By Lloyd Graff
On Thursday, I had the opportunity to spend several hours with Mitch Liss of Edsal Manufacturing, a major producer of steel shelving and office furniture with sales of $200 million, based in Chicago. Mitch gave Noah and I an insider’s view of purchasing politics by big box retailers and huge catalog sellers.
He said that within massive organizations like Wal-Mart or Grainger you find two distinct parties influencing purchasing decisions, the buyers and the global (strategic) sourcing groups.
The shelving buyers who work closely with the sourcing people have the responsibility of making the final call about what product makes it to the sales floor or catalog and how much is ordered. The sourcing guys are charged with scouring the world to find cheaper shelves. Their salary and bonuses are dependent on increasing the amount of dollars sourced, primarily from China.
The purchasing guys have little interest in where the product ultimately comes from, as long as it sells well. This drives a guy like Mitch Liss crazy because every rack and shelf he makes is a sitting target for the strategic sourcing dudes.
What bugs Liss is that the incentives are rigged to favor foreign placement of orders even though he usually offers an equal or lower final price to the reseller.
His biggest irritation is with Costco, who he’s been trying to sell to for eight years without success. He says he can sell a better product for less money than the Chinese currently supply, but the buyers refuse to allow him to be seriously considered head to head against the competition. Evidently, for the Costco buyers, the idea that an American firm based in Chicago can undersell the Chinese is so ridiculous that Edsal cannot even demonstrate its products side by side at Costco headquarters in Washington state. Interesting how Costco has remained blind to the fact that Edsal sells millions of dollars of products to Home Depot, Lowe’s, Menard’s, Grainger and McMaster-Carr.
I would think that an American company would at least get a fair look by a firm that sells most of its goods in this country.
Question: Do you think there should be an inspection fee or tax on every shipping container that arrives in the U.S.?