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Treefrog Handbook

Purchasing

Purchase the best you can get within reason, and expect it to last longer.

There is a strategy as to how we purchase everything. Not everything will fit into these rules, but this will give you a rationale as to why we purchase items in a particular way.

We purchase the best quality products in the marketplace before the cost curve increases into “unnecessarily expensive” because:

  • We expect the product to be more reliable than something cheaper
  • We can expect the product to last longer if it is of better quality, and this will ensure that we get a longer return on our investment
  • There are less setup and admin costs when replacing the product
  • There are less training costs when replacing the product
  • If the product lasts longer, we return less to the garbage. Therefore, we are more environmentally friendly
  • We get more joy during the product’s use by creating more functionality or additional competitive advantage
  • We are the best, and so, we want to be represented by the best
  • We sustain a competitive advantage by staying out in front

The “Purchase Multiple” Rule

Purchase one as an experiment. If the product is Epic, purchase it for everyone.

We hate purchasing one of a product. If you are only purchasing one of a product, you need to ask yourself, “Is this really a Treefrog purchase?”:

  • We want products to match. Matching products look good and are fair to all Frogs.
  • If we purchase a product for one Frog, all the Frogs will want one. If one Frog does not have the new product, it could cause that Frog to think he or she is under-appreciated.
  • If we purchase two and one stops working, we immediately know one is broken because it no longer acts like the other one.
  • We can expect another will break in the same way and anticipate it accordingly.

Southwest uses the “Purchase Multiple” rule and says this of the strategy:

“While other airline fleets can employ 10 or more types of aircraft, Southwest uses just one, the Boeing 737. This results in all manner of cost-saving efficiencies: We only need to train our mechanics on one type of airplane. We only need extra parts inventory for that one type of airplane. If we have to swap a plane out at the last minute for maintenance, the fleet is totally interchangeable. All our on-board crews and ground crews are already familiar with it. And there are no challenges in how and where we can park our planes on the ground, since they’re all the same shape and size.”

The Importance of Brand

Yes, we will pay extra for a Treefrog green one.

Not only do we have a commitment to quality, but also we have a commitment to our brand artifacts. This includes:

  • Colour - Everything you purchase should fit the Treefrog Branding Guidelines.
  • Quality - Everything you purchase, within budget and reason, should be the best quality possible.
  • Modern and Clean - Think about our decor. Think about what everything looks like around our office. If your product stands out, is ugly, or does not fit, Sean will kill you. This is relevant to everything in the server room, in your filing cabinet, in the bathroom cupboard, and everywhere else.

The way we purchase one thing is the way we purchase everything.

Who Purchases Our Products

If you are not absolutely sure you can purhcase a product without asking someone first, ask someone.

If it is under $500, a Pod Champion can purchase it. If it is over $500, you should contact the CEO.

Specific people have specific purchasing rights in order to maximize efficiency:

  • Quartermaster - The Quartermaster purchases everything for the internal operations of computers/phones/etc. Having one person manage this list saves us from having two of anything we do not need.
  • Controller - The Controller purchases everything related to office supplies, etc.

Presenting Your Case

When presenting your case to purchase a product, do not come prepared with only one product you want. Present the case for the product with comparable products. Do your research because we want to make sure we get the perfect product with every purchase.

The more expensive the product, the more research you should do.

How We Purchase Products

If a monthly payment is available, make a monthly payment.

Cash is King in our business, and we are always tight and trying to grow. Therefore, monthly subscriptions are far preferable to yearly payouts. One lump leases are preferred over many small leases.

Why Monthly Subscriptions
  1. We do not pay 14% on the money (usually ends up costing more because we are usually short cash)
  2. We do not get a surprise in 3 years when we stop using the product for something better
  3. We can move with more agility when the compamy switches its service offerings
Why Lease

Leases, though expensive, keep cash in our bank account and allow us to grow. Leases help our credit rating, help add value to our bottom line, and keep the company moving.

  1. Always Lease to Buy for $1 - This way, we can sell the product or keep it longer than expected.
  2. Bundle Leases for Common Business Units - Small leases get lost in adminstration, and we end up paying the lease by mistake years later. Fewer leases mean less administrative mistakes.
  3. Check all Lease Options before Leasing - Leasing people have no soul. Make sure you check the numbers with multiple lease people before signing anything.