The Open-Minded Sourcing Professional, Part II

It’s no surprise:  sourcing professionals in huge companies tend to produce more effective negotiation results than sourcing professionals in smaller companies.

I’ve also observed that sourcing professionals in huge companies tend to occasionally be one-dimensional in their negotiation style compared to sourcing professionals in smaller companies, who have to be more creative.  Hey, the “if-you-don’t-want-to-lower-your-price-I-have-five-suppliers-begging-me-for-the-business” line works, so it is hard to argue with that approach.

But what if you were in a smaller company?  How would your negotiation style be different?

And should you consider other negotiation approaches in your current role?  You know, suppliers aren’t necessarily caught off-guard when you kick off a negotiation in typical big company fashion.

2 Responses to The Open-Minded Sourcing Professional, Part II

  1. This is very interesting topic, Charles. I understand what you’re saying, however I believe that “style” of negotiation is something more driven by personality, than by size of company – there are plenty of adversarial negotiators at small companies.
    Though I work for, I’d say, huge Company and always conduct negotiations in challenging but still positive win-win atmosphere, I often take a second thought – what would I do differently if my volumes were ten times smaller, company less famous and the smile at that guy’s face not that warm? Sooner or later every purchaser will find him- or herself in such situation, so it’s better be prepared now.
    Here’s quick list of things to consider for any negotiations:
    1. Start with basics: is there really the need to negotiate or I’d better do something else, i.e. RFP or reverse auction?
    2. Do I need to negotiate with this supplier vs. going to someone more cooperative (producer vs. retailer)
    3. Gather evidence: what is the industry practice? Are my requests legitimate? Do I need RFI before negotiation?
    4. Get better understanding of supplier interests and needs & match with mine. How do value components look from their side? Are they in a bad need of something, so I can improve my leverage?
    5. How can I make my volumes bigger and more attractive? Team-up with other business units (normally a must), external business partners etc.? Consolidate several categories at one more collaborative supplier?

  2. Oleg,
    You have some excellent view points. Thanks for sharing them here.

    You are truly a rising star in the profession. Keep up the good work!

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