Lessons · Lesson 6 of 6
Reading a buyer before you quote
Answer five questions about a buyer you have never met, using evidence that is already public, and change your quotation to match.
Lesson 6 of 6 · 18 min
The enquiry from a company you have never heard of
An email arrives on a Tuesday. A buying office you do not know wants a price on QP-4165 for a retailer whose name you half recognise. 40,000 pieces, autumn. It asks for a price and a lead time by Friday.
Most factories answer that email with a price and a lead time. But the price depends on five questions the email does not answer. Here is the useful part: four of the five can be answered before Friday, from evidence that is already public. The fifth you answer by asking.
Cheapest evidence first
1. Their standard supplier terms. Ask for them when you acknowledge the enquiry, before you quote: "Please send your standard supplier terms so I can quote against them." It is an ordinary request. Buyers send them. Reading them takes one afternoon. The document holds the settlement discount, the chargeback schedule, the delivery-window rule, the inspection regime, and the clause on retrospective claims. Every one of those is money. Ghannam traded with Ludenholt for two years before anybody in the building read Ludenholt's terms document. The 2.5% in it had been paid eleven times.
2. Their filed accounts. In the European Union a limited company must prepare annual financial statements, have them audited where required, and publish them. That is what the Accounting Directive is for. It is not a favour the company chooses to do you. Two lines in those accounts tell you more about how a buyer has to buy than an afternoon of meetings will: stock days and trade payables days.
3. Their shops, or their storefront. Count the options in one category. Note the price ladder. Go back six weeks later and see how much has changed. A range that turns over almost completely in six weeks, and a range still on the rail in October, are two different businesses. They cannot buy the same way.
4. The labels in their garments. Country of manufacture is on every one. A range built in three countries means a buyer with deep supplier relationships and long commitments. A range built in twelve means a buyer that moves.
5. Their history with you, if you have one: how many indications turn into orders, how many specification changes arrive after the size set, and how long an approval takes. Nobody else has this, and most factories do not record it.
Two lines that diagnose a business
Stock days is inventory divided by cost of sales, times 365. Payables days is trade payables divided by purchases, times 365. Subtract the second from the first and you have the funding gap: the days of stock the buyer pays for out of its own money instead of its suppliers'.
| Volante | Ludenholt | Hallgate group | Panmoor | |
|---|---|---|---|---|
| Stock days | 61 | 148 | 39 | 96 |
| Trade payables days | 44 | 96 | 51 | 62 |
| Funding gap, days | 17 | 52 | -12 | 34 |
These four sets of figures are illustrative. They were built for this course, against invented companies. They are not copied from any real filing. What is not invented is the method, and what the method finds.
The funding gap predicts the shape of the failure. Compare this table with lesson 5. The four rows line up one for one.
Hallgate at -12 finances none of its own stock. Its suppliers finance all of it, and a fortnight besides. When a season disappoints, it has nothing tied up to sell off. So it pulls the only lever it has left: the volume and price of the next programme. That is why the disappointment arrives in March as a smaller order, and never as a dispute.
Ludenholt at 52 finances nearly two months of stock with its own money. When that stock does not sell, the money is already spent and sitting on a shelf. The only place left to look is backwards, at the people who supplied it. The retrospective markdown request is not a character flaw. It is the balance sheet talking.
Volante at 17 has almost nothing tied up. That is the whole design. When a style fails, its lever is simply not to reorder. That costs Volante nothing, and costs its supplier a warehouse of cloth.
Panmoor at 34 owns the goods and owns no shops. So it cannot mark down and it cannot cancel. Its only lever is time, and its request is always a delay.
