Use Negotiation Skills To Elevate Purchasing
PurchTips edition #224
By Charles Dominick, SPSM, SPSM2, SPSM3
Are Your Purchasing Negotiation Skills Underutilized?
Many purchasing professionals find themselves in situations where their internal customers (e.g., Engineering) cut deals with suppliers and don't involve the purchasing department until the moment a purchase order needs to be created. This is a bad practice.
Many companies recognize the consequences of not having early purchasing involvement and have policies requiring the purchasing department to be given an opportunity to participate in all supplier conversations for purchases expected to exceed a certain value. If you want to convince your management to implement such a policy, start by touting your negotiation skills as follows:
As a purchasing professional, you are an experienced negotiator. You negotiate frequently, maybe daily.
Negotiation may not be part of your internal customers' job description. By deliberately keeping you out of a negotiation, your internal customer is failing to utilize a resource that can financially benefit the organization.
Suppliers' flexibility with their pricing is dependent on their perceived certainty of getting the deal. When a supplier "seals the deal" with an internal customer and the purchasing department is involved only at the end, the supplier is certain of getting the deal and will not bow to any pricing pressure that the purchasing department tries to apply.
Salespeople are trained - and many are great - at manipulating even the smartest professionals who have their guard down because they don't negotiate every day. These salespeople know what questions to ask that seem harmless but actually get the information that they need to entrench themselves in buying plans and maximize their margins at the expense of the buying organization.
By having a skilled purchasing professional present at all supplier meetings about major purchases, it can help the organization counter these tactics and prevent the supplier from getting that sense of certainty that results in high prices. But negotiation isn't the only skill that purchasing professionals bring to the table. In the next edition of PurchTips, you'll learn three more capabilities that justify early purchasing involvement.
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Other Editions of PurchTips:
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