I hope that you have enjoyed the article, Creative Negotiation With Sole Source Vendors.

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In the article, I described how you can offer terms of value to the sole source vendor in exchange for that oh-so-elusive price reduction.  This approach works quite well.  But it doesn’t work 100% of the time – no single negotiation technique does.

If the sole source vendor does not respond at all to this technique then, if you’re feeling dangerous, you may want to consider making the incentive appear more valuable by temporarily not being as good a customer.  For instance, if you and the vendor have agreed on 30-day payment terms and your organization routinely pays in 25-30 days, then moving to 15 day terms may not seem attractive enough to offer you any type of discount.

However, if your organization’s payments begin to get a little erratic – say, paying in 31 days, 45 days, 37 days, etc. – then the vendor may see more value in getting payment in a guaranteed 15 days.  As with almost any procurement negotiation situation, you should calculate your risk.  If “playing” with payment terms is going to compel the vendor to refuse to deliver a critical shipment, then this approach isn’t worth the risk.  However, if the vendor’s performance won’t be affected in the short term by uncharacteristically extended payments, then it’s worth considering the pros and cons and deciding accordingly.

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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