Negotiations
Training
Getting
the Best Deal for Your Company:
Negotiation Tips
When Dealing with Vendors
We've already
talked about the
importance of negotiating the right deal for your company when
dealing with vendors. This is in contrast to an approach most people
take - negotiating
for the cheapest deal. Now we will look at the proper
way to negotiate with vendors and supplies so that the right
deal becomes the best deal.
For the most
part, negotiating
with vendors is no different than with other parties. While
some people like to think that purchasing departments have vastly
different needs than others who negotiate, the reality is that the
skills required
are essentially the same. Purchasing
departments must go through the same negotiating processes,
must deal with the same types of personalities and face the same
pitfalls of negotiating with dishonest
negotiators.
Granted, more
care is required from a preparation stand-point as a greater emphasis
is placed on the selection
process before a negotiation takes place. Otherwise, purchasing
departments must ensure that their personnel are well-trainer
negotiators, not well-trained purchasing negotiators.
However, there
are a few tips that will help purchasing departments with the negotiations
they must face on a regular basis.
* Taking an
Account of Where You Stand
- Negotiations take place not only with new vendors but also with
existing ones. From time-to-time, purchasing departments should
review their existing
relationships to determine if the current prices, terms and
conditions they have in place are still comparable with the market.
Has the price of a particular item or service gone down since your
last contract was signed? Have interest rates fluctuated to the
point where it makes sense to
renegotiate terms? It's up to you to determine how often you
should review your vendor agreements. For Fortune 500 companies
with a large number of vendors, the time between reviews may be
much longer than a mid-size company.
* Comparing
Apples to Apples - When considering a new vendor for an existing
product or service or deciding to purchase a new product or service,
many companies build requirement docs to compare
vendors and services. In many cases, an internal meeting will
first take place to determine what requirements should or must be
met for a vendor to be selected. These factors should include applicable
items like budget, product/service specs, terms, shipping, ability
to customize a product/service, delivery dates, payment terms and
so forth.
* Make
Wise Decisions - Again, getting the best deal is more important
that getting the cheapest deal. Do your due diligence to make sure
that a cheaper product or service is the same as other options.
It helps to prioritize those items that will factor into a decision.
Your requirements doc should be used to compare options, not to
make a decision. It is up to you to determine which of the factors
will weigh more or less in your ultimate decision.
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