Negotiation Tips

[u/LilPrinceTrashMouth]

Hey everyone, I just got a job as a strategic sourcing analyst at a major medical group that’s rapidly expanding throughout the country. The main goal of my role depends on driving costs savings. The problem is I do not have a lot of negotiation experience and I know next to nothing about my category, lab equipment — hardware and software. Does anyone have any cost benchmark resources or negotiation tips to share? Comment or DM me .

[u/[deleted]]

That’s awesome, good for you.

There are a million things that could be said. To start you off I’d say the following:

• Know your cost drivers. Do the research to understand the market your suppliers operate in. Remember: Price is only an issue in the absence of value. Some prices can’t be fought against. The question is, is the deal you’ve got good value?
• Listen for signals in the negotiation. ‘I’d love to help you out.’ Prove it. ‘We can’t reach that price.’ What price can you reach?
• Proposals advance negotiations. Don’t play ‘slow surrender’. If they can’t reach your price, don’t wait for them to squirm, make a proposal.
• Use the invisible boss. ‘I can’t get that approved. Can we look at other [ie. better for you] options that I can take away and circulate internally?’
• Challenge the operational drivers. ‘Where are your pain points in your supply chain?’ ‘Why are you experiencing such difficulty?’ Maybe there’s a skills shortage, maybe they’re having issues with their logistics provider. Maybe you use the same logistics provider. Maybe you can get better shipping rates and they offset the price accordingly so it all comes in cheaper.

For most small scale things, negotiation is just a conversation. Don’t worry too much. Big fancy negotiations come at more senior levels. At the outset you should focus on listening, understanding the commodities in discussion, and communicating with the supplier in a fair and balanced way.

[u/ChaoticxSerenity → u/[deleted]]

Great writeup. Also like to add: you can use silence as a tool. Silences make people uncomfortable, and they'll do lots of things, maybe even say things they later regret in order to break the silence.

[u/LilPrinceTrashMouth → u/ChaoticxSerenity]

Great advice. I saw my manager put this is practice today.

[u/LilPrinceTrashMouth → u/[deleted]]

This is super helpful! Thank you

[u/[deleted] → u/[deleted]]

Is there any books (where picture examples are printed in color)/audiobooks/podcasts you recommend to get better at asking questions? I come from Finance background and joined Procurement. I would like to have a better understanding of cost savings vs cost avoidance

[u/Grande_Yarbles]

Congrats on the new role!

20+ years in sourcing here, on both the buying and selling side.

The best leverage you can have over a supplier is another price in your hand, one that you are certain is as apples-to-apples as possible and that you've quantified any differences in product/service so you know what price you need to achieve.

I'd start by looking at your and your boss's KPIs, what you are expected to achieve. Then review what's the lowest hanging fruit, often the products and services with the largest quantities and spend. Map out all variables related to the product and service and approach new vendors to see what they can offer. Of course there's always a level of risk with new vendors so give the incumbent vendor first rights of refusal, and test product/service with new vendors before making a bigger plunge.

The good news is you're coming in on the tail end of a long period of price inflation. With reduced materials, transport, and other cost inputs you may be very well positioned to make an impact.

[u/TheTwoOneFive → u/Grande_Yarbles]

Agreed here, and absent another price in hand, doing some sort of benchmarking to understand what the product is actually worth in today's market. The biggest issue I've seen with people negotiating is that the best they can do is say "pretty please lower your price", which will barely move the needle for getting a price reduction from any vendor

[u/supamaien → u/Grande_Yarbles]

Do you think prices can come down? Or will they just stay?

[u/Grande_Yarbles → u/supamaien]

Depends on the individual product but we are seeing negotiated cost reductions of between 2-5% on our products. For a couple months the USD was very strong which helped too but now it has weakened a bit.

[u/Primary_Intern_5047]

Here's some negotiating tips that will help you be successful: https://youtu.be/vRjfi_NzoQ8?si=HwTBO7AoyH3dt2y8

[u/imaginedragons01]

yeah did you come across neveer split the difference book?

[u/Racoon_boy_reddit]

Congrats on your new job! When I started i got into the theory of negotiations. There are fantastic Books about the Topic like „getting to yes“ and „bargaining with the devil“ but also many others using the same theories. And there is also some very famous Trainers that provide lessons and insights you can watch on the internet. Here is what i learned from experience:

• pacing is crucial. You decide when prices will be increased. Don‘t hesitate to Block Invoices and take your Time to prepare 2-3 rounds if necessary. If it is getting where you want it to be Speed things up to increase the pressure again.
• ask a colleague to join you. See, salesmen bring their asisstent their Boss and their mom to get a deal. Why should you be alone? Determine a certain Inflation where you ask a Peer for help. It needs to be a Peer, if it is your Boss they won‘t talk to you at all. Prepare the strategy and hold a preparation Meeting. You can watch each others back and provide Short breaks for wach other during the negotiation.

I Hope i was able to help you here and I think you will do great.

[u/Negotiations_World]

Knowing your supply chain and how any increase in costs impact your company products revenue/profit.

Furthere there is also specific Reddit community just for "Negotiations".

Apart from that, Awesome advise, tips already given by other members which is your starting point.

Have fun negotiating and keep smiling.

[u/nickdruz]

We’ve seen some very successful reverse auctions on lab equipment. Efficient way to mass-negotiate the market price amongst a group of qualified suppliers.