The top 3 standards you should expect from every supplier negotiation
In articles from managers, or via thought leaders, one type of advice is universally ever-present for procurement professionals, and that is: how to negotiate with your suppliers. Of course, given how critical this skill is, it’s great that there is so much advice out there. But sometimes, it’s also important to look at things from a different perspective, and that is: what advice are your suppliers receiving about how to negotiate with YOU, a procurement professional?
We spoke with several thought leaders on this very topic.
Here’s the very best advice given to suppliers on how to best negotiate with procurement teams, and therefore the minimum standard you should expect from every supplier negotiation you have.
1. Suppliers should know the role of procurement
Procurement professionals, you’re likely not going to like hearing this, but the internet is filled with vague or even explicit complaints from suppliers who have courted a customer for months, thinking that success was imminent, only to have procurement email them stating that there would now be a ‘competitive bidding process,’ they must now ‘agree to all T&Cs’ and that they could no longer speak directly with the client.
This is a source of frustration for many suppliers. But fortunately, when this happens all is not lost.
Instead, suppliers are encouraged to understand procurement’s role in the process, specifically, they say that procurement are the ones setting up the negotiation process, and that the client (the person they may have had contact with initially), may still be the one that approves the final decision.
Fortunately, procurement professionals, suppliers are generally encouraged to respect the value that procurement can bring by setting up a competitive process (So, it’s a good idea to add value in this way, then).
2. Suppliers should work to understand your key business interests
Procurement professionals, who loves it when an RPQ exactly responds to business requirements contained within?
If it’s a yes from you (and it’s certainly a resounding yes from most people in our profession), then you’ll be glad to know that this is the advice given to suppliers out there in the world.
And the advice gets pretty interesting.
Suppliers are advised to ask more questions to understand what the key business requirements actually are, especially – and this may or may not be true in your organisation – ‘in the case that procurement may not have understood the exact goals and concerns of each stakeholder within the organisation, or may not have reflected this accurately in the RFQ’.
How do you feel about that? Would you expect your logic in an RFQ to be questioned? Would you be happy to reveal the thinking that went into every element of your process?
3. Suppliers are encouraged to come to the negotiating table
The last piece of advice to suppliers when it comes to working with procurement professionals is, perhaps unsurprisingly, that they need to come to the negotiating table prepared to create a mutually beneficial arrangement (akin to good supplier relationship management).
Specifically, experts advise suppliers to find ways to politely challenge, disrupt and alter the rules of the competitive pitch (while also respecting the processes that procurement has put in place).
Suppliers are told to take advantage of any power they may be able to garner, including where their inclusion in a tender is desirable, or where the organisation may be dependent on them for any reason.
Further down the tendering process, suppliers are also advised to challenge unreasonable terms, because, as all procurement professionals do ultimately know, losing a valuable supplier is much more costly, so suppliers should always consider contract terms to be flexible.
What do you think of this advice? What advice would you give to your suppliers when negotiating with you? Let us know in the comments below.
Find more Supplier Relationship Management news, insights, and best practises at Procurious.com.
Read more at Procurious:
- Supplier Relationship Management: How to Ace Your First Meeting
- You Ask All Your Suppliers For A 5% Discount. What Can Possibly Go Wrong?!
- 7 Negotiation Tricks Procurement Professionals Must Know
- How to Improve Supplier Experience (and Why)
- Are you annoying your suppliers? Hear what suppliers really want from you!
- Supplier Motivation, A Key Component of Supplier Management
- Stabilise Your Supplier Base with Deep Tier Financing
- How Supplier Diversity Can Help Increase Profitability
- We Need to Rethink Supplier Segmentation to Boost Sustainability
- The Secret of Successful Supplier Selection
- Do You Know What Your Supplier’s Supplier’s Supplier Is Up To?
- How Not To Break Up With Suppliers: 5 Tips From the Movies