Arena Blog

Star Wars Saga: Negotiate Better Part Prices Without Jedi Mind Tricks

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Arena_DemandOEMs across the galaxy loathed negotiating with Watto, the greediest and most mean-spirited contract manufacturer in all of Toydaria.

Headquartered in downtown Mos Def with second and third tier suppliers hidden across the planets, Watto consistently exploited the fact that OEMs, who outsource their manufacturing (and consequently their material planning), were left blind to evaluate and forecast their total component needs. Without knowledge of the total aggregated usage of components, OEMs had no leverage to negotiate with supply chain partners on price-based part volumes. This lack of visibility gave contract manufacturers like Watto the upper hand in price talks.

Not even the shiftiest Jedi mind tricks—even those wielded by a revered Jedi Master, like Qui-Gon Jinn—could improve bargaining position with Watto.

“I wanted to buy some parts from Watto, but I told him I didn’t have cash and tried to (making air quotes) ‘convince him’ that he should accept my Discover Card,” recalled Jinn. “Watto snapped, ‘Discover Cards and Jedi mind tricks don’t work on me—only money. No cash—no parts—no deal.’ “I felt violated by the inflated prices he was charging for parts but helpless to bargain. I was so frustrated I wanted to punch him right in his nose…trunk…beak?”

The Jedi Master knew he needed a strategy to strengthen his negotiating leverage with Watto. To strengthen that you ask how?

Turns out that Jinn, who had just inked lucrative sponsorship deals with Pennzoil, STP and Budweiser to manufacture his own line of pod-racers, had a high volume need for millions of tiny capacitors to build both onboard and embedded electronic entertainment consoles for his luxury and mid-size racers. But he didn’t know how many common modules used the same insignificant part across disparate product lines. To gain greater part visibility so as to better negotiate attractive volume price discounts, Jinn turned to Arena Demand.

Arena Demand works with Arena’s flagship product Arena PLM BOMControl.  It reduces purchased component costs by aggregating the usage of all individual components across multiple products. This visibility provides leverage to better negotiate with supply chain partners on price-based volumes.

“Arena Demand allowed me to shave microns off my tiny penny components—heretofore ignored—that added up to millions of dollars in savings,” said Jinn, proudly flipping his luxurious mane of hair back and forth as though starring in a shampoo commercial. “Arena Demand was created for OEMs like me to gain leverage in negotiating with the Wattos of the world.”

Eventually, Jinn’s negotiation position became so strong that when he entered the Chalmun’s Spaceport Cantina, the most notoriously exploitive CMs across the galaxy would visibly quake, averting their gaze in abject fear.  The Jedi Master became so formidable, he was subsequently able to bargain for the release of Watto’s slave (and Jedi prodigy) Anakin Skywalker who was formally tendered over to his custody.

As more OEMs across the galaxy discovered how Arena Demand enabled a fast, efficient way of looking across BOMs and product lines to update forecasting as products change, Watto could no longer charge exorbitant markups for parts. His wanton ways were splayed open as a warning that OEMs possessing Arena Demand should not be trifled with. Watto was now broke and friendless. Compounding the suffering of Watto’s isolation was his cheapness, which made dating difficult, especially for someone with craggy teeth and a hooked trunk, juxtaposed against diminutive wings.

Jinn took pity on Watto and took it upon himself to offer the uncomely creature some secret Jedi “hook up” advice.

“Look. I’m no George Clooney, but I learned from Jinn that even a hideous blue insect like me could find love if I just started being more generous,” said Watto, his bug eyes welling with tears. “OEMs should count their pennies but suitors should not. I now understand in matters of love how a man spends—or fails to spend—reflects how caring and giving he is as a person,” adding with a sniff, “Arena Demand was a blessing in disguise, man.”

Soon after that, Watto got a European styled haircut, bought a bottle of Georgio Armani Aqua cologne and started taking his dates out to more upscale restaurants. Not over-the-top fancy mind you, so as to not appear showy.

With Arena Demand, OEMs can identify track, roll-up, and count even the most inexpensive components, turning pennies into dollars – and in some volumes – millions.