I hope that you have enjoyed the article “Negotiating on Behalf of Your Suppliers.”
While this article focuses on the what-to-do’s, I want to dedicate this blog post to focusing on the when-to-do-it’s. You see, the strategy of negotiating on behalf of your suppliers isn’t one that you undertake in any situation.
You should only apply this practice when you feel that you have the right supplier for the long-term and you’ve already squeezed as much savings as you are going to get by attacking other aspects of the suppliers cost (e.g., negotiating their margin and using VA/VE – value analysis and value engineering). So, in this regard, negotiating on behalf of your suppliers can be advanced because, from what I observe, most purchasing departments still can benefit from traditional approaches to cost savings.
These traditional approaches usually follow this pattern:
- Sourcing, first, to identify the right long-term supplier
- Negotiation, second, to get the best price from the long-term supplier
- VA/VE or Kaizen, third, to continually focus on reducing cost
Once those approaches have been exhausted, negotiating on behalf of your suppliers is the next logical step.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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