By: Chrys Tarvin and Steve Forsyth
You, your team, and your experienced supply chain strategy partners have put your heads together and found the highest impact initiative to take your business to the next level. It is time to convert your shipping to an inbound consolidation program.
Now comes the tricky part: supplier negotiations. This might be the best path forward for you, but without your suppliers, you won’t get very far. So how can you create the most winning supplier negotiations process possible?
Have Excellent Data
As they always say, you can’t argue with cold, hard facts. Before you approach your suppliers asking them to make changes, make absolutely certain that you know your data and where you got it. Be prepared to demonstrate the data that led to decisions such as the location of your consolidation centers, shipping routes, and projected shipping costs. Particularly in the case in which you will be asking suppliers for a change of freight terms, make sure that the data leading to your ask amount is irrefutable. In these cases, it helps to have the assistance of top of the line supply chain optimization software.
Know How This Benefits Them
When you are trying to “sell” something to someone, you have to know what it is that they need or want. What are your supplier’s pain points? Regardless of how well this initiative aligns with your own organizational strategies, your suppliers won’t be impressed until they hear how this makes their own lives easier or better. And the good news is that making the transition to an inbound consolidation program is in fact beneficial for your suppliers as well. From increased operational efficiency to reduced shipping liabilities, there are plenty of reasons your suppliers might be interested in what you are saying.
Know Your Goals
Each organization’s ICP transition will be a little different because each organization has slightly different strategic goals. There is no single “one-size-fits-all” approach to an inbound consolidation program. With that in mind, it is up to you and your business to decide where your negotiation boundaries are. Perhaps there are some suppliers whose business is so valuable that you are willing to make wide exceptions for them. Then again, there may be others for whom complying with your ask is non-negotiable. Before approaching the negotiation setting, make sure that all members of your team are clear on where each supplier stands within your strategy and then stick with those limits.
Practice Makes Perfect
As with anything, preparation will win the day in your ICP supplier negotiations. While you can’t predict everything your suppliers will do or say, with a little thought you can likely guess many or even most of their possible questions, concerns and reactions. Use that to your advantage. Prepare sample scripts in which you address any likely scenarios and fully prep all negotiators and merchandisers by practicing in a role playing type situation before the actual meetings occur.
When your suppliers hear that you are about to make significant changes to the way your partnership conducts business, their first reaction will likely be concern. No one likes to do business in the unknown. Your suppliers will want to know exactly what this means for them in very specific terms. To that end, they will likely have many questions. By entering into your supplier negotiations prepared to address their questions to the best of your ability, you will allow your suppliers to feel more confident in moving the transition forward.
Change is never easy. Particularly if the change is not your own idea, it can be difficult to get onboard. Your suppliers may be concerned about complying with entirely new procedures and may feel defensive about going into such a process. One way that you can soften their defensive stance is to demonstrate from the very beginning of negotiations that your organization is prepared to offer ongoing transitional support. Remember to discuss your plans for supported onboarding and procedural training early and often during supplier negotiations.
Negotiating with your suppliers to convince them to see your new strategy as the right way forward may seem intimidating. Yet, with some planning and thought, your suppliers will soon be onboard and aligned with your new goals! However, if the idea of tackling your ICP conversion supplier negotiations seems overwhelming, remember that you don’t have to do it alone! Speak with a specialist inbound consolidation program conversion consultant today to get your organization’s next big strategy started!
Designed, integrated and implemented Inbound Consolidation Programs for Fortune 100 and 500 Companies throughout North America, south America, and the Pacific Rim improving cost, service, quality and speed.
Authors’ Note: This article is the sixth of the TPG series on Inbound Consolidation.
Find the previous post here: Seamless Transitions: Getting Everyone Onboard after an ICP Conversion
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