Black Belt Negotiators: Resin supplier gets tough
By Paul Teague -- Purchasing, 9/11/2008 2:00:00 AM
Purchasing's smartest negotiators move from conflict to collaboration fast. Match your wits against these pros. Guess their strategy. Then, read what they really did atpurchasing.com/negotiations.
Among possibilities: Accept the higher price, negotiate a value-added service, sign a long-term deal in the hopes of getting a price break, change suppliers.
A purchasing manager at a custom plastics extruder buys polyethylene from a main supplier and several smaller ones. Early in 2008, rising crude oil prices drove up the price of polyethylene to record heights. The buyer knew he would face higher costs from his supplier, but he was unprepared for the seller's tactics.
Problem: The resin supplier, like other suppliers of the same material, raised his price significantly to compensate for his own higher costs. But when the buyer tried to negotiate, the supplier said he would not change his price. He was not flexible at all, despite the fact that the buyer had been his customer for a long time. In fact, he refused to even discuss options for lowering the price.
Among possibilities: Accept the higher price, negotiate a value-added service, sign a long-term deal in the hopes of getting a price break, change suppliers.
Solution: The manager phoned one of his smaller suppliers and got a lower price. He then called the original supplier and told him that if he didn’t match the lower price he would lose the business. Within 15 minutes, the original supplier phoned back and said he would match the lower price. “We’re a big purchaser of polyethylene and that certainly carried some weight with this supplier,” the purchasing manager said.
Are you a black belt negotiator? Tell us about one of your negotiation successes, and we'll print it so others can learn from your experience. Send it to pteague@reedbusiness.com.
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