Sharing three top tips to get your vendors to sharpen their pencil.
Today’s post is from Dave Wenig is the Senior Vice President of Sales and Services at SafeSourcing Inc
The purpose of a request for quote (RFQ) is typically to reduce costs. Whether you are trying to get the same product or service at a better price, or you are in need of the best pricing available for a new product or service, an RFQ is one of the best ways to get costs reduced.
More recently, that has been challenging with prices for nearly everything constantly on the rise. So how do the best negotiators find success in a challenging market?
Strategy: This may seem basic, but this is often overlooked. The best buyers have a detailed strategy. At SafeSourcing, we create a strategy for every RFQ we deliver, and we create that based on feedback from the markets, from the customers, from the vendor community, and from our own database of RFQ event history. Write out your strategy if you want to be successful. Be specific.
Reserve Prices: Using on online RFQ process like SafeSourcing’s SafeSourceIt™ eRFx tool likely gives you some interesting options. One of those that has been used more heavily recently is reserve pricing. A buyer can set an unpublished reserve price that indicates to the vendors quoting that the customer has a price point in mind and will not be satisfied if that is not met. Make this part of your strategy upfront for best results and set realistic reserves that are tied to a realistic goal.
Be Realistic: However, you feel about it, prices are significantly higher than they were before. If you had a fixed price contract that you negotiated 2 years ago, you are unlikely to get that same price again now. Do not fall into the trap of setting the parameters for your bid too tightly. An example would be setting a max quote based on your 2-year-old pricing and forcing vendors to sit out because they cannot compete. Again, as part of your strategy, you must consider your current price as well as any price increases you have been notified about or are anticipating. That plus the appropriate markets will guide you toward success.
These are just three tips out of many, and we are always happy to share more. Let us know what types of challenges you face, and we will share some guidance!
For more information, please contact SafeSourcing.