Apple Still ‘Old School’ in Procurement and Supplier Relationship Management

Last week, I came across an article in the Wall Street Journal that highlights an ongoing issue I’ve written about the past few years: suppliers getting bullied by large customers.

Would you put up with the Blevinator? Apple still “old school” when it comes to procurement and supplier relationship management.

“Apple procurement executive Tony Blevins’s job is to stare down suppliers and slash prices to the bone, an increasingly vital role,” writes Tripp Mickle in his WSJ article last week titled, “Jobs, Cook, Ive—Blevins? The Rise of Apple’s Cost Cutter.” 

Tony Blevins — or the Blevinator, as he is known — is Apple’s vice president of procurement. Based on the examples highlighted by Mickle in the article, Blevins is as old school as it gets when it comes to procurement and supplier relationship management.

For example, when it came time to find a glass supplier for Apple’s new headquarters:

Mr. Blevins invited several glass makers to the Grand Hyatt in Hong Kong, those familiar with the process said.

He put bidders in conference rooms and went from room to room, pushing them to go lower.

If you don’t come down in price, he said, another bidder would. He used familiar negotiation tactics, including prolonged silences and bluffing numbers, the people said.

It worked. Apple reduced its glass costs by an estimated hundreds of millions of dollars.

Mickle adds that “while Apple got what it wanted, such techniques can strain supplier relationships, some people familiar with his approach said.”

“His job is to Viking a town and get every resource out of it,” a former Apple colleague said of Mr. Blevins. “It’s like killing sheep versus shearing them.”

You can read the article for other examples. I also recommend that you read some of the comments posted, like these two examples:

Robert Fennell: “I’m not impressed by this guy. Some of the described tactics are examples of large corporate aggression on smaller vendors. As a small business owner I have experienced this bullying and slow payment tactic…This seems to me [like an] example of corporate bully[ing] and I’m sure he has no loyalty.”

Zachary Hoffman: “I’m a small business owner and agree with your comment. There is hard negotiating and there is just breaking deals/agreements because your company is larger and can be a bully. My company has experienced similar behavior, though thankfully only [infrequently]. It is usually a new purchasing manager who ‘wants to make an impact’ and ‘shake things up.’ They generally succeed in damaging a number of long-standing relationships, changing little and have, in a couple of cases, gotten themselves fired for engaging in questionable or destructive behaviors. One business lesson that Apple should remember is that you are not always on top. Being a deal breaking bully is all fun and games when you have the power. Power is fleeting and the abused counter-parties will relish the opportunity to return this kind of behavior in the future.”

What do you think? Would you put up with the Blevinator or someone like him? Post a comment and share your perspective.

“What’s in it for Me?” vs. “What’s in it for We?”

I’ll just repeat what I’ve said in the past: Companies of Yesterday take a “What’s in it for Me?” approach to business relationships, where negotiations are viewed as a zero-sum game with a clear winner and loser (and the goal is to always be the winner), while Companies of Tomorrow will take a “What’s in it for We?” approach, which in Kate Vitasek’s words, “flips conventional negotiation on its head and shifts the perspective to where it belongs: viewing the relationship as the substance of the deal, not merely a ‘once and done’ transaction.”

Unfortunately, many suppliers and logistics service providers lack the discipline to say no and walk away from a marquee customer dangling a very large revenue opportunity in front of them (emphasis on revenue, not profitability). They are like sailors lured by the Sirens’ song, straight to a shipwreck.

For related commentary on this topic, please read these past posts: