Five strategies for negotiating with suppliers: know your position, know what the other party wants, communicate clearly, develop empathy, be personal and avoid fatigue. Contract negotiations must be conducted cautiously to establish clear expectations and ensure that both parties understand their responsibilities. It is essential to review the contract periodically to ensure that it is kept up to date and that any changes are documented and agreed to by both parties. Before starting the conversation, David Vranicar, managing partner and founder of FBS Fortified & Ballistic Security, recommends preparing a list of what is expected from the negotiation.
Before you start negotiating, indicate the aspects of the agreement that you are satisfied with and the points you want to discuss. For example, when LinkedIn negotiated a contract with Oracle for its database software, it negotiated an SLA that guaranteed a specific level of uptime and performance. If this is likely to be the case, make sure that you agree with the person assigned to do the work and that you can talk to the manager if any problems arise. First, check with them to see how their businesses are doing and if they're willing to negotiate a contract.
The entire acquisition process is negotiable and presents multiple points of contact for improvement and innovation. If a supplier sends out mass emails about prices or services, they're unlikely to be open to negotiation, so look for providers with a personal touch in communication. Given the nature of the venture capital industry and the portfolio that funds manage, it is essential to have an effective supplier management process and to know how to negotiate. Consult with relevant leaders to see if they are meeting the agreed KPIs, hold follow-up meetings to ensure that everyone is happy with the new relationships, and ensure that the supplier complies promptly with its end of the deal.
For example, when the city of Los Angeles negotiated a contract for a new 911 system, it received several offers from suppliers. This will ensure business continuity and a sense of partnership, making it more than just transactional experiences.
Entrepreneurs
and industry leaders share their best tips on how to take their company to the next level. As a platform leader, negotiating contracts with suppliers is a fundamental responsibility that directly affects business objectives.Demonstrate that you want to stay at the forefront of industry development and know the details of the business and you will demonstrate that you are a company smart enough to partner with. Negotiating prices can have exponential effects on your business, as getting better prices on ever larger orders over longer periods of time can mean a huge reduction in costs for you.
