Prepare for supplier negotiation tactics

Most professionals try to spend as much time as possible preparing for their negotiations with suppliers.  However, little time is typically spent considering the supplier-side of negotiation planning.

Suppliers will prepare their own negotiation plan that is aligned to the customer account strategy and sales goals.  Whilst suppliers will not want to openly share this with their customer, it is essential that the buying organization’s negotiators takes the time to consider, not only the supplier’s negotiation objectives, but also:

  • What tactics will they deploy?
  • Which personnel will they involve and why?
  • Which personnel will they try and engage on the buyer side, and why?
  • How does their negotiation approach align with their account strategy for you?

It may seem cynical to speak in terms of supplier tactics, a term that suggests that the supplier is trying to manipulate the discussion.  Negotiation tactics can be defined as methods of persuasion and lines of discussion that support an overall negotiation strategy.  The supplier is simply doing their job properly by using tactics, just as the buy-side negotiator is. Supplier tactics include:

Tactics to open the negotiation:

There is evidence that an effective opening can sway the whole progress of the negotiation in terms of the balance of power, the extent of openness and the nature of the conditional statements made.

Tactics to influence the stakeholders into the supplier’s way of thinking:

Supplier conditioning before and during the negotiation can position them in a more favorable light with decision-makers and users.

Tactics to get the buyer to make a deal:

Subtle methods are applied to nudge the buy-side negotiator into a closing mindset.

Tactics to enhance the deal value for the supplier:

Suppliers will propose options that offer a win to the buyer but a bigger win for themselves.

To deal with supplier tactics, the buy-side negotiator must identify the type of supplier (and therefore negotiation) they are likely to have:

  • In competitive supply markets, many tactics are in use by the supplier to optimize their weaker position.  The buy-side negotiator must be aware of all the tactics in use and prepare counter-tactics for implementation before and during negotiation.
  • In non-competitive supply markets, the buy-side negotiator must influence the supplier to abandon the use of win/lose tactics in favor of a more open and collaborative approach to finding a solution that enhances value for all parties.

Being aware of the specific tactics that may be used, when and how is an essential part of the negotiation planning process.

You can find out more about individual supplier tactics in our Online Procurement Academy for Negotiation (OPRA).