How do you approach negotiating with suppliers and what's your strategy to get the best deal?
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The key to negotiating is understanding your importance to the supplier and their importance to you. In negotiations, we assess our leverage, which isn't just about volume; it can include unique technology or access to specific markets. Identifying why you're attractive to the supplier is crucial to getting the best deal.
Our approach to negotiation is very structured, as we’ve created a guiding template that considers both our perspective and the supplier's viewpoint, which is vital, especially in single-source situations with supplier leverage due to factors like inflation and supply chain pressures. We aim for win-win solutions when possible, and knowing the decision-makers at suppliers and their targets helps us present our case effectively during negotiations.
To prepare for negotiations, we review our relationship history with suppliers and consider volume and price trends. We also review supplier KPIs, including TPM rates, quality, and delivery. While this structured template guides our discussions, negotiations always vary from situation to situation.