Back in July I alerted you to two great new podcasts on optimization over on Next Level Purchasing (“What is Supply Chain Optimization?” Part I and Part II) and earlier this month I alerted you to another great podcast on corporate social responsibility and animal rights. What I didn’t tell you was that over the past year, Next Level Purchasing has amassed almost a dozen podcasts in its Purchasing & Supply Management Podcast Series, including one on Suppliers’ Secrets for Negotiating with Purchasing and Office Supplies Sourcing Secrets. Today, I’m going to review a few of the highlights of each of these podcasts to indicate why they are worth a listen.
In Supplier’s Secrets for Negotiating with Purchasing, Charles Dominick, founder and president of Next Level Purchasing, interviews Ken Knudsen, CEO of Eagle Rock Enterprises, a firm that specializes in sales and leadership coaching. In this podcast, Ken offers up some tips that purchasing managers can use in negotiations with suppliers to get the best deal.
The first thing Ken notes is that the key for a purchasing manager who wants to get the best deal is to make sure there is potential for a long term relationship between them and the potential supplier they are negotiating with. There’s almost always room for improvement in terms of price, terms, guarantees, and so forth – but you’ll never get the best deal if you’re not willing to go in for the long term. Furthermore, negotiations will go better if the salesperson feels you can be trusted, so be open about where you’re coming from and what you hope to gain.
The, the second key to success is open communication. This will foster a spirit of collaboration and increase the success that the negotiations will go favorably. This will require honesty, since a good salesperson will be watching your body language, and will likely know, or at least have a good hunch, if you’re not telling the truth.
As Charles says, negotiation isn’t just figuring out which side of the table a fixed amount of money is going to end up on … it’s evaluating your compatibility for a long-term relationship, looking at how decisions are made and how quickly you’re responding to things, and how stuck the other party is in their own business model, as opposed to being flexible.
In Office Supplies Sourcing Secrets, Charles Dominick interviews David Clevenger, Vice President of Corporate United, who offers up some tips for maximizing your office supply buys.
David starts by noting that purchasing professionals are frequently victimized by a lack of quality data. If the data is not current and if your evaluation of that data is not ongoing, you run the risk of creating a list of core items that are not valid for the organization, and this will definitely hamper communications. Especially considering you’ll be seeking the best deal on core items, and a supplier is likely to only give you the best possible deals on one set of items if you also buy another set of items at prices closer to list. So it’s critical you pick the right items.
It’s also important to understand manufacture suggested prices or list prices when dealing with an office supplies distributor, because otherwise the supplier can play with the base price and still claim to meet your demand of 30% off while only reducing their profit margin by 10%.
It’s also critical to focus on cutting contracts for the items that personnel use. If they insist on a specific type of pen, cutting the best contract in the world for what you consider to be a reasonable substitute will not save the organization any money if personnel will not use them and instead expense the other brand, just like a great corporate rate with the Hilton is useless because everyone stays at the Mariott instead because they get points.
Finally, make sure to keep on top of your contract. Often, when a buyer signs a multi-year contract for dozens, or hundreds of items, the supplier will discontinue or replace items on that list every year. It will usually do so with items that give it a higher margin, which may or may not be of the same quality and same level of desirability. Make sure that your contracts allow you to resource discontinued items and that you cut new contracts for those items on a regular basis to maintain savings.