Negotiating with Powerful Suppliers
Koen Vandermarliere, Business Consultant, Belgium, SIG Leader
I encounter this situation often with suppliers in ICT.
What I usually do is:
Your power in the negotiations will not be buying power but the power of information. I use Porter's 5 Forces Analysis to look at the vendor's position
regarding competition, new entrants, substitution of his product, his suppliers and his customers.
I make our company as interesting as possible to him. As a reference in a tough market, as a door opener, joint developments...
Then there is the person
you are negotiating with; what are his interests, what is his position in the company, did he make his sales figures...
On the risk side
... Cover your bases using SLA, KPI, etc. But think out of the box, are there any other techniques, alternatives? Should you foresee buffer stocks, a stable supply for at least X months...? Do I have any impact on his supply ?
It is not an easy game, but one that is much more satisfying then the standard x% additional discount game.