The Purchasing Professional for a large multinational business considerably improved his negotiation skills and results by asking a simple question nearly all within the industry now encounters. What can we do right now in order to instantly reduce our purchasing spend within one particular area of the company?

It was critical for him to achieve a substantial decrease on their existing spend without compromising the quality or quantity of the goods, services and solutions being provided. Anyone who have had some negotiation training, will immediately acknowledge most of these principles.

1. Thoroughly explore all options available to both you and your counterparts.

You should have a good understanding of exactly what will take place if you don't achieve the improvement in cost that is needed. Are you able to buy from another dealer? Are you able to sell more of your product or service to other clients? Might your client purchase from another supplier?

Exactly what percentage of your supplier's business is represented by the volume of purchases between your respective businesses and so forth. Knowing what both you and your counterparts may do if negotiations fail will help you to recognize the balance of power. Maybe you will discover a better alternative to renegotiating the cost!

2. Marginally overstate your needs

You need to ask for more than you have to get. If you are seeking to achieve a 5% increase on your selling price, then you certainly should be asking for a 7% increase. Seeking more than you need to get allows you to make a concession to your counterpart. No one wants to negotiate with someone who is rigid and uncompromising and if you are not ready to make any allowances, then it is definitely unlikely that your counterpart would make any allowances.

3. Emphasise things in common

As humans we are more likely to be affected by the people who are perceived to be similar to us; effective sales training endorses this. Regardless of whether you need to obtain a cost reduction from your provider or a price increase from your customer, highlight the commonalities between yourselves and between your organisation & theirs. For example, exactly like you and your colleagues at ABC Company, we at LMN Corporation also have considerable pressure on our input costs and expenses. This has made it essential that we adjust the cost of the product.

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Merely depending on the negotiation abilities of individuals is a familiar oversight businesses make. Developing a strong negotiation capability is contingent on critical factors: The negotiation strategy, process, the individual's skills and the supporting network.

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