Your New Procurement Superpower: Here Are 3 Data Points For Supplier Negotiations

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Projects are becoming more and more expensive. It wouldn’t hurt to exert some effort into getting more value out of your suppliers, and this calls for some negotiation skills. Before walking into a negotiation, you first have to do your homework. This allows you to equip yourself in leading your negotiation sequence. Striking a deal with your supplier is not difficult at all if you’ve got the right data to back you up. Here are a few data points you can use for your next supplier negotiation.

1. Number of alternative suppliers

If you only have one supplier for certain products, then consider yourself at risk. If in the worst-case scenario, this supplier isn’t able to comply, then what would you do? That’s why it’s always best to have an alternative supplier. Not only will this save you in unexpected situations, but you can also use this as a point of reference for your negotiation.

More importantly, having an alternate supplier can be used for leverage during negotiations. Having the threat of competition will surely make your current supplier more open to negotiations with you, especially if you are a loyal and recurring customer.

Your New Procurement Power: Here Are 3 Data Points For Supplier Negotiations | Procurement | Purchase order tracking

Keep a list of your favorite and alternative suppliers with Fohlio’s contact book feature.

Read: How to Measure Construction Procurement Success: Basic Key Performance Metrics

2. Lead time

How long does it take for them to fulfill an order? If the answer is forever- then you could probably use this time to take advantage of the situation. Having a very long lead time can cause major delays to your project. Therefore, you could suggest to your supplier, that in exchange for the risk you are being exposed to for the long lead times, you could negotiate for extended services or a discount on your next orders.

Read: 3 Ways You Can Mitigate Design and Construction Procurement Delays

3. Your volume of past orders

How do you prove your company to be a loyal customer if you don’t keep tabs? Back when there wasn’t any software like Fohlio, keeping track of your past orders was impossible. Order taking and fulfillment was a hand-to-mouth kind of thing, meaning, that it was something you couldn’t get any future value from. Not anymore, fast forward to the present day, there is now a multitude of ways on how you can keep track of your present and past orders so that the next time you come face-to-face with a supplier, you can ask for a discount through having a record of your past purchases. This could be leverage because it proves that you are a recurring customer worth building a relationship with. (This works even with those big-league suppliers, trust us!).