The Apprentice – lessons for procurement (yes, really!)

The UK version of the Apprentice last week featured their annual 'procurement' task, where the teams are sent out to buy a fairly random list of items and negotiate the best possible price.

It actually demonstrated some useful procurement and negotiating truths – so let’s take a look at what happened.

First of all, planning is key in any process and every negotiation. Susan, who is only 21, led one team, and perhaps given her experience of running a market stall (she has a degree as well) took charge and had her bunch well organised and motivated.  In the other team, Gavin runs a few opticians shops so thinks he can lead the team. They don't know what a Cloche is.. (they don't have Internet access which makes all this a bit unrealistic of course). But Gavin clearly can’t organise or inspire his lot, who sit around turning the pages of their directories in a desultory fashion for 3 hours....

They find stockists on the phone – or Susan’s team does anyway. In Gavin’s room: “Can you tell me anyone in London who sells Fillet Steak”?  They phone the Ritz and ask for their list of suppliers! An interesting approach to market intelligence – ask your competitors! That doesn't work. (Perhaps we just don’t see it, but they all seem to get just one supplier, then feel they can negotiate when they get there – we would of course find at least 2 to get our BATNA and use competitive pressure…)

But while Susan is organised, her team seem to have found THE most expensive suppliers of everything. They go to the leading top hat maker in St James. “Whatever they say, shoot low, say, like a fiver” is Susan's negotiation plan. They're quoted £365 for a top hat. He won't offer anything off. They leave. The next shop says “If you can get it cheaper try somewhere else”; he also refuses to move – they finally get a penny off –  £349.99 for a top hat!

Jim gets £40 off the Fillet Steak. It’s all about rapport, he says but he does a genius move when he agrees the price with the butcher, then somehow charms the finance man into giving another £10 off as he hands over the cash. Jim is a charmer and a good negotiator.

Gavin's team still doesn’t even know what half the items are. They've found light bulbs – in Teddington, an hour out of London.  Natasha starts by saying £20 is the maximum they can pay. No, the guy says. £30. No. £40. No. Within seconds they're up to £80 and Vincent has stepped in. (That's one problem with the 'lowball' initial offer – you can look pretty stupid if the supplier just says 'no', and you've probably p****d them off too).

Natasha is upset that Vincent interrupted her.  "I could have done more negotiation."  Yes, but you were negotiating UPWARDS Natasha!!

Vincent thinks he's done a great deal as he negotiates 25% off the price of the steak (so most CPOs would be chalking that up as a 25% saving in their savings measurements), but he's actually paying 40% more than the other team! (Which nicely demonstrates the difficulty of measuring savings properly).

They rush into the Top Hat Dry Cleaners and ask if they sell top hats...the owner looks at them as if they're mad.  (The problem of supplier and spend classification demonstrated nicely)!

Gavin is now having a small nervous breakdown.

Meanwhile... “It’s for a really important client”, says Susan.

“How would that make a difference to me”? Replies the lady in the silk shop (a brilliant negotiation response).

Susan's team go to the most expensive tea shop in London. Even after negotiating 50% off, they're paying £187 more than the other team for their Chamomile tea. (A clear message - great negotiation is of limited value  if you've chosen the wrong supplier in the first place).

Spoiler alert

Gavin's team loses because they failed to find 4 of their 10 items – but only just, because Susan’s team had bought the most expensive tea and silk in London. Jim’s £10 of genius with the steak was critical (proving you never know when that last bit of negotiation will really matter).

Gavin goes, not surprisingly, having proved that being able to run a small optician’s business does not make you The Apprentice, or indeed a halfway decent sourcing man. But I’d have Jim or Susan in my team any day.

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Voices (4)

  1. Guy:

    The other lesson is to look at the bigger business objective. Susan’s team almost lost even though they got 8 of the items. They probably would have been better off not buying any Tea or the top hat and would have won by more than the £8 they eventually did.

    The objective is to spend the least (including fines), not make sure you get all 10 items.

    Last year the team that got all 10 items lost as well.

  2. Christine Morton:

    Ha ha Garry – I’m glad I’m not the only one screaming at the television at the Apprentice! I love that show.

  3. Garry Mansell:

    I have decided that from now on that is the one episode in the Apprentice series I am never going to watch. SrAln does it to them every year, “Here is a list of things to go and buy”….Every year I end up screaming at the TV, my dog hides behind the sofa and wont come out for three days and my wife rolls her eyes back in her head and knows I am the biggest smart arse in the world as I once again predict the responses of every vendor the contestants come across. The ““How would that make a difference to me”? comment was the BEST of the program. BUT………. what a great bunch of examples to use in a negotiation skills course. If the BBC aren’t selling this to all of the “trainers” the world has they need shooting, I bet they get anything from 27 pence up to 25,000 pounds for the episode….Rule one, sell it from a shop in St James in London and refuse to negotiate. Its 24,999.99 to you Mr Smith, and please don’t ask for extended payment terms. Credit cards? Certainly Mr Smith, we accept any credit card as long as it is made of paper with the Queen’s head on it and is signed by the Chief Cashier of the Bank of England.

  4. Final Furlong:

    They forgot the 7 Ps:

    Perfect Planning Prevents a P*ss Poor Performance in Procurement.

    There can’t be a single woman anywhere in the western hemisphere who doesn’t think that Vincent is a complete cock (in the company of hens).

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