Negotiating the Best Deal
Merchandisers in the apparel industry engage in two kinds of negotiation activities. At one level, merchants try to negotiate the deals with their buyers and at the other level, they do the same with their suppliers such as trim suppliers and fabric suppliers. The rules of the game remain the same and only the orientation needs to change, in one instance you think as a buyer and in the other as a supplier. Here are a few tricks that can help merchandisers to negotiate the best deals in whatever situation they find themselves in the apparel supply chain.
1. Counter Costing – Merchandisers should take quotations of price and product from at least two to three sources. This allows for a fair judgment of existing market scenario. You will sense immediately if a particular supplier is trying to over charge you for the product. You will be able to apply pressure on the preferred supplier, by making him aware that you are getting better quotes from other suppliers, and that he is not in a position of monopoly.
2. Comparative Analysis – In addition to taking counter quotes, it’s also important to do a thorough comparative analysis of the various quotes received. One should compare individual components of the cost break down, as well as the product specifications against which the price is quoted of all the quotations at hand. For example, if you are a buyer negotiating the cost of a fabric, you should compare the cost break down components like the cost of greige, cost of dyeing, cost of processing and finishing, as well as compare the specifications of the product like the fabric width, shrinkage, performance standards of fabric being promised by the fabric supplier etc. This way, you will be able to judge the true value proposition of each quote instead of simply being blinded by just one criterion of the cheapest price quote. Often the cheapest option may turn out to be the costliest one in the end, owing to the various invisible and intangible factors involved in the daily business transaction like service quality, delayed delivery etc.
3. What’s in it for them? Once you have made a complete and thorough analysis of all the quotations, to be a good negotiator, you need to find out whether the particular deal which you are negotiating, is important to the supplier or not, how important is it for them? Is the supplier overloaded with orders at hand, and yours is just another additional order, or is the supplier craving and hungry for orders and needs your order badly. This knowledge will arm you well at the negotiating table. To know to what extent the supplier is willing to make concessions to grab the deal, will help you in negotiating the best deal.
4. How much are you willing to concede? It’s not sufficient to know what’s at stake for your supplier. It’s also important to take stock of your own situation and clearly know what’s at stake for you. How important is the deal for you? How far are you willing to concede to get the deal closed? Are you in a position to demand and push the supplier beyond a point? What are the choices or options you have at hand? Do you have a backup plan in hand, should this deal not come through? Would you rather pay more and be safe and work with a reputed supplier? Or are you in a position to take a risk and go with a cheaper but not so well known supplier? All these and many more questions depending on your specific situation need to be answered clearly at your end before going to the negotiating table. Clarity and understanding of your own objectives will help you in cutting through the confusion and make the best choice and best deal.
5. When to go to the top desk and what to ask for? Any negotiation goes through various stages and levels. A smart merchandiser needs to know what kind of aspects can he negotiate at his level, and the level of his counterparts in the supplier/buyer end, and what kind of aspects will need to be dealt with at a higher authority level in the organizational hierarchy. For example, for a specific style/order, if you go to the level of company’s owner, it would be a sheer waste of time, if you start haggling for minutiae like individual cost components, trim costs etc. An owner is probably not involved in those minor details and is more interested in overall profitability of the business. You need to therefore know what specific aspects should be kept for negotiating in the end at the highest authority level, after having sorted out all the minute details at lower levels. Talk about things that will matter to the owner at an overall business level for example, future prospects of order volumes that you may bring in for the supplier, building of rewarding relationship etc.
In the end it’s important for merchandisers to remember that negotiation is a process of achieving consensus while avoiding conflict. It’s not a zero sum game of win lose, where you win and the other party loses. If you believe that negotiation is some tricky way to beat people and get your way, you will certainly fail. People are not stupid and most will be able to discern your intent regardless of your outward demeanor. The key elements of good negotiation strategy are understanding, empathy, trust, contribution and consensus. Both parties have to find a win way out.
By anjuli gopalakrishna