A friend shared with me part of an email his company recently received on behalf of one of his customers, a Mega-Global Company You Would Know, from a self-styled "Procuremement Outsourcer" that processes my friend's (tiny) invoices to Mega-Global:
[Procurement Outsourcer] and [Mega-Global] have partnered in an effort to increase savings and reduce costs associated with supplier alignment. The result is a new Hybrid Pricing Model, under which each supplier will be responsible for paying an administrative fee that will be withheld from all invoices submitted to [Procument Outsourcer/Mega-Global] for payment. This fee will be based on the size of the supplier company.
Nowhere in this email, of course, was the rate or size of the new "administrative fee" supporting the "Hybrid Pricing" model. A couple of emails later, my friend learned that his firm would now pay 2% to Procurement Outsourcer simply for the privilege of billing Mega-Global. Of course, Procurement Outsourcer will still take 65 days to pay, upon completion of the project. Meaning my friend's tiny firm could be paying 2% to finance Mega-Global for six months or more.
Five questions immediately come to mind for Procurement Outsourcer and Mega-Global:
- You're kidding, right?
- Did it ever occur to you that "Procurement Outsourcer" sounds like a corporate euphemism for "Pimp?"
- Did it ever occur to you that "Hybrid Pricing Model" sounds like a corporate euphemism for "Sticking Suppliers With the Bill for Bad Outsourcing?"
- Did it ever occur to you that suppliers might just increase their bills 2% to cover the "administrative fee," driving Mega-Global's overall spend up by — let me do the math here — 2%?
- No, really, you're kidding, right?
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