PurchTips edition #213

While the global economy teeters between growth and a double dip recession, this may be your last chance to use a few negotiation techniques that work extremely well in rough economic times. Here are three techniques that you can still use effectively before the economy truly does improve.

“Make The Supply Chain More Competitive.” It can be a challenge to get direct materials suppliers to be excited about reducing prices and improving their terms for you. However, if your organization loses deals because customers consider its proposals “too expensive” and your supplier competes with the suppliers of your organizations’ competitors, helping your suppliers see that slightly lower prices can result in significantly higher volume through more deal wins by your organization can make negotiation easier. This technique is extremely effective because you and the supplier are on the same team seeking mutual gain.

“Share In The Sacrifice.” Suppliers are never happy to trim their profit margins solely just to make their successful customers even more profitable. However, if you can point to layoffs, salary reductions, and budget cuts in your organization as evidence that your organization isn’t negotiating strictly out of greed, it can make suppliers feel more sympathetic than defensive.

“Forced To Consider Competition For Everything.” Few things strain buyer-supplier relationships more than the threat to switch suppliers or competitively bid deals with current supply partners. However, the threat of competition is sometimes the only technique that motivates suppliers to reduce costs. In such situations, discussing how economic conditions have forced your organization to reevaluate market pricing for everything it buys can make aggressive negotiation feel less like a personal attack, thus limiting damage to the relationship.

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