Pricing for goods and services can be volatile in a global market. Procurement professionals are continually in a process of negotiation and renegotiation with suppliers for this reason. But some companies opt for the easy way out, choosing a contract which writes the process in stone.
While that may be easier, it’s not going to maximize your spend. For those who haven’t done things that way, a process of analysis and re-tooling must be constantly pursued. In this post, we offer you 3 supplier negotiation strategy tips to smooth the way forward.
1. Competition and transparency.
Staying competitive is important to your company, so entering the negotiation process with that in mind is key. You’re in negotiations to get the best possible deal for your company, with the best possible products, from the best vendors you can source.
Doing your homework on pricing is what creates the tension you need in the negotiating process to leverage better pricing from the vendors you’re talking to. Ensure that your vendors are compatible with your company’s mission and that you share common values.
Having a code of conduct in place for vendors will help you narrow your search. In discussing this with potential vendors, it will soon become apparent who’s most aligned to your corporate values (which is just as important as price). Let vendors know that ethical workplaces which follow sustainable practices are always at the front of the line, if that’s the way your company does business.
2. Legal matters.
One of the most important steps you can take when entering negotiations is to be aware of legal and regulatory guidelines concerning vendors in their specific jurisdictions. This can be a complex task, with regulations and guidelines on every imaginable level of government.
If you’re not an expert on navigating these complexities, bring one on board to ensure you don’t run afoul of regulations governing bidding with local authorities. That can mean fines and penalties.
3. Hire an expert.
Dismissing the complexities of procurement is a mistake. Someone with knowledge of the sector and its intricacies should be in place to oversee the process from end to end, to make sure the supply chain is on point and those individual vendors aren’t letting you down.
Hiring a procurement professional with a supportive team is one way to do this. Another way is the GPO. The Group Purchasing Organization not only strategically leverages the resources of many other companies to obtain deep discounts, it manages and negotiates contracts, bird dogs your supply chain and analyzes data to bring its members the best goods and services at an exceptional price point.
Centerpoint Group – collective procurement power.
Your people are moving your company forward and helping you meet organizational goals. While they’re doing that great work, CenterPoint is a GPO which has led the sector for 10 years.
We’re able to deploy collective procurement power which brings your company exceptional savings on every day needs, from cell phones to office supplies.