obtain such tickets was a privilege not afforded to all.

Over the years, I have seen policies from zero tolerance (mentioned above) to wide open, anything goes. In fact, there is an area in the United States where I warn suppliers that the graft is so bad, I won't even go there.

An acquaintance was doing work in that area sometime in the last few years and related this story. At lunch one day, he went into a pawn shop which happened to sell guns. The owner struck up a conversation with him. Learning that he was working at the local paper mill (which he probably suspected all along), he immediately took him to a display wall covered with shotguns and said, "These are the ones the boys at the mill currently like."

The whole town was in on the graft game! And from my experience, this town and several others in the same region are in on it, for the local suppliers cover a wide region.

It is simple. Suppliers buy gifts (including lunch) for purchasing managers and others for the purpose of swaying your thinking in their favor. They will tell you it is a way to get to know you better, and that is also true. Yet such activities may cause you to purchase less than the optimum goods or services for your company. And, of course, your company ends up paying for the actual lunch or whatever it is that the supplier is providing--it is built into their prices.

I actually have a client who buys me lunch every quarter. They want to have a discussion with me about general trends in the industry (nothing confidential).

As a supplier of services for the last 30 plus years, I want to buy your lunch, and find ways to move your decision towards me. So, I talk from both sides of my mouth on this subject. It is a tough one.

One way I have found to overcome this (this does not preclude me from buying you lunch) is this. I have developed a unique business card, which is a struck coin like one finds in the military as challenge coins. The reaction to this is very interesting. Sometimes people try to give it back to me, for they see it as something of value (I always manage to persuade them to keep it). Where they would gladly let me buy them lunch, they see this as an extravagance. However, it only cost about $4, or the price of enough gas these days to drive 20 miles to see them. I also know it does not end up in a stack of everyone else's business cards, in fact, I have seen them in subsequent visits on people's desks as paperweights.

Tough subject and one all of us, not matter what side of the negotiating table we sit, should treat with respect, not forgetting our fiduciary duty.

Be safe and we will talk next week.


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