Negotiating with suppliers: 5 successful techniques for efficient purchasing management

Knowing the different negotiation techniques with suppliers may make the difference between the success or failure of a business. Learn how to become an expert in the subject.

Ideally, every company would find the negotiation with vendors to be the major goal of purchasing management. It is an activity that has advantages to the company itself in a broad sense whereby other important benefits, such as improved financial control and access to improved services and products, will be well realized if exceptionally well performed.

Therefore, it depends on every businessperson or procurement manager to be keen enough and devise ways to help him conduct a good negotiation strategy. In the following article, let us inform you of some tips on how to evolve in this area:.

Stages of a negotiation

A successful negotiation with suppliers consists of the purchase by the company of raw materials and supplies that are appropriate for its financial situation, with their respective operational support and delivery times corresponding to its needs. With the aim of being able to reach this goal, a series of steps must be followed in order:

Explore

It all starts with market research. Once you know what you should buy, you need to find suppliers who have those products. You should pay attention to several factors; the quality of the product, its features, prices, payment methods, and delivery methods.

Comparing a few companies by asking for quotes will let you know which companies are more apt to act as suppliers for your business. It is also worth researching the reputation that these companies have in the market.

Negotiate

At this stage, the negotiation process begins. Having a list of companies that offer the best benefits and their respective quotes, it is time to make attempts to obtain better prices and deadlines or even an increase in the quantity of products delivered.

To maintain

When finding the ideal supplier for your business, you need to maintain a good relationship in order to keep them as a long-term partner. Making the supplier see your company as a business partner, where both ventures can grow together, ensures that better budgets, deadlines and products offered and delivered in the future, which can guarantee the maintenance of your business, and even its growth.

Tips for negotiating well with suppliers

1. Define your goals, needs and prices

Before starting a negotiation, you need to check how your production process works. What products do you need most and their respective quantities? In what time frame do new purchases need to be made? What is the maximum amount your company can pay for these inputs?

This would turn out to be a situation where you will have a contract with the firm, which doesn't enable you to meet your expectations. This can only be avoided by an understanding of the business with correct planning.

2. Be a business partner

One mistake that some sales managers make is to see the supplier as an adversary, making it necessary to take advantage of this company when negotiating to obtain better conditions and prices.

As mentioned earlier, making your supplier see you as a business partner, where both companies can grow together, can guarantee better benefits. In addition, your suppliers will work harder to always achieve your satisfaction.

3. Listen first, then speak

Another common mistake seen during negotiations with suppliers is to start the contact by explaining your needs and budgets. Try to listen first, then talk. By letting the supplier explain their conditions, you can check whether they meet your expectations, making a counteroffer in order to obtain better conditions for your business.

4. Be flexible

It’s important to keep your goals in mind and know how much money you can afford to spend. However, working with an elastic margin can give you more business options. No negotiation is one-sided, and having more flexibility increases your chances of finding a supplier who will be your partner.

5. Anticipate negotiations

By leaving a negotiation until the last minute, when your stock is already low and you urgently need new materials, the chances of getting good conditions decrease drastically. Therefore, it is essential to negotiate in advance. If you are not desperate to get new products, you will have time to check out the best options available on the market and more time to get that discount or a more advantageous delivery condition.

Getting discounts in negotiations

As previously highlighted, getting better prices is one of the main objectives of negotiating with suppliers. We have two more tips for you in this regard:

Do a market analysis

Find out the average price the market is charging for the goods you want to buy. With this knowledge, you can ask for more reasonable and realistic discounts that your supplier may accept. If you liked the quality and delivery conditions of a particular supplier, but the prices they are demanding are too high, mention that you have seen better conditions from other companies.

Show that your business can be a great customer

Show your supplier that your business is growing or has good prospects for long-term growth. Set goals as your business becomes more successful in the market. When the supplier sees your potential, he or she can offer better conditions now, to reap greater deliveries in the future. By maintaining a good image for your company, suppliers will want to do more business with you, adapting more to your needs.