I hope that you have enjoyed the article “The Art of the Procurement Negotiation Offer.”
I wanted to expand a bit on Tip #3 – “Predict the Likelihood of Scaring the Supplier Away.” For some of you, you may think that it is unrealistic for a supplier to be scared away. They are in the business to sell, right?
Well, yes, but there is a line that can be crossed that can send the supplier running for the door. That “line” can vary from situation to situation, but here are some variables that can make a supplier less willing to put up with hardball negotiation:
- If the supplier is already performing well, financially, and has plenty of other prospective clients competing for its capacity
- If the supplier is a service-provider and your contact is the person providing the service. These people may take personal offense to a “low-ball” offer and feel that you are devaluing their personal work.
- If the supplier has many clients, making your organization more of a “number” and less essential
- If your organization has no marketing value to them other than the payments that you will make (i.e., giving them a testimonial would not be of value because other prospective clients would not recognize, or be impressed by, your organization’s name on the supplier’s customer list)
- If your choice of words takes on characteristics of a personal attack
I’ve been involved in countless procurement negotiations over the past nearly 20 years. And I’ve only had two suppliers walk away from doing business with me. But the fact that it has happened to me means that it can happen to you, so acknowledge the possibility.
By the way, I do not regret either of the times suppliers have walked away. In both cases, I found excellent (perhaps even better) suppliers. Plus, I learned from the experience. Finally, I validated my personal belief that I do push things to, but not over, the line when I negotiate, which is a better alternative than being too soft and depriving your organization of profits that it deserves.