Best Practices for Negotiating with Key Suppliers

Based on 15 years of working with clients in the sourcing and procurement arena,

Vantage Partners identified twenty best practices for managing critical supplier relationships.

These practices represent a reasonably comprehensive (though certainly not exhaustive) approach to maximizing value in important supplier relationships.

While not a recipe for guaranteed success, these practices comprise a roadmap for systematically negotiating and managing key supplier relationships more effectively.

Today’s sourcing and procurement professionals face a multitude of negotiation challenges: from internal negotiations with business units around sourcing strategies; to negotiating agreements with single and sole source suppliers; to ongoing negotiations over individual statements of work, change orders, issues of scope, and the like.

This excerpt describes the four best practices related to negotiation and offers some practical ideals about how to implement them.

About the Study
The study was based on data collected from sourcing and supply chain executives at more than 100 companies about relationship management practices with their key suppliers, across six fundamental areas:

• Evaluation and Selection
• Negotiation
• Post-Deal Relationship Management
• Termination
• Performance Monitoring
• Portfolio Governance and Management

One hundred fifteen survey respondents were asked to answer scaled questions on specific practices, as well as open-ended questions about their company’s overall approach to supplier relationship management.

The bulk of the study details specific findings about each practice, including a description of the practice, benefits of instituting the practice, barriers to implementation, and ways in which the practice has been implemented.