Next Level Purchasing - Helping Purchasers Become Indispensable
Home   |   Contact Us   |   Email This Article To A Friend  |  
Photograph of Charles Dominick, SPSM This is the Web-based version of this article. Click here for the printer-friendly version.
  * More Purchasing Articles

Ethical Negotiation With Multiple Suppliers


PurchTips - Edition # 191

By Charles Dominick, SPSM

 

Is It Ethical To Negotiate With A Non-Low Bidder?

I often get questions about the ethics of negotiating with one or just a select number of bidders after receiving proposals. Should all bidders be given the opportunity to negotiate?

Well, here's my rule of thumb.

I create and continuously maintain a ranking of best bidders at the post-proposal stage of the sourcing process. Whether that ranking is based on price alone or a combination of criteria, I always have it. And my personal rule is to not give a negotiating opportunity to someone without giving the same opportunity to all HIGHER ranked bidders.

So, if you have seven bidders and want to negotiate with the bidder that has the third best rank, the bidders ranked #1 and #2 should also be given the opportunity to "sharpen their pencils." I wouldn't worry about the lower-ranked bidders unless I think that they also have a legitimate shot at actually earning the business. Usually, at that point, I've already ruled them out.

Now, if I negotiated with the third-best bidder and, as a result, got "the best deal" and never gave bidders 1 and 2 an equal opportunity to revise their proposals, that would reek of poor ethical judgment.

One thing about this approach is how it might be abused by the suppliers that you frequently engage in sourcing processes. If they know from experience that they don't have to put their best proposal forward because they will have the opportunity to negotiate later, you may find your sourcing process becoming more complex and less efficient than it needs to be.

You also have to do a self-evaluation and ask yourself "Why am I negotiating with someone other than the top two bidders?" In some cases, it may be due to internal political pressure to keep the incumbent.

Using the competitive bidding process to simply lower the incumbent's price without any realistic chance of actually switching suppliers is unethical. So you need to employ some change management to shape the culture of your organization while also keeping the process fair.

(keep reading for a FREE Offer)

Spotlight On Professional Development Opportunities

SPSM Certification

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.

You see, today's employers refuse to reward employees for yesterday's skills. They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.

Distinguishing yourself as an achiever in purchasing is key to sustaining a rewarding career, even in these difficult economic times. Earning your SPSM® Certification  by completing the Senior Professional in Supply Management® Program is to take if you want to bring the most modern purchasing  practices into your organization and achieve your career potential.  Learn how to earn your SPSM® Certification (and  perhaps get an  iPod) at:

 www.NextLevelPurchasing.com



The Latest Purchasing News

 

FREE Offer!

Do you worry about not being able to keep up on the latest developments in purchasing? Then check out our FREE report "Staying Up To Date With Purchasing Using RSS!" This report teaches you how to get the latest purchasing news, trends, and more brought right to you!

To get your FREE copy of "Staying Up To Date With Purchasing Using RSS," follow the instructions at www.NextLevelPurchasing.com/purchasing-trends.html www.NextLevelPurchasing.com/purchasing-trends.html .


Copyright 2009. This article is the property of Next Level Purchasing and may not be copied or republished in any form without the express written consent of Next Level Purchasing. Click here to request republishing permission.