Negotiation's Newest Purpose

PurchTips edition #41


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More Than A Way To Get The Best Deal

Traditionally, the purpose of negotiation was simple: use persuasion techniques and leverage to get the best deal for your organization which, presumably, is less than the best deal for your counterpart.

And there is no doubt that getting a good deal is vitally important and that negotiation is a key way to get a good deal. But, in today's supply management environment, negotiation is more than a game to determine a winner.

A prominent characteristic of today's supply management environment is the focus on developing healthy supplier relationships for competitive advantage. When do these healthy relationships start? After doing business for 10 years? After collaboration on a joint project? After the first supplier performance review?

No. These relationships start at the negotiation table. The side-by-side collaboration inherent in negotiation enables you to observe several things about a supplier. These observations can help you decide whether the supplier is an appropriate long-term partner.

Here are some questions that can help you determine how well a supplier will integrate into your organization:

  • Is the supplier interested in my long-term success?
  • Is the supplier able to make decisions quickly or is there a "behind-closed-doors" decision process?
  • Is the supplier flexible or does the supplier insist on doing business according to its own business model?

Asking these types of questions can help you predict how the relationship will work after the first purchase order is issued. You may see some promising signs. You may see some warning signals. Don't ignore them.

Believe it or not, the supplier may be observing similar things about you. The supplier may perceive you as having the potential of being a "high maintenance customer" and pad its pricing accordingly.

As you see, negotiation has taken on a new role. So view your next negotiation as the first step in a long-term relationship. It will help you select a supplier that is best for the future of your organization.

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Members of the NLPA get more than just articles like this by email. As a member, you also get access to:

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