Some purchasing agents see negotiating with suppliers as a competition. They’re more concerned about coming out with the better end of the deal than about forming a strategic business partnership. But taking this approach with supplier negotiations can only set you up for short-term gain and long-term loss.
Managing vendor relationships is less about finding the best deal money can buy than about building a valuable business relationship. When negotiating with a vendor, approach it as a conversation to see how both parties can help each other succeed. The best way to think of vendor negotiations is to aim for the best possible cost at the closest match to your company’s needs. Here are six tips to get the most out of your negotiations with suppliers.
6 TIPS FOR A SUCCESSFUL NEGOTIATION WITH VENDORS
1. SET THE STANDARD
As the customer, you set the standard for the vendor-client relationship. Most people will only rise to the expectations that are given, so if you lower your standards to meet the vendor, you’re sure to get less than you want. Instead, know ahead of time what your expectations are, and don’t settle for a supplier that isn’t prepared to meet them.
2. PREPARE AHEAD OF TIME
There’s nothing better you can do for yourself than to prepare ahead of time and do your research before talking with the vendor. Learn as much as you can about the supplier and their products.
- How do their prices compare to the industry standard?
- What do their customers and review sites say about them?
- How do their service offerings compare to other vendors, and to your own needs?
- What are their actual costs?
Also be sure you know precisely what your needs are, and what your budget is, and what the scope and timeline of your project requires.
3. TALK TO MULTIPLE SUPPLIERS
Even if you’re short on time, talk to at least three suppliers. Not only will it give you a better range of options, it can help you find a better deal. Tell the suppliers you’re looking around—often it will incentivize the supplier to offer a little extra to win the job.
4. HELP YOUR VENDOR HELP YOU
When you talk with suppliers, take the approach of forming a mutually beneficial partnership. Your negotiation should investigate how you can help each other. Find out how you can help them reduce their own costs or make their process more efficient. By understanding their needs, you can help lower costs for everyone.
5. SELL TO THE VENDOR
Jun Loayza of Lion Step Media says to think like a supplier. “They have the product and want to sell as much of it as possible…A supplier that sees dollar signs will make a partnership with you. The trust and credibility you build will determine the terms of your partnership and favorable rates.”
In other words, be prepared to show them the value you can provide to them—especially if you’re willing to negotiate a long-term contract. If they see you as an investment into their business, you’ll have more success with negotiations.
6. BE SOMEONE SUPPLIERS WANT TO DEAL WITH
People want to help people they like. If you’re easy to work with and interested in helping the vendor, the vendor will be interested in giving you the best quote they can. Be honest and open in your negotiation. You don’t have to divulge every piece of information—but trying to swindle a better deal will only ruin your chances of finding a vendor you love doing business with.
MAKE IT A WIN-WIN FOR YOU AND THE VENDOR
The supplier negotiation process is your opportunity to identify your next valuable business partner. Use strong communication practices to build and maintain rapport. When negotiating, aim for the best possible cost at the closest match to your company’s needs—but don’t make it all about the money. In the end, you want to work with your suppliers to build strategic partnerships that help your businesses succeed.