ProPurchaser CORE PRACTICE: Never enter negotiations without first researching what has happened to your supplier’s costs

Two Ways We Engage with Suppliers

A different way to negotiate

As Purchasing professionals, we use two main approaches to establishing prices with suppliers.

The first is through a bidding process. We prepare formal documents and invite several suppliers to participate – a tried-and-true best practice for engaging with suppliers. We know that promoting competition between suppliers is a reliable and effective way to achieve good results.

The second approach is through direct (one-on-one) negotiations with current suppliers. We know that this method is akin to the Wild West, with few tried-and-true best practices. We are usually on our own to achieve good results.

“Why not just use bidding all the time?” an observer might logically ask. Good idea in theory, but not in practice. Bidding is rigorous and time consuming, and few Purchasing departments (including governmental ones) have enough staff to bid everything, all the time.

  • Direct negotiations, without the benefit of competitive pressure, are a fact of life.

There is good news… read the full article to learn more about this ProPurchaser Core Practice, here.


Source: (Core Practices)

Article Author: ROD SHERKIN

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