How Expensive Suppliers Negotiate, Part II
PurchTips - Edition # 184 August 11, 2009
By Charles Dominick, SPSM
How Do You Probe A Supplier's Value Proposition
In the last edition of PurchTips,, I explained the supplier negotiation tactic I call "de-commoditizing" to justify a higher price and how you should handle it in negotiations using five questions. The first two questions were (1) Is the supplier meaningfully differentiated? and (2) Do the supplier's differences have a measurable financial benefit to your organization?
The next three questions are:
- Can The Supplier's Financial Benefits Be Proven? Any supplier can claim to save you money, but how well do those claims hold up in the real world? Were other customers able to achieve real monetary benefit and track the impact on their companies' financial statements as a result of taking advantage of the supplier's unique capabilities?
- Can The Supplier's Financial Benefits Be Guaranteed? Even if other customers have realized positive financial results from the supplier's differences, will you? There is always a risk that you won't. So who should bear that risk? A supplier guarantee will give you assurance that your organization's bottom line will be impacted the way that you expect it to be.
- Did You Ask For More Attractive Pricing And Terms Anyway? Just because a supplier can differentiate itself successfully doesn't mean that there is no room for them to make their pricing and terms more attractive. You can still ask for improvements! As the old saying goes, "If you don't ask, you don't get!"
Using these questions to analyze suppliers' claims of differentiation will help you determine whether the suppliers' differences have value to your organization and should be considered or if the differentiation claims are just sales tactics that should be discarded. Do be aware that taking a supplier's unique advantages into account can sometimes result in an unexpectedly more profitable procurement for your organization, despite a higher price. So keep an open mind, but use these questions to focus on what is most important in making a world-class supplier selection.
(keep reading for a FREE Offer)
Spotlight On Professional Development Opportunities
In purchasing, there is the top talent and there is everyone else. In which category do you belong?
As a purchasing professional, people are always trying to figure out your talent level. Whether it's a current employer deciding who to lay off in a bad economy, a company seeking to hire a new purchasing manager, or even a supplier trying to determine the capabilities of his negotiating counterpart, people are always evaluating whether purchasers are true professionals or just "average buyers."
Sure, most purchasing professionals will feel that they are among the elite, but how can you prove that you are? Earning the SPSM® Certification is a powerful way to confirm and communicate that you are among the most talented purchasing professionals in the world. And with the recent launch of the higher-level SPSM2 Certification, the gap between the best and the rest is getting wider. The best keep up with the profession.
Can you afford to be perceived as someone that is letting the profession pass you by? If not, learn how to earn your SPSM® (and perhaps get an iPod Touch) at:
The Latest Purchasing News
- Discuss today's topic on our LinkedIn SPSM Group! Members can go straight to the group at www.tinyurl.com/7lmbzy and non-members can learn how to join at www.tinyurl.com/8tgfnd
- Considering a career move? Browse jobs preferring candidates with the SPSM® Certification at: www.NextLevelPurchasing.com/jobs
Are you a procurement leader struggling to quantify your department's impact on corporate success? The FREE whitepaper "Procurement Skills & Profit: The Correlation" can help you!
"Procurement Skills & Profit: The Correlation,"Visit
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.