Q & A Table of Contents
A Slow Supplier Is Hurting Our Business
From: Doreen, Singapore
Question: One of our manufacturers has been delivering late shipments over a duration of 6 months. Hence, production has been delayed and bringing higher costs and a loss of customer goodwill.
How can we prevent future delays in deliveries? Our company wants us to come up with a negotiating strategy and accompanying tactics to achieve a desirable business outcome.
Response: You need to look at the interests of all of the stakeholders in this situation: your company; your supplier; your customers; employees; the competitors of the customers, supplier, and your company; and whatever other parties have an interest in the situation.
Once you have an idea of what you assume to be the interests of the various parties, you need to test those assumptions. Some of that will dictate the questions you ask during negotiations with the supplier; other questions can be directed to other stakeholder parties. Understanding each party's concerns can help you focus on the elements of a likely agreement.
It is also important to take a look at the BATNAs of the parties, their Best Alternative To a Negotiated Agreement. Can you switch suppliers? How badly does your slow supplier need your business -- or can they do better supplying other customers? For example, it may be that other customers yield more profit, so they jump to the head of the production schedule, leaving your company to wait for its orders.
When you assess the BATNAs of the parties, you are measuring the balance of power among them. Before negotiation try to figure out how you can strengthen your BATNA and weaken the BATNA of the slow supplier. Your objective in that case is to make it so the supplier needs to please you more than your company needs to please the supplier. It increases your bargaining power.
It could make sense to have discussions with your customers; ask them how the slow delivery is affecting their business, ask them whether they know other suppliers who can do a better job of fulfilling their obligations to you so you can do a better/faster job for your customers. Your customers need to know you are addressing the issue actively.
The fundamental issue is to assess the interests of all the parties with a stake in the outcome, measure the balance of power, and undertake negotiations asking a lot of questions to do a reality check on your assumptions -- and to learn more about what will motivate the slow supplier to meet the appropriate schedule.
Thinking in advance about possible solutions, possible motivations or objectives, and creative ways to change things will mean that you negotiate with a plan rather than only thinking on your feet during the negotiation. You need to be flexible in the negotiations, but your flexibility should be based on a good job of preparation.
Good luck,
Steve
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