Sometimes Saving Money Really BlowsBy Greg Harris
How do executives deal with a letter from Greg?What are you willing to do to save a little money? Will you drive across town to save a few cents per gallon on gasoline? Will you resist making a purchase because you've seen the same thing cheaper somewhere else? At Jameco, our low price commitment starts at the top. When it comes to frugality, Jameco's management team is second to none.
Jameco's CEO was suffering from a bad head cold. When I walked into his office, I was struck by the prominence of a roll of toilet paper in the middle of his desk. He was using it to address the steady leakage coming from his nose. A roll of toilet paper? Surely this guy could afford a box of tissues. Maybe there was something else about the roll that he liked. Maybe it was speed or flexibility. He was pretty quick on the draw, spinning the roll with precision to extract the perfect number of squares. Maybe it was that light and flakey toilet paper texture; he claimed he gets less "chafing" with toilet paper. But I think we all know the real reason...it's about value.
I'm no better. When I get sick I prefer paper towels to tissues. The sturdiness of the paper towel seems important to me. I could even argue that the paper towel is sturdy enough to reuse a few times, but that's probably more information than you care to have. The truth is, like our CEO, I'm cheap too. I've always assumed that a paper towel was the least expensive tool for the job.
I decided to use some of the same scientific methods we use around Jameco. I went shopping to find the least expensive nose cleanup material on the market. For the sake of scientific rigor, I held the brand (Kleenex) constant and priced out all three solutions: tissue, toilet paper and paper towels. I also decided that I would price the smallest quantity available for sale. I carefully read the box to see how many tissues, plies or sheets each package contained and then I set up my spreadsheet.
I was immediately pleased with myself. By opting for paper towels over tissues, my study revealed that I was saving 6%. But then I saw that there should be no doubt about who was most worthy of the title of CEO; the toilet paper option was a whopping 14% below the cost of tissues. And that was determined using a "5 square" assumption!
No one likes waste. Jameco's management team may be a little over the top in this regard, but it's these cost-saving genes that are hard at work for you every day. These same genes are looking for great deals and negotiating price savings on your behalf. While our expertise is value, that doesn't mean you have to sacrifice quality. We know that one bad component can cost much more than it ever saved. We rely on a proven supplier network and product testing to make sure that the Jameco definition of value is both low price and outstanding quality.
From house brands to special factory overrun buys, from our pricing methodology to our low price guarantee, it's all designed to drive the cost of electronic components straight down. We work hard at keeping prices low. If we don't get it right, our customers have this remarkably effective way of telling us, and of course, when our customers ask for something, we tend to jump and get it fixed.