What a buyer cannot concede

Two different reasons for no

When a buyer refuses something, most merchandisers file it under the relationship. That is almost never the reason. There are two structural reasons a buyer says no. They need different responses. Neither is about how much the buyer likes you.

The model forbids it. Whatever the buyer's own business earns its money from is not for sale to you at any price. Giving it up would stop them being that kind of business.

The person does not own it. The company could say yes. The person across the table has no authority to. This wastes more merchandiser hours than anything else in the trade, because the answer is never a clear refusal. It is "I'll look into it", and that can be repeated forever.

Hallgate: the lead time is not for sale

Ghoneim asked Hallgate for a ten-week lead time, so that Ghannam could take more of the autumn peak. She asked three years running.

Hallgate's price of USD 4.62 is possible because of four things, and they all point the same way. Its yarn is bought once a year, on one contract negotiated centrally for the whole clothing programme. Its shop space is booked against a promotion calendar that the grocery business sets nine months ahead. Its shelf price is printed in a leaflet before the cloth is knitted. And its buyer is measured on cost per unit across the programme, not on how fast she reacts.

Every one of those is the same fact in a different department: the price is built out of committing early. Ask Hallgate for a ten-week lead and you are asking it to buy yarn at spot — today's market price, not the contract price — to book shop space it has not planned, and to give up the arithmetic that produced the price you are quoting against. It will not happen, and it has nothing to do with goodwill.

Here is what Hallgate can give, and gives at once when asked:

• An earlier purchase order. Hallgate plans a year ahead anyway. The order sitting on Ghannam's books in January instead of March costs Hallgate nothing.
• A rolling twelve-month programme instead of one season at a time, for the same reason.
• The mill contract opened early at the factory's request, because Hallgate owns the contract and the volume is already committed.

None of those is worth a cent on the price. All three turn guessed line-days into contracted line-days, earlier in the year. A line-day is one production line running for one day. That is exactly the thing that lets Ghannam say yes to a buyer like Volante at all.

Volante: the commitment is the product

Ghoneim asked Volante's merchandiser to confirm the 48,000-piece repeat at the time of the first order. The answer was no, and it was the correct answer.

Volante's margin comes from not deciding. Suppose it committed 60,000 pieces in July, and the style then sold through at 62% instead of the 88% it needs. It would mark down tens of thousands of shirts. Committing early turns a fast-fashion retailer into a department store with a worse cost base. The gap in the commitment is not a flaw in Volante's process. It is Volante's process.

So the ask has to change shape. Volante cannot commit to the garment. It can commit to the cloth, and that is a different question, asked one level down the bill of materials — the list of every material that goes into the garment.

Ghannam's exposure on the repeat is what it writes off if the repeat never comes: USD 124,320 of cloth that recovers only 45%, a loss of USD 68,376, in one season out of three. Turn that into a fee. An option fee is money paid for holding a quantity open. It is paid when the buyer gives the indication, and credited in full against the repeat if the repeat is placed.

At USD 0.59 a piece — 9.9% of the FOB price, the price of the goods at the port of shipment, on a quantity nobody has ordered — Volante's block returns 516.48 a booked line-day. That is within USD 0.38 of Ludenholt's 516.86. At that price Volante's shape stops costing Ghannam anything against the best alternative in the room. It is a number you can walk into a meeting with, instead of a feeling.

Volante will offer USD 0.40. Take it. 491.23 beats the 438.07 Ghannam gets for carrying the risk free, and it beats every other use of those line-days at five weeks' notice.

Ludenholt: you are negotiating with somebody who did not write the term

Ghannam spent three seasons asking Ludenholt's menswear buyer to remove the 2.5% settlement discount — the deduction a buyer takes for paying early. Every meeting was courteous. Every time, the answer was that she would look into it.

She could not remove it. The settlement discount lives in a group supplier terms document that applies to every supplier in every category. Group commercial sets it once a year, and a category buyer has no route to change it for one factory. On this order it is worth USD 8,100. That is a genuinely large number, and it was unwinnable at that table.

In those same three seasons, nobody asked her for the thing she owns outright. The delivery schedule is hers. Widen the window on each of the three deliveries from three working days to seven, and you release the 4.5 line-days of float Ghannam's planner is holding, worth USD 2,325.87 at Ludenholt's own return a booked line-day. Merge the three deliveries into two, and you remove a colour change worth USD 775.29.

Nobody did anything wrong. The buyer answered honestly. Ghoneim asked for the larger number. The larger number was the one the buyer could not reach. Three seasons of asking the wrong person cost USD 6,977.61 of capacity that was available for the asking, and the discount was never once winnable.

The impossible ask is worth 3.5 times the possible one. Ask for the possible one anyway. It is the only one that can be granted.

The two questions, as a grid

One sentence in a meeting finds the right box: "Is that yours to decide, or does it sit somewhere else?" Buyers answer it readily, because it is not a challenge. It is an offer to stop wasting their time too.

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.

What to take away

1. There are two reasons for no, and they need two responses: the model forbids it, or the person does not own it.
2. Ask openly which one you are hearing. It is a normal question, and it saves both sides a season.
3. When the model forbids a commitment on the garment, move the ask down the bill of materials to the cloth.
4. Price the option instead of arguing about the risk. Ghannam's number was USD 0.59 a piece, and it accepted USD 0.40 knowing exactly what it was giving up.
5. The free asks are routinely left unasked, because they are worth less than the impossible ones. Ask for them first. They are the only ones you can be given.