Jerry Judge: Why allowing client ‘purchasing’ departments to run rampant is a zero sum game

“They drive me mad!” That’s what my pal said. He was talking about a client’s purchasing department. “They want to know how many how many hours it will take to come up with good creative work.”

The purchasing guy didn’t understand creative work. It happens in an instant. The trouble is the instant needs a lot of preparation and no one can say exactly when it will occur. And anyway, the ‘instant’ has a big responsibility.

It has to interrupt the TV watching relaxation of its intended target without annoying them. It has to leave a pretty powerful message. And it has to be at least as seductive as the programs around it. Then my pal told me that it was a pharmaceutical client. I own some shares in the company. At my stage in life I don’t want speculative investment. I want racing certainties. So I’m ever so slightly at fault in driving the financial performance of the company in question. And in the US all public companies are scrutinized on a quarterly basis. Just in case someone feels like not performing optimally.

Anyway, to banish my vague guilt about screwing up a very nice agency by supporting the efforts of ‘Purchasing’, I turned on the news. And guess what? There’s horse meat in the instant meals. All over Europe. Any cheap meat dishes are vulnerable to being pepped up by the use of some poor old Romanian steeds: cost saving. I wonder if ‘Purchasing’ got involved on this. Some pretty big manufacturers and retailers are having their reputations kicked by sloppy buying.

So now I’m thinking about the whole business of cost saving. Making profit by saving money. It’s what becomes vital when businesses ‘mature’. Growth slackens off. Costs remain constant. Profit margins fall. Supply is greater than demand. And I remember that price and value are very different things.

Here in the US there are huge numbers of cost-conscious businesses. Because in a domestic market this big, one false move can cost a fortune. So big efforts are made to minimize risk. Unfortunately I have yet to come across a company with a ‘Value’ department. I wonder? Could the Value Department deliver more investor success than Purchasing? Because with Purchasing running riot you have a zero sum game. Spend no money and you’ll waste none. Or, put another way, go out of business and no one will take advantage of you.