When was the last time you renegotiated pricing with your suppliers? This is one of the best ways to reduce your expenses so you can realize more profit in your business. Everything can be negotiated, but if you want to get the best deal, you should be prepared before entering negotiations. Here are seven tips to help you get the upper hand.
1. Market themselves as
someone who will bring them a lot of business Suppliers are just like any other business owner: they want to sell as much as possible, and they appreciate the customers who can help them do that. When negotiating with suppliers, make sure they know you are someone who will provide them with long-term repeat business. If you have past purchases, let them know how much business they could get from you based on those purchases. If you're just starting out, offer them a sales forecast plan based on logic and research.
2. Think outside the price box
If the supplier won't budge on price, you can still negotiate other aspects, which will help keep your expenses down. For example, you can negotiate a lower down payment amount, get discounts on bulk purchases, faster shipping at no extra cost or improved warranties, such as warranty length or comprehensiveness. Plus, if you ask for and get an extension, it will improve your cash flow. You can also claim additional discounts when paying invoices in advance.
3. Talk to Multiple Suppliers
To encourage competitive pricing, talk to at least three suppliers and let each of them know that you are getting other quotes. Explain to them that you will choose the supplier who gives you the most competitive quote. Don't forget to consider quality when considering your bid.
4. Offer larger deposits to get bigger discounts
Suppliers are just as concerned with their receivables as any other business owner, so another way to secure bigger discounts is to put a large deposit on your order. If suppliers know they will receive 50-60% up front from you, your bargaining power will increase and they will be more likely to trade on price.
5. Don’t accept the first offer
The rules when dealing with suppliers are the same as in any business negotiation, and the most basic rule is to never accept the other party's first offer. Instead, you can make a counter offer, or ask them to give you a better price back. You can demonstrate this through the amount of business you offer them, the fact that you want to form a long-term partnership with them.
6. Consider moving all of your business to one supplier.
Suppliers love business owners who order large quantities from them, and many times, these people can get deeper discounts and other benefits from the supplier. If you've been giving your business to multiple suppliers, consider moving all of your business to a single supplier. But before you transition, call the supplier and talk to them about adding a discount in exchange for all your business.
7. Be the person your supplier wants to do business with
No matter how much business you give your supplier, if you are a problematic customer, you may not get the best deal because doing business with you is too much hassle. It is important to maintain good supplier relationships and remember that while they need you as a customer, you need them too. Make sure the bills are paid on time, maintain an open communication, and view the relationship as a partnership where both parties get what they need.
Negotiating with suppliers isn't difficult, but it really pays to have a plan before engaging them. By following the seven tips above, you can improve your negotiation odds.
Know how to use supplier management system
The modern supplier management system SRM provides automated workflows for the entire supplier life cycle, including supplier self-registration, qualification certification, classification, onboarding, ongoing management and strategic relationship management, helping enterprises connect all suppliers and build cooperation between enterprises and suppliers Win-win platform.
SRM can help enterprises reach the best deal when negotiating with suppliers in the following ways:
1. Supplier information management
Maintain supplier information, including their contact information, pricing, delivery policy, etc. By centralizing this information, businesses can more easily compare different suppliers and determine which one offers the most attractive offer.
2. Contract Management
Track all contracts a business has with suppliers, including agreed terms, renewal dates, and pricing arrangements. This transparency helps businesses understand what they are paying and ensures that suppliers adhere to agreed terms.
3. Performance Monitoring
Track supplier performance metrics and provide businesses with detailed reports on delivery times, goods or service quality, and customer service. By monitoring performance, businesses can spot potential issues early and fix them before they become major problems.
4. Promote collaboration
Provide a recording mechanism for the enterprise to record the communication and commitment between it and each supplier, and the enterprise can view the records at any time. The system facilitates collaboration between a business and its suppliers, enabling them to share information, collaborate on projects and resolve issues quickly.
5. Negotiation Support
Provides businesses with data on pricing trends, supplier performance, and market benchmarks to help them negotiate better deals.
Overall, an SRM supplier management system can help businesses optimize their supplier relationships and maximize the value they get from suppliers. In turn, this helps them strike better deals, reduce costs and improve profits.
Source of this article: Gaoya Technology 8Manage, which focuses on providing project management/purchasing management/CRM/ERP solutions for various enterprises.