Contract Negotiation in eProcurement: Essentials to Consider

Contract Negotiation in eProcurement: Essentials to Consider

When it comes to contract negotiations, the most challenging element may be ignoring what you’ve been taught about standard negotiation strategies, tactics, and methods.

Contract negotiations should focus on sealing a fair, reasonable, and beneficial deal for both parties, not on who is smarter. This is the definition of a good contract negotiation process, and here’s how to do it. 

Negotiations in ePrrocurement

Photo by Cytonn Photography on Unsplash 

1. Preparation is Everything

The most crucial phase in the contract negotiation process is this. You have to know that contract negotiation isn’t about who’s a better negotiator; it’s about being ready.

Imagine you’re trying to negotiate a contract with a supplier, and you have no idea what their price is or how it stacks up against the market rate. That shows you’ve done a cost analysis and have a clear idea of how much it costs the supplier to provide goods and services. 

Before the negotiation, you need to carefully review historical trends, supplier performance, purchasing volume and patterns. In addition, you need to consider all data regarding past and current market data. 

2. Understand the Supplier’s Goals

Find out what the supplier’s goals are. Think beyond pricing and volume objectives, particularly with strategic suppliers. This helps you plan ahead of time to address their concerns and consider creative solutions. Are there any non-financial topics of the contract that are significant to them and easy for you to deliver in exchange for better terms?

For example, you can provide a public endorsement or introduce them to the market. Do your homework and review the supplier’s finances to get a better picture of potential supplier-related risks and possibilities. 

3. Consider the Alternative 

Listening is not an innate power. Before jumping into a solution, listen to suggestions, acknowledge them, and consider them positively. It’s easy to feel irritated with folks who have opposing viewpoints.

Make an effort to stay calm when necessary and allow others to speak. There’s always another valid view. Try to examine the issue from both sides, not simply from your own perspective. You will not only be acknowledging another viewpoint, but you will also have a better chance of finding a solution that is acceptable to both parties.

4. Learn & Improve 

One of the most overlooked aspects of contract negotiation is learning the lessons and doing better next time. It’s critical to arrange a recap session, especially for sourcing processes, to learn from past mistakes and avoid repeating them. Returning to the first point, how much more preparation can you do?

Bottom Line

There’s no denying that learning negotiation techniques can help you get better results. However, having a reliable contract management solution like Penny’s can take a massive burden off your shoulders and let you deal with fine details that make the ultimate difference. If you’re interested, please contact us and seal the deal.



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Frequently Asked Questions

Penny is a cloud-based Procure-To-Pay system. penny helps you digitize and manage your full procurement cycle from request to approval. Manage RFQs to vendors, compare quotations, send POs and even payment. penny was designed to make things easy and consolidate all of your organization’s spending needs into one intelligent system.

  • Allocate, manage and monitor budgets by expense accounts, projects, departments, location, teams..etc 
  • Streamlining procurement means requests, approvals, and POs won’t be lost in emails or offline.  
  • History and records of requests and purchases can be extracted and tracked easily via the platform. 
  • Product requests are more accurate through the catalog, and hence avoid purchasing mistakes.
  • Reports and analysis can be extracted from the platform, giving you a consolidated data center for all your procurement activities.
  • penny is cloud-based and an easy to use platform. The action-board gives your team a user-friendly and simple experience.

Yes, penny is designed to handle complex procurement operations. We make EVERYTHING simple. Via the contract management feature, you can set the terms and conditions of your contract, and the system will recognize the products and the vendors of your request and match it with specified terms of your contract. Easy.

Putting you in control of your spending is integral to our mission. penny allows you to create Expense Accounts that match your P&L, and assign budgets to them. For example, you can assign $X for your “Travel Budget” and reflect on the budget before approving a travel request. In addition, penny allows you to set budgets for cost centers like projects, departments, locations, and so much more. With penny, you can extract reports and view your spend per Expense Accounts or cost center.

Yes. If your product search finds no results, you can submit a non-standard request.

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