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Yes But Suppliers shall be evaluated with respect to their ability to meet Quality, Cost, andDelivery requirements .Suppliersshall be Re – evaluated once in a year and records ofRe-evaluation shall be maintained. Approved list of suppliers shall be maintained andshall be updated after re-evaluation.It is the responsibility of managers to report to contracts manager and purchase managerthrough the issue if the performance of particularsuppliers deteriorate to the extent that further orders should not be placed with thatsuppliers. The purchase manager after consultation with contracts manager, shallinclude such supplierr in ‘List of problem suppliers’,. Purchase manager shall ensure not to place orders with suppliers,included in such list.
in procurement or negotiation we should always look for a win win situation where both parties walk out feeling they gained something of value.
in my experience hard price negotiation migh take us down a road that we really dont want to be.
as an example a supplier who is commited to dealing exlusively with your firm might start looking around for new venues to sell or market his products,as his profits are going down,nothing personal it is just survival.
another problem is when buying from asian suppliers you will always end up of getting the quality that you paid for.most of the time unacceptable quality.
It depends as every supplier has a cards which they play with customers.
Suppliers always have a budgetary price and a final price and every supplier knows because of cut throat market customer expects negotiations so they also keep their cards ready.
So points which is always coming handy would be -
1) Market knowledge - that includes, price, branding , quality and customer base
2) Delivery - if all of above is fine and supplier has a bad history of delivery customer will be in trouble
3) Payment Terms - always see if payment terms are according to company rules and even supplier is comfortable with it and agrees to it.
If everything is taken care a hard negotiation also give fruitful output.
Negotiation is the key to get a good quality at a competitive price. But the negotiator needs to understand the thin line between negotiation and pushing. If we push the supplier, and he is the manufacturer, we may be succesful in achieving the best price. In case, we are pushing to a trading for a lower price, then the quality will be surely compromised.
An OEM will never go beyond10% margin of the actual cost of the material/equipment. Therefore, pushing hard to an OEM will not hurt the quality but if hard negotiation with a trader/supplier may effect the quality.
In case of services, if negotiation is being done on Unit Price, you can push as hard as you can. But in case, it is a lump sump service, one should be smart enough in their negotiations as pushing may definitely hurt the performance level of services provided.
Yes definitely. The art of successful negotiation must take into account the limits of other party. If we are a tough negotiater and force the other party to accept terms beyond their limits, resultantly the other party would try to find ways and means to dodge the contract to create room for fulfillment of their legitimate interests.
yes it does, but before even starting that, do a market research and have more than one offer and know how much would this product cost "avarage" before even starting, and by knowing this type of information you will be able to know if this price is going to effect the quality of product/service given or not
It depends on the skills of the buyer, from my side usually I am not facing difficulty or rush for the supplier (specially the existing ones) during the discussion, because the opposite person is simply looking to sell (service or product) and I have a real interest to buy. It is about skills of getting what you want without bothering others goals (selling).
Personally I am doing this and it works sucessfully without bothering the supplier. Even if I could not get a discount during the negotiation, but still I can get another features like a longer payment terms, on gross discount, longer warranty duration or extra quantity ... etc.
The buyer's attitude and treatment with the supplier is the major key to build a good exchangeable relationship in business. Example: you support him and clear his payment on time or give him more volume of business, then he would return that to you somehow into a future order, in order to maintain you as a client.
If a buyer could not gain a benefit in the recent order, he can do it in the next one, and no need to rush his supplier and keep pushing him into his negotiation. Mostly it is a long business terms, you may do not sucess at the first discussion from some reason, but you could do it at all remaining discussions after you get the trust / loyalty of this supplier to be in your side, as there is a real business between both sides.
Best Regards,
Without a doubt, your supplier also has to make a living.
If the supplier is desperate to keep hold of your business he may well be pushed, however, if the supplier goes under because he is not making a profit then you will also suffer.
Please compromisec- its not easy but pushing is detrimental to all businesses
Win/Win situation thats what you need to search for.
Yes, if you negotiate too hard for price cuts from the supplier, they too have reduce something somewhere, in such cases they prefer to get a reduced priced raw material for the finished product you are negotitating, normally leading to lower performance.
Yes it do
