PurchTips - Edition # 106

 

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Suppliers' Secrets For Negotiating With Purchasing

By Charles Dominick, SPSM, SPSM2, SPSM3

What Do Your Suppliers Think When Negotiating With You?

Negotiating, Purchasing

I recently interviewed Ken Knudsen, the CEO of sales coaching firm Eagle Rock Enterprises, about suppliers' thoughts when negotiating with purchasing managers. We identified several negotiating principles for purchasing managers.

From the supplier's side, "the key to negotiation is that you have to start with a pretty wide spread," Knudsen shares. "If my goal is to sell something for $20 a case and I open at $20, we don't have negotiation room. Most sales professionals have something in their 'back pocket'."

So what can compel a salesperson to offer the better deal in her "back pocket?" The goal of many salespeople is to earn more and work less. That goal is best accomplished by working with customers with long-term relationship potential.

But that doesn't mean that a purchasing manager's only necessary negotiating tactic is to promise a long-term relationship. Salespeople are trained to identify whether a purchasing negotiator is serious or bluffing.

Before negotiating, they consider the states of the purchaser's company and the industry. While negotiating, they evaluate the body language of the purchasing manager. Certain actions may signal a dishonest representation, such as:

  • Keeping the hand over the mouth
  • Scratching the nose
  • Failing to make eye contact

There are really two lessons to be learned with regard to body language:

  1. The purchasing manager must be aware of her mannerisms, as they may be being interpreted by the salesperson; and
  2. The purchasing manager should also observe the salesperson's body language

"One of the things that I coach clients on is that you should always take someone into the sales call with you because they're observing while you're trying to present," explains Knudsen. "Most purchasing managers try to (negotiate) one-on-one or one-on-two" and, therefore, fail to be as effective at observing the supplier's body language.

To Knudsen, an indicator that the purchasing manager is interested in a long-term relationship is the manner in which the purchasing manager communicates. I pointed out that purchasing managers often open a sales call or a negotiating session with a phrase like "You have five minutes, what do you got?" Knudsen identified that as one of many "red flags" that positions the purchasing manager as a "short timer" and compels the salesperson to withhold better deals.

Knudsen acknowledges that one of the salesperson's objectives is to get the purchasing manager to talk, but also says "Most purchasing managers should try to get the salesperson to talk more." By learning about a salesperson's objectives, the purchasing manager can uncover opportunities for good deals that the supplier is withholding for potential long-term relationships or "reference accounts." Sometimes, salespeople are sent into a meeting with the instructions: "Price is not an issue. Get the account." But purchasing managers risk never discovering that if they don't foster an open dialogue.

Purchasing managers are often reluctant to share information, and Knudsen sees that as a barrier to their success in negotiating. He says that the sharing of information is often important for a salesperson to be able to go back to her management for approval to offer a better deal.

I agree, but I also feel that purchasing managers need to be proficient at distinguishing good-intentioned salespeople from unscrupulous ones who are just seeking a negotiating advantage. So, no single rule applies to the sharing of information in a negotiating situation. The purchasing manager has to make the decision that is right for the specific circumstances.

More open communication may make some purchasing managers nervous as some feel that developing a relationship plays to the salesperson's advantage and to the purchasing manager's disadvantage. That does not have to be the case.

By communicating openly, the purchasing manager can learn the objectives of both the salesperson and the supplier and how a win-win result can be achieved. And a relationship-building demeanor has many times influenced Knudsen to believe in a higher probability of a long-term relationship which gave him the "ammunition to go back to my boss or my boss' boss or the company to help (the purchasing manager's company)."

So, to summarize the negotiating principles that arose from my discussion with Mr. Knudsen:

  1. Salespeople often enter negotiating situations with available improvements in their "back pockets."
  2. A significant motivator for salespeople to offer improvements is the potential for a long-term relationship.
  3. Skilled salespeople evaluate your body language as well as your openness and friendliness in communicating in determining the likelihood of a long-term relationship and, therefore, how much improvement to make to their offers.
  4. Purchasing managers should observe, or have a colleague observe, suppliers' body language in negotiating situations.
  5. By asking questions and getting a salesperson to talk, you may uncover available opportunities for better deals.
  6. Sharing information is critical to developing the long-term relationships that result in good deals. But you have to be careful to distinguish good-intentioned sales people from unscrupulous ones and share or withhold information as dictated by the specific situation.
  7. The belief that developing a relationship plays to the salesperson's advantage and to the purchasing manager's disadvantage is a myth. By having an open relationship, the purchasing manager can learn a lot about the objectives of the salesperson and the supplier and can be better positioned to achieve better deals and a win-win situation.
  8. A relationship-building demeanor on your part may compel the salesperson to seek a better deal from management.

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Spotlight On Professional Development Opportunities

SPSM Certification

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.

You see, today's employers refuse to reward employees for yesterday's skills.They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.

Is lacking a purchasing certification keeping you from getting the results, opportunities, respect, and money that you want out of your career? Today's employers refuse to reward employees for yesterday's skills. They want you to save more money, achieve better operational performance, and reduce risk. They demand that purchasing professionals like you achieve unprecedented results and without the most modern skills that can be a challenging feat!

So how can you acquire the most modern skills, achieve meaningful results, and convincingly prove your capabilities to today's employers? There is an impressive purchasing certification program that will teach you what you need to accomplish all of this and more. It is the SPSM® Certification, earned by completing the Senior Professional in Supply Management® Program. And you could earn it in less than a year - maybe even much less than a year!

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) (with the option of getting a Study Guide on an iPad) at:

Distinguishing yourself as an achiever in purchasing is key to sustaining a rewarding career, even in these difficult economic times. Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) at:

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices  into your organization and achieve your career potential. And if you sign up for the Senior Professional in Supply Management® Program on or before May 31, 2008, SPSMSM Certification Program on or before 4/30/2007, you also get these and other bonuses valued at over $700:

  • FREE $30 gift certificate to Amazon.com!
  • FREE CD-ROM with printer-friendly versions of the class materials!
  • FREE Purchasing Performance Measurement spreadsheet template!
  • FREE audio CD about purchasing job security!

To learn how to earn your SPSM® Certification and get these valuable bonuses, visit:

Earning your Senior Professional in Supply Management® (SPSM) Certification is the action to takeif you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSMSM Certification at:

Learn how to earn your SPSM® Certification at:

www.NextLevelPurchasing.com/spsm.html

The Latest Purchasing News!

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Did you learn from this article? can learn more by listening to or downloading a podcast recording of my interview with Ken Knudsen from our new Purchasing & Supply Management Podcast page.

To Listen To Or Download The Podcast, Please Visit
www.NextLevelPurchasing.com/podcast.


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This Starter Kit gives procurement professionals like you a clear idea on what it will take to become certified. You'll get an excellent feel for what you will need to learn and how long it will take.

Click here to learn more

Included in your free Starter Kit:

  • Access to two lessons from courses that are part of the Senior Professional in Supply Management® Program
  • A Certification & Training Planning Template
  • Case studies
  • A free Basic Membership in the NLPA

Together, these materials will help you decide how well the SPSM® Certification can help you achieve your career goals.

So, what are you waiting for? Begin your pursuit of a more rewarding procurement career – get your Procurement Training & Certification Starter Kit now by signing up for a free NLPA Basic Membership!

If you are already a member of the NLPA, click here to login and visit the "Starter Kit" tab to access these resources.