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.
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.
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.
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.
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.
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.
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.
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:
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