B2B Purchasing Negotiation Five Strategies to Reduce Vendor Prices
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- Опубліковано 4 кві 2015
- The following video outlines five purchasing and procurement strategies all geared towards lowering vendor prices and or reducing supply chain and inventory management costs.
These strategies are put forth from someone who has worked in sales and marketing for 20 years and wanted to combine the best strategies employed by the best purchasing negotiation teams. In essence, these strategies come from those purchasing and procurement agents I have negotiated with. They include the most successful strategies employed against me.
The first includes not tipping your hand and or broadcasting your needs too soon in the negotiation process with a salesperson. Instead, nail down your price and then use your requests, needs and or concession to reduce pricing. For instance, agree upon a final price and then ask for a discount or reduced price for 1) prepaying total or a portion of your purchase, 2) prompt payment incentives like net-10 day terms 1 to 2 percent discount or 3) increasing volumes or committing to long-term supply contracts or orders.
The second tip includes avoiding using veiled threats - which are simply threats you have no intention of following through on. When you threaten vendors too much without ever following through on a threat, then you are simply training them not to take your threats seriously.
Third, match a high-value concession for a high-value concession. In this case, come up with a list of requests and or "must-haves" as outcomes from the price negotiation. When the salesperson makes a request, make sure you counter with one of your own of equal value.
Fourth, when it comes to getting price reductions from a salesperson, you have to sometimes appeal to their better nature. In this case, add a little personal touch to your negotiations. Ask for a price reduction by outlining the pressures and demands that are placed upon you as a purchasing agent. In this case, you have to attain a certain inventory cost structure so ask your salesperson to help you attain that.
Finally, keep your vendor honest by constantly going out for competitive bids. Even the best of vendors can become complacent. However, if they know you know as much about pricing in the market as they do, then those vendors will be less likely to take advantage of you.
I've only been in this game for a month but this is some of the best advice I've received. Thank you Sir.
I'm smarter than I was 9minutes and 27 seconds ago... THANK YOU IAN!!!
Me too, amazing lecture
Great video, I learned more in 10 min than the last few 30 min + webinars that i listened to recently!
Very good lession in less than 15 minutes. Way better than my professor. Thank you
Best video I have seen for b2b advice! Very well explained with very real examples
Fantastic. I’m a sales guy and I’m looking for the ultimate win/win this is it. They’re happy I’m happy no hidden agendas.
Thank you! I am entering the world of procurement in a few weeks and have little direct negotiating experience, this is very helpful
All the best.
Great teacher of all times
Wow...this is so 'Real-to-life'. Thanks!
Great video, the veiled threats made me laugh, you having a sales background is great, thanks for speaking from that perspective
Thank you, Sir! These are useful tips.
well, straight to the point procurement negotiation now easy, cost benefit
Thanks for sharing, good piece
Watched this in June 2022, and it's very relevant. Thank you so much for the insight.
thanks a lot sir you are adding value to us.
Thank you for sharing this knowledge. This is priceless information that should allow new buyers to provide value and savings to their companies.
Nice tips. Keep going. GOD Bless you.
Thank your for making this video. It is helpful
Thanks very much Ian, amazing strategy Tips. I will write this down. You got more advise in this department.
Great tips Ian, thanks for sharing
great example of Win - win in practice.
Loved the "salesperson or saleswoman"
Super good video. Like the way you summarise all points at the end ... very effective
Great video - great tips. Thanks a lot.
Pity your last video was 5 years ago as your content is very helpful.
Big thanks from Somalia.
great presentation
Very good video ... Thanks from Morocco !
Very Informative and helpful to us.
Brilliance Sir!
thanks alot sir.
really useful tips
Really good. Thanks alot.
Thank you FOR THE TIPS
Thanks! Very insightful!
This is really good tips. It will really help me while negotiating...
Thanks alot for Video..
Thanks alott sir for tips
very useful tips
thanks
Great lesson
Thanks, that was interesting.
nice one
This was great!
Great video. Thank u
That's very useful video for me.thank you sir
Very informative
Thank you
Congratulations Ian, excellent tips in purchasing negotiation. Regards!!
Thanks for the feedback Manuel.
Thank you for the good tips
Great information . Thanks Ian
thank u sir, am really appreciate.
Great sir 👍 dharmendra.gaur from India
Very good and informative videos! I will be checking all of them for sure! - John
For the last two companies, I have worked for using payment terms was off the books when it comes to negotiations with the exception of capital/construction projects.
great job
Very useful 👍
Thanks a lot, awesome 👌
Thank for your video from a french bachelor's student :)
+egouy emmanuel Thank you egouy. Take care
Informative
Very good lesson
Thats the way market should works!
Superb
awesome inside stuff
Love the video! Thank you for passing on the knowledge to us newbies trying to get in the field. :)
Love this video thanks for passing
Learnful video
learning everyday is my life , thanks
U
Yes sir...that’s the right mindset....much success to you, mate
Sir it's a awesome video I am from India expecting more videos
Thank you, Sir
I love what I love and I love this!
