6 tips for successful supplier negotiation
Supplier negotiation can be a tricky part of the procurement process. You’re not just seeking the best value for money (although this is a huge part of it). You should also hope to build strong, positive relationships with your suppliers. Especially if you’re hoping to work with them on future projects.
That being said, do you know what it takes for successful and rewarding supplier negotiation? In this blog, we’ll go through six tips for negotiating the best value for money from suppliers.
-
Build a relationship
The first stage of your supplier negotiation strategy should be to build a relationship with the supplier. By opening the lines of communication through being approachable and professional, suppliers are more likely to be open to negotiation. So, by establishing a relationship with your chosen suppliers, you’re more likely to find better value for money.
-
Reach out to more than one supplier
When you’re looking to buy services or products, you should reach out to more than one supplier for a price. You could even inform each supplier about the other businesses you have contacted. This way, each supplier will be prepared to give you their most competitive price.
-
Communicate with their customers
Another supplier negotiation tactic that you can use is to identify and communicate with their past customers. For example, you can reach out to these customers for feedback about the supplier’s performance.
This can work in two ways. If the customers were happy with the supplier’s performance, then the goods or services might be worth the higher price. Therefore, you can take this into consideration when you’re negotiating with the supplier.
On the other hand, if the customers were unsatisfied, you could actually use this to lower the price. However, you should take the negative feedback into account and ensure you still want to work with the supplier.
-
Figure out the cost to the supplier
Before you start the supplier negotiation process, it’s a good idea to work out the actual cost to the supplier. This means you’ll be well informed about the work involved and how much the supplier can alter their pricing.
-
Make yourself a buyer of choice
A good way to negotiate with suppliers is to make yourself a buyer of choice. What do we mean by this? Well, suppliers might be willing to lower their costs if it means working with a trustworthy buyer. Especially if the opportunity will help the supplier secure a pipeline of work.
So, as part of your supplier negotiation strategy, think about your track record. What are your strengths when it comes to working with suppliers in the past? If you find something that is likely to appeal to suppliers, lead with that during the negotiation.
-
Think like a supplier
The best way to negotiate with a supplier is to think like a supplier. So, put yourself in the supplier’s shoes and think about what they want out of the deal. Not only will this help with price negotiation, but it’ll strengthen your relationship going forward.
In summary
Without a strategy in place, supplier negotiation can be tricky. However, there are certain things you can do to improve your chances of reaching your desired outcome. These include:
- Start on the right foot by building a positive relationship with the supplier.
- Reach out to more than one supplier and inform them of this. This way, each supplier will be prepared to give you their most competitive price.
- Contact their past customers for feedback about their performance. This will either justify the supplier’s quote or give you an advantage when negotiating with them.
- Work out the actual cost to the supplier, so you know how accurate their pricing is.
- Make yourself a buyer of choice be demonstrating the advantages of working with your business.
- Put yourself in the supplier’s shoes and think about what the supplier hopes to achieve from the deal.
How can Hudson Procure help your organisation with supplier negotiation?
Procure Consult
With Procure Consult, we offer support with tender management and ad-hoc procurement consultancy. Our expert team will manage the end-to-end procurement process or offer assistance with any stage, as and when required.
Procure Health Check
With Procure Health Check, we’ll conduct a full review of the strategic and operational procurement processes within your organisation. We’ll identify the areas that need improvement and help you drive greater value from the procurement process.
Procure Analyse
The purpose of Procure Analyse is to conduct a high-level analysis of your spending activity. We’ll help you understand your current strategic purchasing behaviour and highlight areas that can deliver greater value. Procure Analyse is also offered as part of Procure Health Check or as a standalone service.
Procure Outsourcing
With Procure Outsourcing, we deliver a range of procurement solutions on an outsourced basis, completely bespoke to you. This can range from delivering multiple tender projects as a package to delivering the full procurement function of your organisation.
Procure Post
Are you trying to find a supplier for your project? Post your tendering opportunity onto any of our 11 sector-specific portals for FREE with Procure Post!
Housed by our sister company, Hudson Discover, our portals host thousands of tendering opportunities for organisations of all sizes. For an additional cost, we’ll even help you identify your requirements and find the most suitable suppliers for your business.
Get in touch for a consultation and find out how we can help your business drive better value from procurement.
Check out our other blogs for further Procurement Insights:
