How to negotiate without hurting your supplier relationships

October 3rd, 2014

Avoiding the “us vs them” mindset

Today’s post is by Michael Figueroa, Account Manager at SafeSourcing

When negotiating a sale with a vendor, the wrong process can quickly change the tone of communication from a friendly sales meeting to that of a confrontation. With large accounts at stake and communication tools that can lose the intended meaning of the speaker, misunderstanding can easily breed offence. The process doesn’t have to devolve into a foray that sours business relationships however. The health of your business will require healthy, win-win, long-term relationships with your suppliers, so let’s consider a few rules for promoting a healthy negotiation outcome:

Clear away assumptions

The only assumption you should start with is that you will discover unknown variables during the procurement process. This is why it will be crucial to allow for questions, feedback, involvement from SME’s and stakeholders, as well as flexibility for the process to be iterative. Your team may publish a set of specifications, then find that there were options in the market they weren’t even aware of from the vendor community. Assuming you know all there is to know about a category could force you into a purchase that is sacrificing value without considering other opportunities identified in the process, as well as alienate suppliers who may be trying to help you help yourself.

Think win-win

You and your suppliers know each other’s business: How can you help each other do business better? Things like “If we changed shipping schedules we could save our vendor a ton of money. And if the vendor sent us PO’s through our EDI system we’d save a lot of time”. The give and take of negotiation doesn’t have to be win/lose. Find the variables that make sense for both parties and adds value to the full project, not just the invoice.

Have a clearly defined process

Leveraging competing quotes to drive savings can be exhausting when done linearly. The back and forth over remote location can be extremely time consuming, and the “negotiation room” tactic leaves suppliers feeling short-changed. This is why e-sourcing web-tools are designed to consolidate complexity through clearly defined mechanisms. Bids are collected with a simple and immediate indication of low quote status. Negotiation is technical, not personal, parameters such as top threshold of quote are identified from the outset, and the timeline and specifications are all in one place.

For more information on how SafeSourcing can assist your team this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.
 
We look forward to your comments.

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