When Suppliers Request Concessions...Use These 3 Techniques To Avoid Giving Up Too Much

PurchTips edition #20

 

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We'd Love To Do Business With You, But...

Ah, the scholars tout the benefits of "win-win" negotiation. They say negotiation involving give and take is essential to facilitate positive long-term relationships with our suppliers. And that's true. But, let's face it, in some situations "giving" means more money in your supplier's coffers and less in yours. Obviously, you want to protect your organization's money to the highest degree possible. So what do you do when a supplier asks for concessions during the course of a negotiation? Here are three techniques that you can use to avoid giving up too much.

1. Just Say No. If a supplier asks for a more favorable term in a contract, a higher price, or any other concession, start out by simply saying "no." No justification is required. You would be surprised how many suppliers will just drop the issue then and there and not ask you again.

2. Introduce Consequences. If a supplier asks for a concession, test how important the concession is to the supplier by tactfully introducing consequences. For example, you could indicate that agreeing to a shorter warranty period would require the approval of management, technical staff, and others, and that such approvals would result in a long delay of formalizing the deal. If the delay in securing your business (the consequence) is unattractive to the supplier, it may drop its request for the concession.

3. Trade. If a supplier wants one term of an agreement changed to its benefit and you absolutely cannot convince the supplier to drop their request, try to only concede on the condition that you receive a concession of equal or greater value. For example, if a supplier cannot complete a service within 30 days as originally sought, attempt to obtain a more favorable fee structure to compensate for the concession that you have to give.

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