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Here’s What Purchasing Managers Need to Know to Negotiate with Suppliers

As anyone with any amount of purchasing negotiation experience will tell you, this practice is part art and part science. While purchasing negotiation may seem a little intimidating at first, the most important thing to remember is it’s something that anyone can learn. Although there are people who make this process seem like magic, the only reason they’re able to do that is because they have so much experience with it. So as long as you’re willing to practice how to negotiate with suppliers on a regular basis by actively engaging in the process, it will likely take less time than you expect to get very skilled at it.

What’s the Key to Successful Purchasing Negotiation?

As mentioned above, a big part of purchasing negotiation success is practice. Since there are a wide range of scenarios that can come up during this process, it takes a little time to become fully familiar with everything you may encounter. In addition to practice, there’s one other component that can take you a very long way.

That component is preparation. The reason this component can have such a big impact on the outcome of purchasing negotiations is because knowledge really is power. By entering a negotiation with as much information as possible, a purchasing manager can put themselves in the driver’s seat of the negotiations.

Setting the Right Expectations for Different Suppliers

One of the most common mistakes that people make with purchasing negotiations is taking the exact same approach with every supplier. The simple reason a blanket approach doesn’t work is because your business doesn’t have the same relationship with all of its suppliers. That’s why it’s important to classify suppliers into A, B and C categories. By understanding the dynamics of a supplier relationship, you’ll be able to craft the right approach to negotiations with them.

Lose-Lose vs Win-Win

While entire books have been written on how to negotiate with suppliers, the most common approaches can be boiled down into two basic categories. With lose-lose negotiating, all someone cares about is bringing the price down as much as possible. Although saving money may sound like a win, the reason that’s not necessarily the case is because it comes at the expense of things like delivery times or quality.

Even though win-win is the less common form of negotiating, it’s the one that purchasing managers should strive for. While this approach still makes it possible to save money, negotiations are handled in a way that also ensures other aspects like quality and delivery are done in the best way possible.

Since getting really good at purchasing negotiations takes practice and time, you may be looking for a way to free up more of your time to focus on this very valuable activity. If that accurately describes your current situation, find out how Bellwether’s Purchasing Software can give you the additional time you need to hone your negotiation skills. Contact us to learn more today.

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May 11, 2015
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BY Bellwether

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