If you’ve recently joined (or will soon join) the procurement team of a supply chain organisation, you will at some point undoubtedly be involved in procurement negotiations with suppliers. To help you prepare for those events, I want to share some tips for success in negotiations.

 

The reason for sharing this information is simply because I’ve seen many procurement teams miss one of the most important elements in negotiation—Solid preparation.

 

Some of the most successful procurement negotiations are those for which at least 75% of the entire process is taken up by preparatory activity. So in this post, I’d like to focus on one particular aspect of preparing for procurement negotiations—gathering intelligence about the company that will sit across the table.

 

Know Your Adversary

 

Know Your Supplier

 

Now I’m not suggesting for a moment that negotiations should be adversarial. In fact, the opposite is true. However, there is no getting away from the fact that in procurement negotiations, you are there to get the best possible value from a buyer/supplier contract. Similarly, your prospective supplier is there to get the most profit and the most favorable terms it can. That’s the nature of the game.

 

When you and your team are sitting across the table from a key supplier, about to begin negotiating, the most potent weapon you can wield is insight.

 

If you do your homework and know your supplier’s organization, you will know what points can be leveraged during discussions to extract maximum value from the deal. In the following section, you’ll find some tips for learning as much as possible about the people, culture, and business standing of the company you’ll be dealing with.

 

Intelligence Gathering Tips

 

Background Checks

 

First of all, find out the names of the supplier’s negotiating team members. Then hunt for their profiles on Linkedin.com. Depending on how much detail they provide in their profiles (and whether or not they are Linkedin members), you may be able to generate some perceptions about the individuals you’ll be meeting with at your procurement negotiations.

Next, visit the supplier’s company website. Find out what you can about the company’s background and history, plans for growth, and operational facilities. If the website has a “press release” or “in the media” page, review this to discover the latest news concerning the organisation.

While on the supplier’s website, see if the company lists any of its past or present customers. If it does, revisit Linkedin and try to find profiles for the customers’ procurement leaders. Your team may then be able to make contact with some of these people and see if they’re prepared to discuss non-confidential aspects of their own negotiations with the supplier.

Another way to gather intelligence before procurement negotiations is to read any public financial reports which may be available. If the supplier you are dealing with is listed publicly, you can probably access its annual report, from which facts can be gleaned to strengthen your negotiating position.

 

Prepare for Procurement Success

 

Procurement Success

 

As a procurement professional in the supply chain world, learning to negotiate successfully should be one of your primary areas of development.

There are many skills you can work on to increase your negotiating effectiveness. However, nothing beats solid preparation before sitting at the table to discuss deals and contracts. Knowing the company you’ll be dealing with is a key element in preparing for procurement negotiations.

You can learn much more about negotiation and other facets of supply chain procurement at The Supply Chain Leaders Academy. For example, numbers 5, 12, 13, 54, 75, and 76 of our eClass series all contain insights relevant to a career in procurement or purchasing.

If you’re not yet a Supply Chain Leaders Academy member, why not visit our home page, where you can find out about some of the many membership benefits?

 

Contact Rob O'Byrne
Best Regards,
Rob O’Byrne
Email: robyrne@logisticsbureau.com
Phone: +61 417 417 307

 

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