Purchasing.com recently ran their fifth installment in their strategic sourcing series – How to Negotiate with Suppliers – which presented a number of tips for successful supplier negotiations. According to the article the following five points are key:
- Know the Market
The right data allows a sourcing manager to develop a strategy that has a high probability of reducing cost and minimizing risk.
- Be Collaborative
Remember that the ultimate goal of any negotiation is to get the supplier’s representative to go back and sell the deal. Consider a neutral location.
- Go for a win/win
Negotiations are most likely to succeed if everyone feels they are getting a good deal.
- Keep things fair
Don’t try to strong-arm or intimidate suppliers at the negotiation table. They’ll just get defensive, and we already know a collaborative spirit is important.
- Aggregate spend
Knowing your complete spend up front will give you some leverage in negotiations.
and the following tips should also be kept in mind:
- Aim for long term relationships
- Be ethical and honest
- Be patient; Talk Less, Listen More; Ask Questions
- Set a Deadline
- Don’t be Afraid to Say No
This is good advice … and we’ve found that our customers who employ these tactics are generally quite successful.