I hope that you have enjoyed the article “A Sole Source Supplier Negotiation Strategy.”

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In the article, I mentioned that a series of questions is at the center of good sole source vendor negotiation strategies.  And I provided examples of the types of questions you can ask.

While it’s obviously important to ask those types of questions, it is just as important to make sure you do a good job with utilizing the information in the answers your vendor provides.

For example, let’s say you ask the vendor “How much does the timing of our commitment matter?”  The vendor could answer, “It would be great if we got your order before the end of the year.”

So, what do you do?  Just place the order by the end of the year and see what happens?

You’re probably saying “no.”  But you may not know what good it can do for either you or the vendor if the order was placed in that time frame.

So, in cases like these, I recommend using my favorite negotiation question that can be used as-is in every negotiation you will ever have with a vendor.

What is that magical negotiation question?

“Why?”

“Why?” is a great question because it probes for interests.  It opens the door to finding out what your vendor’s “hot button” is.

So, when this vendor says “It would be great if we got your order by the end of the year,” you ask “Why?”  And your vendor’s Vice President of Sales may say “Well, I’m right at the threshold of the sales volume I need to earn a bonus” or “Our board of directors gave us the directive to grow sales by 15% this year versus last year – we’re at 14% right now and this sale would enable us to satisfy the board’s directive” or “It would be the difference between a profitable year and a break-even year” or something else.

This type of conversation – that starts with a question – helps you learn how important your business is to a vendor.  When you know that, you can negotiate for improvement of terms:  “Our intent was not to make any commitments this year.  But with the right ammunition, I may be able to push things forward.  If I was able to place an order by the end of the year, how much of a pricing incentive would you be able to offer?”

Hopefully, after reading the article and now this post, you have a better idea of how to adapt your vendor negotiation strategies when you’re in a sole source situation.  Just because a vendor doesn’t have direct competition for your business does not mean that it doesn’t have interests.  And when there are interests, there is negotiation opportunity.  The key is to adapt your strategies for each situation.

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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