How to Negotiate with Powerful Suppliers
Ordering delays, market share demands, warranty reimbursements — these were some of the concerns dealers shared to this question: “What Would You Change About Your Manufacturer?” in our 2015 Dealer Business Trends & Outlook survey.
Here’s the follow-up question: What are you doing about it? You may feel you have little leverage in bringing about changes with your manufacturers. This Harvard Business Review article talks about the shift in power to large suppliers:
“The shift has come about for various reasons, any or all of which may be in play in a given industry. In some cases suppliers have eliminated their competitors by driving down costs or developing disruptive technologies. In others, fast-growing demand for inputs has outstripped supply to such a degree that suppliers have been able to charge what they want. In still others, buyers have consolidated demand and forced suppliers’ prices down so far that many suppliers exited the market, giving the remaining few more clout.”
The authors offer these 4 steps for gaining back negotiating clout with powerful suppliers:
- Bring new value to your supplier, such as through new markets.
- Change how you buy, such as consolidating purchase orders.
- Create a new supplier, such as one from an adjacent market.
- Play hardball and consider action of last resort, such as canceling orders.
Read more about ways you can increase your negotiating power.
