Being unprepared for contract negotiation in the procurement process is asking for trouble down the road. However, with some strategic planning and relationship building, you can set up your procurement contracts for success. Here are some key considerations to keep in mind before you start the negotiation.
Before negotiating, define what success means for this contract. Ask yourself:
Good contract management in procurement facilitates an effective working relationship between buyer and supplier. Keep this bigger picture of success in mind as you negotiate the details.
Do your homework before sitting down at the negotiation table. Take a data-driven approach by analyzing:
With spend analytics, you can easily access the insights needed to negotiate from a position of strength. Define fallback positions in case you do not reach your ideal agreement.
E&I Cooperative Services® can help you prepare. You can compare pricing, terms, and conditions with E&I’s 150+ ready-to-use contracts. Because E&I negotiates contracts on behalf of its 6,000 members, there is bulk buying power to negotiate best-in-class pricing and terms.
You can also take advantage of E&I’s strategic spend assessments (SSAs). E&I provides a no-cost evaluation of your spend data to find opportunities to reduce costs, bring more spend under contract, and maximize efficiencies. An SSA can uncover areas to save and consolidate, providing a strategic roadmap for future procurement.
Look beyond the supplier’s obvious commercial goals. Research helps uncover their wider business objectives, challenges, and biases. For example:
Gaining this context facilitates creative problem-solving to meet both parties’ core needs as part of negotiation and contract management in procurement. Building a solid relationship with suppliers can help make future interactions more productive.
Your internal team can unintentionally derail negotiations despite good preparation. Financial, time, or professional pressures may boil over into unhelpful emotional reactions. It is best to:
With patience and empathy, you can get discussions back on track.
Do not rush to assumptions or hardened positions. Listen closely to understand the other side’s perspective. Acknowledge their ideas positively and look for mutual ground. Some tips include:
Creativity and compromise require open-mindedness. Multiple effective solutions likely exist.
After signing, debrief with your team on lessons learned while the experience is fresh. What worked well that should be repeated? What can be improved for next time? Which data and insights proved most valuable?
Experience with one supplier can help in negotiations with the next.
E&I Cooperative Services is the only member-owned, non-profit, sourcing cooperative that exclusively focuses on serving the education community. As their sole focus, E&I’s team of procurement experts is uniquely equipped with the experience and expertise to meet the specialized needs of educational procurement.
There is no cost to become a member and no minimum purchasing requirement.
Not only do E&I members get access to competitively sourced contracts and certified diverse suppliers, but they also can benefit from exclusive rebates and incentives from select suppliers. As a cooperative, E&I also shares proceeds with its members in the form of patronage refunds based on yearly volume.
Contact the experts at E&I Cooperative Services today to learn more about contract negotiation in the procurement process.