Negotiating effectively with suppliers and partners is one of the main keys to efficient purchasing management. It is also a good way of testing the waters and finding the best basis for agreement.
And yet, negotiating is an aspect that companies often neglect. But please realize that, even if you are short of resources, it is perfectly possible to conduct fruitful negotiations with your suppliers and partners.
Maritchou Plamondon, a consultant and purchasing expert at J2, shares her 5 tips for effective negotiations. Try them to see whether they help you optimize your purchasing process.
1. Set your criteria
Negotiating effectively with suppliers means, first and foremost, knowing what you want. Before you sit down for discussions with potential partners, take the time to set your objectives and selection criteria.
This will give you a negotiating strategy that safeguards your interests and puts you in a more advantageous position.
2. Look beyond price
When negotiating with manufacturers, many businesses may be tempted to go for the least expensive option. But this is not always the best choice!
“Successful negotiations are much more than a question of money. You have to evaluate the overall impact of your decision. A cheaper supplier sometimes leads to higher costs in the long term. And don’t forget the operational costs involved in changing supplier.” – Maritchou Plamondon
Keep the following points in mind when negotiating:
- The supplier’s production capacity
- The supplier’s ability to meet delivery deadlines
- Merchandise quality
- Payment terms
So, before allowing yourself to be won over by a potential partner’s low prices, ask yourself whether they meet all the conditions necessary for a winning long-term business relationship.
3. Do your due diligence
Negotiating well involves conducting your own research on players that you are considering, just as you would do before hiring an employee.
With due diligence, you make sure that your supplier is capable of delivering quality products on time. Remember, your company’s reputation is at stake!
J2 stresses the importance of carrying out these checks during negotiations, as Maritchou Plamondon explains: “Due diligence will minimize risks. And, by conducting this type of research, you will save yourself from having to go looking for another supplier at short notice.”
Perform these checks every time you renegotiate a contract with your suppliers. You will always have up-to-date information and be able to keep control over your purchases.
4. Show transparency
Unsure of your approach? Afraid you might not have negotiating skills? Play the transparency card! You will be increasing your odds of success.
Immediately state your objectives. Your main aim is to optimize your purchases and make savings. Let this be clear from the start of negotiations. Your suppliers will generally follow your example by setting out their own expectations and criteria.
5. Have the contract checked out
Whenever a contract binding you to a supplier involves substantial sums, J2 recommends having a legal business partner examine the agreement in all its aspects.
Again, proceeding in this way will help you keep risks under control. And you will be reassured that all clauses set out in the contract are unambiguous, and that nothing is missing.
J2: an expert team to help you negotiate
Don’t forget: negotiating successfully involves being able to assess the overall impact of your choice of supplier.
Need help with this process? J2 offers personalized consulting services to help businesses optimize their purchases. Call on J2’s experts to move onto the next stage and maintain control over your procurement.