When you leave the office, do you stop being a procurement geek?
I am a Trekkie, so my answer to the above question is self-explanatory. In short, I ask myself: “What would Spock do?”
Moving into a new neighborhood this past May, in which two big schools are within walking distance, we are anticipating a significant number of Trick or Treaters coming up to our door this Hallow’s Eve. As a result, my wife asked me to pick up the usual goodies.
When I walked into our local Independent Grocers store, my intention was to “bulk buy” a pre-packaged mix of Candies such as the one in the image below. (Note: think of it as buying on a prenegotiated contract from an approved supplier.)
Based on the above “pre-negotiated” price, the cost per unit is $.20. Keeping in mind past usage, most people give more than 1 of these sweet trinkets – usually 2 but more likely 3 units per trick-or-treater. As a side note, those who only give one are usually met with a “that’s all cheapskate look” and are likely to have their house “toilet-papered” later that evening – rightfully so I might add.
If you drop 3 units into the eager bag holder’s sack of sweets, the cost per visitor is $0.60, which means you can accommodate 34 kids (I rounded it up from 33.33).
An Off-Contract Maverick
Remember, “upper management,” e.g. my wife, gave me specific instructions on what to buy – which I had full intention of doing – the key word being intention.
Greeting me as I walk into the store is a display featuring candy nirvana (see picture below).
Instead of the usual price of between $2 and $3.50 a bag, the store was selling the above beauties for $0.50 per unit.
Bearing in mind that these a big bags – the Twix for example had 8 of the little bars in a unit compared to the lone little bar in the approved bulk buy option, the decision for me was immediately obvious – I am buying off-contract.
Jack’s Beanstock
When I proudly walked in the front door with bagfuls of my bounty, my wife gave me a look that was probably similar to the one Jack’s mother gave him when he walked into the house with a bag of beans.
Do you realize that by buying off-contract she pointed out that giving one big bag of candy to 100 kids will now cost us $50!!! If you had purchased the pre-approved bulk contract at $19.99 with 100 units, the price would only be $0.20 per unit!!! For 100 kids that would only cost us $20 instead of $50. By buying off-contract, you went over budget by $30!!!
Before throwing the bags out the window, e.g., making me return them for a full refund, let’s pause for a moment and reflect on the following points:
- If we gave 1 unit (trinket) per trick-or-treater, the approved purchase would only be $0.20 per unit – and a direct path to a house TP
- If we gave 2 units (trinkets) per trick-or-treater, the approved purchase would only be $0.40 per unit – worthy of a forgetful smirk and thanks.
- However, if we gave 3 units (trinkets) per trick-or-treater, the approved purchase would be $0.60 per unit. No TP, no smirk, just ho-hum.
Now, let’s consider the $0.50 bags of beans – figuratively speaking, that I purchased off-contract:
- For $0.50, the kiddies will receive a product that offers 5X the candy – maybe more, that usually costs at minimum $2.00 plus per unit.
Which of the above two options – on-contract or off-contract delivers the most value?
I would have to say that although maverick, my decision-making was indeed “quite logical.”
LIVE LONG AND PROSPER!
30
Procurement Insights
A Sweet Procurement Deal? An Off-Contract Tale With A Sweet Ending!
Posted on October 14, 2023
0
When you leave the office, do you stop being a procurement geek?
I am a Trekkie, so my answer to the above question is self-explanatory. In short, I ask myself: “What would Spock do?”
Moving into a new neighborhood this past May, in which two big schools are within walking distance, we are anticipating a significant number of Trick or Treaters coming up to our door this Hallow’s Eve. As a result, my wife asked me to pick up the usual goodies.
When I walked into our local Independent Grocers store, my intention was to “bulk buy” a pre-packaged mix of Candies such as the one in the image below. (Note: think of it as buying on a prenegotiated contract from an approved supplier.)
Based on the above “pre-negotiated” price, the cost per unit is $.20. Keeping in mind past usage, most people give more than 1 of these sweet trinkets – usually 2 but more likely 3 units per trick-or-treater. As a side note, those who only give one are usually met with a “that’s all cheapskate look” and are likely to have their house “toilet-papered” later that evening – rightfully so I might add.
If you drop 3 units into the eager bag holder’s sack of sweets, the cost per visitor is $0.60, which means you can accommodate 34 kids (I rounded it up from 33.33).
An Off-Contract Maverick
Remember, “upper management,” e.g. my wife, gave me specific instructions on what to buy – which I had full intention of doing – the key word being intention.
Greeting me as I walk into the store is a display featuring candy nirvana (see picture below).
Instead of the usual price of between $2 and $3.50 a bag, the store was selling the above beauties for $0.50 per unit.
Bearing in mind that these a big bags – the Twix for example had 8 of the little bars in a unit compared to the lone little bar in the approved bulk buy option, the decision for me was immediately obvious – I am buying off-contract.
Jack’s Beanstock
When I proudly walked in the front door with bagfuls of my bounty, my wife gave me a look that was probably similar to the one Jack’s mother gave him when he walked into the house with a bag of beans.
Do you realize that by buying off-contract she pointed out that giving one big bag of candy to 100 kids will now cost us $50!!! If you had purchased the pre-approved bulk contract at $19.99 with 100 units, the price would only be $0.20 per unit!!! For 100 kids that would only cost us $20 instead of $50. By buying off-contract, you went over budget by $30!!!
Before throwing the bags out the window, e.g., making me return them for a full refund, let’s pause for a moment and reflect on the following points:
Now, let’s consider the $0.50 bags of beans – figuratively speaking, that I purchased off-contract:
Which of the above two options – on-contract or off-contract delivers the most value?
I would have to say that although maverick, my decision-making was indeed “quite logical.”
LIVE LONG AND PROSPER!
30
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