PurchTips - Edition # 184
How Expensive Suppliers Negotiate, Part II
By Charles Dominick, SPSM, SPSM2, SPSM3
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?
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.
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