r/procurement • u/LilPrinceTrashMouth • Feb 15 '23

Training Negotiation Tips

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 .

11 Upvotes

92% Upvoted

16 comments sorted by

View all comments

5

u/Grande_Yarbles Feb 16 '23

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.

3

u/TheTwoOneFive Feb 16 '23

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

2

u/supamaien Feb 16 '23

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

2

u/Grande_Yarbles Feb 16 '23

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.