If you’re in purchasing or procurement, how can you reduce your costs, increase your margins, and still ensure the quality of service required from your vendors?
When your vendor contracts come up for renewal, bid out the contract and come up with several alternate plans to renewing the current deal. While you may ultimately stick with your current vendor, this classic leverage move-especially effective in a down economy-ensures you will tap into hungry and possibly desperate vendors increasingly worried about revenue and finding and keeping good customers. The better your plan B, the stronger your leverage; and the stronger your leverage, the higher the likelihood you can negotiate better deals.
And if you’re on the sales or vendor side, reassess your leverage and, as much as possible, incentivize your customers so they don’t bid out your contracts. At the same time, seek out new customers. Challenging times often present great opportunities if you can undercut your competitors’ prices.