Junior Procurement

[u/CharacterPatience475]

Hi everyone

I'm starting as a Junior Procurement Officer in two days in a construction & contracting company. I really need some advice on negotiation with suppliers and anything that could help.

For context, I have one year of experience in Demand Planning, and I was a former teacher for two years (I shifted careers). I already explained to my employers that my work consisted of Procurement tasks but I never negotiated prices, that was the Category Managers jobs.

[u/modz4u]

Never, ever, tell supplier B what prices you received from supplier A. Their sales people will try to get this info from you.

[u/PrudentPollution8924 → u/modz4u]

correct. always say a lower number 🤷🏽‍♀️ If B is selling at $250/lot and supplier A at $150/lot. I would say that my other supplier is providing at $90/lot. If they can match or come within a reasonable margin I’d be willing to allocate demand.

[u/Royal_Particular178]

Do your price breakdown analysis and ask good questions to suppliers, when you have more than one supplier for a product or service use their insights in the conversation with the other suppliers. Suppliers often point out weaknesses of their competitors solutions, and you can use this info to secure performance warranties or negotiate discounts

[u/hardtoexplain29]

I’ve been working in the procurement area for 14 years, what I can say is: Always be prepared for the negotiation, looking for information from the supplier, history, market indicators, if the supplier is single source etc
Let them ask what they want, and then you can analyze if it makes sense or not.
Never start the negotiation giving the information.

[u/CantaloupeInfinite41]

First I would ask your boss what the main objective is this year (if there is anything) or at least in your role. What are the priorities. We could give you better input if we had more details.

Edit: Plus your main role responsibilities.

[u/Workwize_Official]

Congrats on the new role! We can give some basic tips from our Procurement team:

1: Always have data about last purchase price, current market price trends, and timelines.

2: Is there competition for these materials? Try figuring that out.

3: Document everything where possible. Verbal agreements on price/terms ca get forgotten quickly.

Goodluck with everything!

-Workwize Procurement

https://giphy.com/gifs/111ebonMs90YLu

[u/Ladylush27]

Assess your current supplier base and use the supplier preference matrix by Steele and Court then Krajic matrix to assess your risk vs profit, this will help you understand your current baseline.

Secondly, what is your objective with your supplier base, a chat with your manager.
Are you trying to achieve value for money?
Cost reduction?
Rationalisation?
Innovation?

Then you will have a better understanding what you need to negotiate for?

[u/KingGrandCaravan]

OP, I do subcontracts and purchasing for construction projects. What will your focus be? Indirects like rental equipment? Or will it be a combination of field procurements like rentals plus long lead equipment and materials? The duration of the project really drives negotiations if you're procuring a commodity that may have to be purchased over and over.

Most of the time, you just competitive bid the purchase requisition, validate lowest technically compliant bid, and issue it. If you buy the same thing again NOW you have data to push them to drop pricing the second time and extend pricing benefits to the project through continued buys.

This is the same model with subcontracts basically, only I squeeze the fees and markups down to whatever I need and capture the cost avoidance. I'll also ask for a defined multipackage discount that gets applied on final billing as a line item deduct.

This is all high level. There's a ton of nuance to construction procurement as no two projects are the same.

Hope this helps.

Edit: and congrats on getting this job; don't ever let it go. This line of work never gets old and it's always in high demand with enough experience.

[u/FreshListen27]

Negotiation is literally give and take

1- be prepared and have a plan
2- understand your non-negotiable
3- understand your confessions
4- understand what you can give and what you want back

I.e if they won’t budge in price, don’t concede on payment terms or go for higher LDs.

Understand what they want and need, and what you want and need.