Today’s post is by David Wenig; Senior Account Manager at SafeSourcing.
The answer may be surprising. One may assume that the negotiation begins when the vendors begin quoting. This is a reasonable assumption, but I know that negotiation begins long before this point.
Often, in procurement, a negotiation can begin with the writing of the specification. I find that when the host organization is writing their specifications, they are forced to rely on their incumbent vendors for details about the products or services that they are providing. During this process a vendor may have the upper hand and, as a result, may influence the specification in a way that will benefit them throughout the process. Not so long ago, a specification was written for a fairly simple manufactured product. The specification for this product dictated the use of stainless steel. This would not have been an issue, except that only one of the vendors was able to meet the specifications. It turns out the use of stainless steel was patented in this case.
Even more often, this type of influence can be felt in the days leading up to an RFQ. Typical vendor negotiation tactics during this timeframe may include calling on the sourcing partner or host organization directly to try to get time extensions or to attempt to implement last minute specification changes as discussed above. Worse yet, they may also use this time to negotiate for higher prices. If a maximum has been set for price submission, it is not uncommon to hear feedback that these prices are too low. While these complaints may be valid, the timing seems suspect. In these last minute cases, it is important to react carefully and avoid being forced into a decision that you would not have made two weeks ago.
So, how do you sort through the feedback and specification input (solicited or not)?
You have to make a plan and see it through. Your strategic sourcing partner has experience navigating vendor communications. They are actively tracking the feedback and working with the vendor community make the journey from planning an RFQ to awarding business go as smoothly as possible. Place your trust in both your partner and the process and you will find favorable results.
We look forward to and appreciate your comments.