If you had the choice between negotiating with vendors and visiting the dentist, would you find yourself in the chair, open-mouthed, before you finished reading this?

OK, maybe dealing with vendors isn’t quite that bad.

But it is a complicated process. If you haven’t done your homework and put your ducks in a row, it can get ugly pretty quickly.

The best vendor-purchaser relationships are like those tandem Olympic divers who leap from the platform and match each other’s motions — well-planned, well-choreographed and well-executed.

What’s the best way for you to push your vendor negotiation skills from bronze to silver, and finally to gold metal status?

There are three key areas where you need to be prepared if you’re going to walk away from the table with reasonable results:

• What’s reasonable
• What you really want, and
• What you see as the ideal purchaser-vendor relationship.

So how do you know when you’ve pushed a vendor hard enough — without hurting your relationship?

• If available, get best-practice benchmarking data on what your industry commonly pays for basic purchases
• Categorize your goals: must-have, would-like, if-we-could, take-it-or-leave it, etc.
• Agree to build in an exit clause — for either of you — to get out of the contract if there’s a significant change in business conditions, and
• Be aware that your vendor has revenue goals, as well, and recognize those needs.

Before you sidle up to the negotiation table, be sure to have a firm understanding of what you’re seeking to come away with.

The way to do that:

• Identify the stakeholders in your company — who has the most on the line in this contract relationship
• Know the high and low limits, and where there’s flexibility, and
• Don’t be shy about putting (specific) requirements on the table with the vendor, so the vendor has an idea of what you’re looking to come away with.

Finally, how can you lay down some basic ground rules to help guide your relationship with vendors?

• Clearly state, as part of the agreement, the roles and responsibilities for both you and the vendor
• Agree on performance indicators and measurements to judge whether business goals were reached, and
• Make sure to set up the opportunity for an ongoing conversation with vendors, to keep the communication pathways open and to build a stronger sense of collaboration.

Tags: contract, customer, negotiate, supplier, vendor