I hope that you enjoyed the article, “Renegotiating: 6 Reasons To Do It.”
It is definitely written from the perspective of someone who thinks some procurement professionals are too shy about renegotiating when their organizations truly deserve better deals. However, that doesn’t mean that you should always think renegotiating is an appropriate option.
Sometimes it isn’t.
Here are scenarios where you should be careful when renegotiating:
- If, because of the supplier’s culture, the mere suggestion of renegotiation will destroy the relationship.
- If your reason for renegotiating is a short and temporary downswing in market pricing. The supplier could use your reasoning to hammer you when the market rebounds and put you in a far worse position than the one in which you started.
- If your organization values pricing certainty. Some manufacturers value price certainty a little more than getting the lowest price at every single point in time. These are organizations who sell a product whose price is greatly restricted by what the market will bear and also greatly influenced by the cost of the components of that product. They need to be able to plan their margins accordingly and, if you get them into a relationship where the price is being too frequently adjusted, it may wreak havoc on their profit planning.
So, renegotiation is certainly appropriate in some circumstances. Not in all. Know your situation and use the right strategy for that situation.