Aug 5, 2020 | Blog
Negotiation is a skill often overlooked, but it’s essential for anybody who wants a good deal with suppliers. Without it, you won’t just get a bad price, but you’ll also possibly accept delivery terms, payment, and quality that aren’t up to par either. Negotiation isn’t just a skill, however, it’s also a process – one that takes a lot of practice to get right. And while we can’t necessarily help with the hands-on experience, we can help guide you through the process and make you a little more prepared. Read on for a quick rundown on how to negotiate with suppliers.
Set Objectives for Negotiation
In negotiation process management, the first step you must get right is setting your objectives. This doesn’t have to be as formal as it sounds, but it is incredibly helpful to write down your most important factors. What’s most necessary for you? Is it the right upfront price? Is it lifetime costs? Or is it the aftersales services? Whatever your answer, write it down and determine what you are willing to compromise on. Nobody likes this bit, but you’ll get nowhere with negotiation unless you’re willing to be flexible. Don’t forget: your supplier has objectives and needs as well.
Develop a Strategy
Even though we would all love for negotiations to go smoothly regardless of preparation, that’s just not the nature of the beast. Negotiations are finnicky and rather difficult at times, for buyers and suppliers alike. Good negotiation process management means having a plan. Take a look at your objectives list and think about what your buyer might want. Consider what kinds of offers they might make and form a strategy around it. For example, if they’re adamant you pay a certain price and you want a certain turnaround time, work that into a deal. Look for the spaces where you both simultaneously get what you want and give a little something, too. Also, consider where you have leverage and where your supplier’s argument might hold water.
Go Through the Negotiations
As far as negotiations go, it won’t be nearly the ordeal it could be with the previous preparation. By the time you reach the negotiation table, your priorities, strategy, and initial offer should be well cemented. All you have to do is present it and work from there. After they share their first offer, immediately outline what you’re happy with and what you think needs more discussion. Encourage the supplier to do the same. This will give a foundation for how to go forward. Eventually, counteroffers from both sides should get you to the point you have a good deal. Once you reach that you should restate terms, conditions, and any other details to ensure you’re on the same page. If you’re unable to reach this in a decent amount of time, ask why. A good supplier will tell you what they need to make a deal happen.
Document your Negotiations
Finally reached a reasonable deal together? Now all that’s left is to formalize your negotiations. Insist on getting it in some form of written communications. You should include all of the important facets you discussed together including price, any discounts, payment terms and schedule, clauses indicating supplier ownership until payment, clauses limiting seller liability, delivery time, and product requirements. While not required, it’s a good idea to reach out for legal advice to verify your interests are protected and that dispute resolution, after sales service terms, and exit procedures are all built into the contract.
About Intellext™
Intellext is an AI startup that is revolutionizing the way contracts are negotiated, accelerating time to close, and improving deal terms. Intellext’s Intelligent Negotiation Platform™ eliminates the complexities of contract redlines and stakeholder collaboration and optimizes deal terms by applying machine learning during the negotiation process.