By Domenic Nigro
Negotiations are often traditionally viewed as a “transactional” model a contest to be won. Current negotiation models emphasize a more strategic approach in order to develop an ongoing customer-supplier relationship that’s beneficial to both parties. While the United Auto Workers may have good reason to take the transactional approach when negotiating with car manufacturers, it’s not the best approach for business owners looking to sustain and expand their shops.
The business owner must begin by “aiming high” in negotiations with suppliers, looking for the best value for the products he’ll purchase. The strategic approach focuses on value creation. When a supplier quotes a price, the business owner cannot view it in isolation from the entire owner-supplier business relationship. As a shop owner, you want a supplier who delivers the parts you need in a timely manner and provides quality parts for you and your customers. The supplier wants your repeated orders. Having a reliable supplier of quality goods creates value for your shop.
Rather than a contest with a winner and loser, the strategic approach is a “win-win” proposition for both parties in the business relationship. Among the benefits the shop owner can look for from the supplier are things such as: 1) transportation accommodations, 2) favorable payment terms, 3) additional purchases, 4) the opportunity to buy a combination of products and/or 5) accommodations in the delivery of parts.
A shop owner needs to prepare before entering into negotiations. In the strategic approach, keep the following in mind.
Give yourself room to negotiate. Don’t go into the process with a “take it or leave it” attitude, backing yourself into a corner. Have a clear goal in mind for the negotiation. Be prepared to make concessions that are beneficial to your position, but know that it’s not necessary to match the other party concession for concession. As a buyer of parts and supplies, you begin lower on the price scale, giving legitimate reasons for your position.
In the strategic approach to negotiations, “concession” is not a dirty word. Remember, the process is a give-and-take for both parties. It may be easy for you to concede on minor issues to generate goodwill. But, remember also to not be ridiculous in the process, asking for concessions you know the other party can’t make. At the same time, don’t insult the other party by not responding to their legitimate business requirements.
The strategic approach requires a comprehensive approach for the shop owner. Besides price-per-part, the shop owner can deal more intelligently if he also includes items such as: cost of delivery; storage of products; and, response from the supplier if problems occur.