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Negotiation method | 3 things you must do to win the negotiation
One of the purposes of negotiation is to get the results you want from the other party, so one of the important preparations before procurement negotiations is to understand yourself, what you want, that is, what you are talking about, and your situation (such as urgent procurement, a small amount of Purchase, spot buy…..). Purchasing negotiation with suppliers is not only the purchase price, but also buy terms such as MOQ, delivery terms, delivery time, etc. It’s easy to determine what to talk about, but the outcome of the negotiation requires a very detailed analysis.
Prepare facts and figures
Knowing the technical background of purchasing products is a compulsory job for buyers. Only if you have a sufficient understanding of the technology can you conduct business negotiations with justification. For special technical terms, you must know in advance. If you don’t know about the purchased products yourself, the supplier will think you are not professional, then you will be very passive.
1) Supply market conditions. Buyers not only need to understand the status of the supplier, but also understand the supplier’s competitors and industry trends in the entire supply market.
2) Cost structure analysis. If you do a good job of cost structure analysis, you will have a basis for discussing the rationality of costs with suppliers, and you will be able to grasp your own profit range accurately.
Establish negotiation goals
We must set goals for everything. No goal is equivalent to no performance.
From the moment of contact with the supplier, we must constantly dig out useful information from the latest information to adjust our own negotiation rhythm.
1) Before negotiations, set acceptable bottom lines and goals. The bottom line is the maximum tolerance for concessions, which is an insurmountable red line. The final negotiation result is between the bottom line and the goal, which is the ideal result.
2) In the process of setting goals, not only cost goals, but also other goals such as lead time, payment terms, quality requirements, after-sales service, etc. Anyone of these goals can be used as a lever to achieve other goals.
3) Establish negotiation strategies and procedures. It is necessary to plan what to talk about first and what to talk about later in order to be targeted on the scene.
How to set negotiation goals?
1. Distinguish important goals and secondary goals
The “objective” must be clearly described before negotiations. And do the corresponding sorting according to the priority. Learning to rank goals is the first priority in preparation for a negotiation.
2. Distinguish which can and cannot make concessions
After listing the priorities of the goals. The requirements, terms, and goals that can or cannot be concession should be clear again.
3. Set the needs of negotiating opponents
As the saying goes, knowing yourself knows the enemy, and you must analyze the supplier’s needs and situation before purchasing negotiations. You may not be able to fully understand the supplier’s situation during the first cooperation, but a preliminary analysis should be done to determine our attitude towards the supplier.
Whether the suppliers are willing to cooperate strongly. How much does your purchase account for the supplier’s sales, the supplier’s current Capacity vs. Order status, whether the product you are purchasing is the supplier’s main product or a product that is about to be eliminated, whether the person negotiating with you has the right to decide. The setting of goals and the selection of purchasing strategies must refer to the needs and conditions of suppliers.
Forecast and clarify the goals and needs of the negotiating opponent. And compare with our own goals and needs in order to formulate a “plan” for a wider range of options.
Second, we believe that the determination of supplier relationships must be clear before procurement negotiations. Whether the supplier establishes a long-term cooperative relationship with us, or a one-time buy, or a general purchasing relationship. For example, for long-term suppliers, we can get better service and prices by choosing long-term cooperation contracts.
Prepare alternatives to leave yourself a way out. As long as the negotiations are not over, any accidents are possible.
Before purchasing any services or goods, especially when facing strong suppliers, you need to think about alternative suppliers and alternative products. Buyers always face uncertain delivery risks.
During the negotiation process, you must adapt to changes and try to maintain your dominant position. By establishing principles, setting goals, and following actions, you have the opportunity to obtain a win-win negotiation. Next, share how to perform 3 actions.
The preparation for negotiation can also be said to be a process of data integration and information collection, and the collected information is used to “evaluate the negotiation opponent”.