Is Half Price Really Half Price?
The Unbelievable Cost of Unbelievable Prices
Attention Purchasing Agents:
Your dad just called. He’s about to have heart surgery. Did you sell his hospital the good cables? Or the “half price” ones?
When you hear a supplier, typically one whose business is located across the oceans, offer you “half price,” you jump, don’t you? Of course! You’d be a fool if you didn’t, right?
What could be better than getting whatever it is for half price? Well, maybe only one thing, you tell yourself: the look of utter satisfaction on stockholders’ faces – and deep admiration for you – at the vast profits they all will be reaping because of your amazing work. “Wow, Frank!,” you imagine them saying. “You are doing a fantastic job for this company. We couldn’t do it without you.”
Fast forward six months. One of your engineers has discovered that the cable this overseas magician manufactured for you isn’t made of the same materials. At first you aren’t too worried. After all, you rationalize, it’s probably an equally high-quality, reliable material …just different. Isn’t it? It won’t matter, will it, if the material is just slightly different?
But then he tells you that the copper that was supposed to be used at the contact points was substituted with stainless steel and that the strain relief broke after just 5-6 simple flexs, instead of the 100,000+ standard your previous supplier used.
Suddenly you feel sick. Your company sold these cables to thousands of hospitals across the U.S. for their pulse oximeter monitors.
The potential liability is gigantic. Pulse oximeters measure the oxygen saturation of arterial blood. Their performance is critical to ensuring that medical professionals have the accurate and reliable information they need to intervene in potentially life-threatening situations.
Fact is, very few purchasing agents consider the long-term, potentially extremely high cost of selling out high quality standards for the allure of low prices.
What’s the old adage? If it sounds too good to be true, it probably is.