What each answer changes in the quotation
| What you found | What changes in the quotation |
|---|---|
| Commitment cover under half | Quote an option fee on the indicated quantity, or a cloth deposit. Do not quote the price on its own |
| A settlement discount in the terms | Add it to the price. It is not a discount, it is the price |
| A retrospective-claims clause, or a funding gap above fifty days | Put the expected ask in the cost sheet as a line, at the frequency you have measured |
| A licensor or a parent brand in the approval chain | Add the committee calendar to the critical path. Quote a longer lead time, not a higher price |
| The order placed by an agent | Run the four-line test, and credit-check whoever is named in the buyer field |
| Quantities below your dye-lot minimum | Quote the leftover cloth as a price, in all three of its versions |
| A delivery window with a chargeback | Quote the float you will hold, in line-days. Then see whether asking for a wider window is worth more |
Nothing in that table is a refusal, and only one line raises the price. Most of what reading a buyer changes is the shape of the quotation, not the number in it. A factory that sends a shaped quotation tells the buyer, in the first document they ever exchange, that it understands their business. That is not a small commercial advantage.
Ghannam's one-page buyer sheet
Eight lines, filled in before any price leaves the building. Keep it in the buyer file, and go through it again at each annual review.
- What kind of business it is, in one line: who they sell to, and who owns the shop.
- Who decides the cloth, and who pays for it.
- Weeks from commitment to delivery, and how much of the quantity is firm on the day cloth is ordered.
- What triggers a repeat: a number, a person, or a stock-out.
- Who carries stock that does not sell.
- Stock days, payables days, funding gap, and the date of the accounts they came from.
- The approval chain, with each committee's calendar.
- The failure shape to expect, and the one protection that works against it.
Ghoneim's version of that sheet for Volante has one more line, written in after the season lesson 5 describes: indications that turned into orders, 8 of 12.
Check yourselfYou cannot get the accounts — the buyer is private, or in a country that does not publish them. What is the next best evidence?Show the answer
The purchase order and the terms document. You can always get these, because the buyer has to send them to trade with you at all. They give you the payment days, the chargeback schedule and the retrospective-claims clause directly, so you do not have to infer anything. After that, the shops: option counts, the price ladder, and how much of the range has changed in six weeks. That answers the commitment question well enough to quote against. The accounts are the fastest route to the funding gap, not the only one. And a buyer with no published accounts is itself an answer to the four-line test in lesson 4.
Prompt · Sort my asks into what this buyer can grant and what nobody there can
Before a negotiation, when you have a list of things you want and no idea which of them you can win.
Act as a commercial negotiator advising a garment factory. I have a list of asks for one buyer, and I want them sorted before the meeting. I have wasted whole seasons asking the wrong person for the right thing. The buyer: name and type [BUYER AND TYPE]; who I am meeting and their job title [PERSON]; what I know about how they are measured [PASTE]; their standard supplier terms, pasted or summarised [PASTE]. My asks, in the order I care about them [LIST, WITH THE VALUE OF EACH TO ME IF I KNOW IT]. Put every ask into one of four boxes, and say which box and why. (A) Their business model allows it AND this person owns it. Ask now. (B) The model allows it, but this person does not own it. Tell me who probably does in this kind of organisation, and what to say so that they pass it on rather than absorb it. (C) The model forbids it, but there is a substitute ask that gets me the same money by another route. Name that substitute. (D) Nobody in the building can give it. Stop asking, and tell me what the ask is really about, so I can drop it cleanly. For box C, be specific about the substitution. If they cannot commit to a garment, can they commit to cloth, a dye lot, a knitting slot or a trim booking? If they cannot move price, can they move quantity, the delivery schedule, the size ratio, the packing or the approval calendar? Then rank all the box A and box C asks by value to me per hour of negotiation. Give me the one opening sentence I should use to find out which box an ask is in when I am not sure. Finally, list any ask on my list that would cost this buyer more than it gains me. Those are the ones that damage an account for nothing.
AI can make mistakes — check anything you act on.
What to take away
- Four of the five questions can be answered before you quote, from evidence that is already public.
- Ask for the standard supplier terms when you acknowledge the enquiry. It is normal, it is free, and it is usually where the money is.
- Stock days minus payables days is one subtraction, and it predicts how a buyer will behave when a season goes wrong.
- Most of what you learn changes the shape of the quotation, not the number in it.
- Keep a buyer sheet, and put your own measured history on it. How many indications turn into orders is the most valuable line on the page, and nobody else has it.