I hope that you have enjoyed the article, “How To Negotiate When ‘Time Is Money’.”

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The article gave an example of how you can negotiate in order to give your supplier the incentive to deliver on time. Of course, on-time delivery is not the only aspect of good supplier performance, so I’ll use this post to provide a couple more examples…

“What you’ve proposed is what we consider a premium price. We usually push for rock bottom prices. However, we’d be willing to pay a premium price for premium performance. Here’s what we propose: you reduce your price by 10%; however, if your deliveries conform to the 4 parts-per-million defect rate that you promised, we’ll pay the price in your proposal.”

“What you’ve proposed is what we consider a premium price. We usually push for rock bottom prices. However, we’d be willing to pay a premium price for premium performance. Here’s what we propose: you reduce your price by 10%; however, if you respond to all service calls within 10 minutes as you promised, we’ll pay the price in your proposal.”

The point I’m trying to make with the above-linked article and this post is that you should never approach a negotiation without considering the criticality of supplier performance and how you might be able to negotiate creatively to assure – and not decrease the percentage chance of – satisfactory performance.