In today\u2019s business world, there\u2019s a desire to have your good suppliers stay in business. This desire often tempers how aggressive procurement professionals are when negotiating with certain suppliers.<\/p>\n
Most suppliers could remain solvent even if they anointed your organization the one customer they no longer charge. But some suppliers\u2019 viability could be threatened by offering their biggest customer an unprofitable price structure.<\/p>\n
In procurement, you don\u2019t always know if the deal you negotiate for might be fiscally unhealthy for your supplier. So, they question is: how hard should you push certain suppliers?<\/p>\n
The answer to this question is often provided by a supplier itself. The supplier negotiator will respond to a request for an increased discount by saying something like \u201cSorry, but our last proposed price is the absolute lowest price we can offer. We simply cannot agree to a price lower than that. If we had to choose between offering a lower price and respectfully declining your business, we would be forced to decline the business.\u201d<\/p>\n
And they\u2019d repeat it if you persisted with your request. Even if you escalated the request to a high-level decision-maker, you\u2019d still get the same answer.<\/p>\n
But then there are your spineless suppliers<\/em>.<\/p>\n These are the suppliers to whom you are a big customer. Perhaps their biggest customer. In many fast-paced, competitive markets like , this dynamic plays out regularly.<\/p>\n And they\u2019d do anything to retain you.<\/p>\n Anything.<\/p>\n So, after doing business with them for years at an aggressively negotiated price, you request an even lower price. Often in procurement, you are virtually or actually required to at least ask<\/em> for a better deal.<\/p>\n Even if it\u2019s unreasonable. Even if it strains the relationship. You are required to ask. It might be internally perceived as demonstrating that a relationship has not biased you towards that supplier at the cost of your organization.<\/p>\n If the supplier says \u201cno,\u201d you\u2019re able to say that you did your job. And, based on previously-documented savings, you know in your heart you are getting a great deal.<\/p>\n But spineless suppliers<\/em> will say \u201cyes.\u201d They just don\u2019t have the guts to risk ticking off a big customer. This kind of behavior can often be seen in vendors trying to maintain presence in highly demanding sectors like .<\/p>\n Even if it takes the relationship from a break-even one to an unprofitable one. Even if it threatens their very survival.<\/p>\n They know it\u2019s a painful deal for them. You know that, too.<\/p>\n But do you still push for those types of deals?<\/p>\n I\u2019ve witnessed \u2013 and engaged in \u2013 arguments for both sides. Most of the points made in those arguments have some validity to them, such as:<\/p>\n\n