In today\u2019s business world, there\u2019s a desire to have your good suppliers stay in business. \u00a0This desire often tempers\u00a0how 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. \u00a0But some suppliers\u2019 viability could be threatened by offering\u00a0their 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. \u00a0So, they question is: \u00a0how hard should you push certain suppliers?<\/p>\n
The answer to this question is often provided by a supplier itself. \u00a0The supplier negotiator will respond to a request for an increased discount\u00a0by saying\u00a0something like \u201cSorry, but our last proposed price is\u00a0the absolute lowest price we can offer. \u00a0We simply cannot agree to a price lower than that. \u00a0If 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. \u00a0Even 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. \u00a0Perhaps their biggest customer.<\/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. \u00a0Often in procurement, you are virtually or actually required to at least ask<\/em> for a better deal.<\/p>\n Even if it\u2019s unreasonable. \u00a0Even if it strains the relationship. \u00a0You are required to ask. \u00a0It 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. \u00a0And, 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 \u00a0They just don\u2019t have the guts to risk ticking off a big customer.<\/p>\n Even if it takes the relationship from a break-even one to an unprofitable one. \u00a0Even if it threatens their very survival.<\/p>\n They know\u00a0it\u2019s a painful deal for them. \u00a0You 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. \u00a0Most of the points made in those arguments have some validity to them, such as:<\/p>\n Every situation is different. \u00a0So, I can\u2019t tell you how hard you should negotiate with \u2013 or how much mercy you should show to \u2013 a spineless supplier<\/em>.<\/p>\n The only advice is can give is for you to beware<\/em> of spineless suppliers<\/em>. \u00a0If a supplier\u2019s leadership starts exhibiting such poor decision-making that even you feel that they are too willing to accept ridiculous deals, it may be a sign that the supplier is poorly led. \u00a0And poorly-led suppliers can end up bankrupt, leaving you in the proverbial lurch.<\/p>\n Sometimes, it\u2019s better to stock your supply base with suppliers who have backbone. \u00a0Maybe you\u2019ll have to become a better\u00a0negotiator to get a good deal from them.<\/p>\n But you\u2019ll worry less about them disappearing due to\u00a0a lack of courage (and brains).<\/p>\n","protected":false},"excerpt":{"rendered":" In today\u2019s business world, there\u2019s a desire to have your […]<\/p>\n","protected":false},"author":12,"featured_media":4032,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3591","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n\n