Dealing with a Unique Supplier While You Don't Have Negotiation Power

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Kraljic Model > Best Practices

Jimmer Campos, Colombia
Sometimes you have to close a negotiation process but you donīt have any negotiation power because your volume for purchasing is low, while your supplier is unique for the project or service you need. How could you get the best conditions or minimize the risk? How do you engage this unique supplier in the market to pay attention to your requirements? How are you going to get advantage during the negotiation process or is there no negotiation at all? What must you develop to reduce future risks? The unique supplier in the future could stop the deliveries and that could have a high impact in your supply chain... Did you play this game? Please share your experiences and developments. (...) Read more? Sign up for free

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  Koen Vandermarliere, Business Consultant, Belgium

Negotiating with Powerful Suppliers

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.

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Koen Vandermarliere
Business Consultant

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