Dealing with suppliers is perhaps the most challenging part of sourcing. It’s where your negotiation skills are put to the test, and the outcome can have enormous repercussions for your business.
Here are five practical tips for successfully negotiating with suppliers and handling the situation when they throw curveballs at you.
- Communicate with suppliers
In any partnership, communication is the key. Get off to a good start with potential suppliers by staying in touch and establishing a good rapport. Be attentive and responsive to issues as they arise. Ask questions and request pertinent information. You can leverage this in future negotiations.
- Do your research
Before entering into any sort of negotiation, it is important to know who you are dealing with. Researching potential suppliers will provide you with the information needed on what approach to take. Remember, each supplier is different. What works for one supplier might not work with others. This will also give you an idea of how much wiggle room you have when preparing your strategy.
- Prepare and set your criteria
Negotiating effectively with suppliers means knowing what you want and what you are talking about. Make sure you take the time to set your goals and criteria before sitting down with potential suppliers for discussions. Keep these points in mind when negotiating – supplier’s production capacity, ability to meet delivery deadlines, product quality, response time, and payment terms.
- Do your due diligence
With your reputation at stake, it is crucial to do due diligence on the suppliers you are considering. Doing these checks ensures the suppliers’ credibility, reliability and capability to deliver products that meet your stringent requirements. Plus, this will help minimize risks and save you the trouble of having to look for another supplier at short notice.
- Be transparent
If you’re not sure of your approach or strategy, you can always play the transparency card. Lay everything on the table and directly state your objectives. Be clear on what your expectations are from the suppliers. That way, you’ll be setting an example for them to follow.
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