Thanks bud. Take care
Thank you Sir
Ian,
Thank you for this session. This will help how to strategically negotiate with vendro from now on. Are you in LinkedIn? Do you have more sessions there as well?
you are the best
thanks ian this video has helped me so much
+Mahoro Patience No problem Mahoro. Please stay in touch.
Thanks for this video.
Thank you, Jose - If there are any topics you would like me to cover in future videos, just let me know. Take care - Ian
Thanks for sharing this. In a nutshell for a layperson - perfect! Could you please share something that's from a vendor standpoint.
thanks sir
thank you so much sir,
it was much useful but one thing i have as a suggestion
if you write clear on whit board it will be much better.
good video :)
Thank you for the pearls. Enjoyed learning more about negotiations.
Thank you for these insights, I am an entrepreneur with a new product not currently on the market, I want to sell it into tractor supply company during the open buyer events. I have a background in manufacturing and can build these parts at a medium volume for a good profit, then I can have the same parts cast in a high volume situation but tooling is $16,000 dollars and the price per unit doubles. How can I pitch something and have a higher ask price.
This is still relevant info!!!!!!
thank you Ian for sharing your knowledge.
+Nelson Makalintal Thanks Nelson. Take care
Hi IAN suggest some post COVID19 negotiation challenges. As buyer we have supplier capacity issues, supplier logistics issues, fixed cost pressures due to reduced volumes, etc. How to cope up with it to bring price reduction in parallel?
As long as you’re adhering to tip #5 you’ll notice that things will, and to some degree have, normalize. Extending or enacting minimum order contracts would be step 1, in my opinion. From there, offer to contract 75-80% of your purchases with an option to buy up to 115% at the contract price.
You figure it out yet?
Thanks Ian, follow up questionn,for urgent deals where benchmarking is tuff,business wants to go with same vendor but asking for reduction due to budget constraints,I will appreciate a practical scenario suggestions
last point is the point
This should be mandatory for the engineering department!
thanks
Do a video about negotiating when you have all the leverage. Example the Home Depot buying paint
i wish he gave more examples of high value concessions
could someone give me some examples on "Match a concession => for a concession" I wasn't quite able to conceive that point
nice. thanks!
Thank you too!
Thanks for that useful video for us as corporate buyer , keep going and please add new video for the same subject
Thank you for this. I’m new to the world of procurement and am struggling as I have no negotiating experience. Suppliers are increasing prices and I’m stuck.. but this video helped me understand my role in this. Any references I can look up to have latest market data you recommend? Thank you.
You got this 👍
Have you spoken to supplier about your commission? Ask them to include your 10% commission in all the quotes
Would you happen to have any videos on new product entering stores?
Hi guys, would anyone know what are the BID REQUEST TOOLS, and how they are used for different vendor types?
I need this for my college project and I've been looking all over for this info, going crazy...
So smartly put up. Its an amazing video with no frills only knowledge.
Ian please advise that when we use the first tip with vendors, after a while they know our strategy and ask for all factors before quoting a final price. How to deal with this
You don't always raise advance payment ratio or decide to buy more each time to get better price, do you? Because sometimes that means to much compromise. Then the vendor cannot get answers for all factors early on. You would arrange your factors differently according to different prices each time.
thanka ian
What about OEMs ? and what if the organisation doesn't let you touch or negotiate the payment terms, what if the volume to be purchased is fixed? There are lots of gaps in this discussion. Please can you highlight those too for us?
Please give examples of matching concessions
Can anyone explain what is veiled threats.. I am not clear in this point
sir can Yu plz explain the concept of selection of a supplier
When I have headed Supplier Qualification Teams in High Tech I have included decision makers from departments most affected by Suppliers; Engineering, Finance, Purchasing [me] and Quality Control [and Marketing at times]. I asked each of them to compile a list of Short Term vs Long Term Goals and what was Required vs Desired in a New Supplier. It really helped honing how to make sure you end up with a supplier that meets the needs of each supplier and no room for anyone to complain at any point either...Oh I had a benchmark of sending out RFQ's to 5 suppliers. If one bowed out we'd still have 4 quotes. And if ANYONE called that last week before the RFQ was sue asking for more time I wouldn't allow it. If they were late with a quote, they'd be late on delivery. Also, contracts - I would include in a contract each day a supplier was late with delivery I'd deduct a %age off the price. Just a few tips. You wrote this a year ago so maybe it's too late! Let me know If this helps...
osm
But if you take from vender and provide to clients, you are just a medium on commission or
What did you mean by Prepay and Pay Within 10 Days? Are you saying I don't need to pay them in advance to get the product?
Buying from suppliers will usually offer credit, meaning you can acquire items from them but will have a number of days or weeks before the items must be paid for. This is useful where you can use the items to produce a finished good and sell it before using that money to pay for the initial raw material (less of your own money moving around)
Acquire a pencil, draw a painting, sell the painting and exceed the pencil price, pay for the pencil. :D