Negotiation with supplier
and source of selection
Submitted By : Amanpreet kaur (184432)
Index
1. Negotiation
2. Before Negotiation ,during & after
3. Process of Negotiation
4. Factors Affect Negotiation
5. Qualities of good Negotiator
6. Types Of Negotiation
7. Sourcing' or 'Selection
8. Successive Stages of Source Selection
9. Source selection
Negotiation refers to the communication between buyer
and the seller. The basic purpose of negotiation is to
discuss the various terms and conditions and state
everything clearly so that there is no scope of any doubts.
The Purpose of negotiations may be any one/more of the
following:
1.Best Price
2.Best Quantity
3.Time of Delivery
4.Terms of Payment
5.Best Quality
6.Place of Delivery

Negotiation with the suppliers
Before Negotiation
1.Product Knowledge
2.How to Search
3.Person of the same Trade
4.Call your Vendor in the last
5.Go to Manufacturer, Behave like a Whole saller
During Negotiation
1.Don’t make the first offer
2.Don't be in a hurry
3.Excepting an expensive price ? Quote first
4.Be a good observer
5.Don’t let him read you
6.Be firm
7.Be a good communicator
8.Don’t speak too much
9.Never accept the first offer
10.Don’t bluff
After negotiation
Put it in Writing
•Write down the details of what you have agreed on. Both of you should review it to be sure the
agreement says what you intended. Make sure that you are both OK with what the agreement
says. You can write your agreement simply, using ordinary words. Putting things in writing will
increase the chances that your agreement will be followed by both of you.
Stay Positive
•At the end of the session, express positive feelings about the agreement you have reached.
This was probably a difficult process for both of you. As hard as it was to get to agreement,
share your feelings about the fact that you both succeeded.
•“I feel better about this now that we are talking.”
•“I appreciate this.”
•“I am glad that we were able to work this out together.”
•“Thank you.” If Prices are MoreIf Prices are More : Don’t cancel the deal If Prices are Less : He may back out
Don’t show your happiness
Process of Negotiation
FACTORS AFFECTING NEGOTIATION
• PLACE: Familiarity with surrounding
helps in boosting confidence.
• TIME: Time should be adequate for
smooth exchange of ideas &
securing agreement before it is to
late .
• ATTITUDE: Attitude of both parties
should be positive, i . e, willingness
to make an agreement or deal.
• SUBJECTIVE FACTORS: Like relation
of two parties involved, status
difference, information & expertise.
Qualities of Negotiator
1.Preparation and planning skill
2. Knowledge of the subject.
3.Ability to think clearly
4. Ability to express thoughts verbally
5.Listening skill
6.Judgment and general intelligence
7.Ability to persuade others
8.Patience & Decisiveness
9. Considered lots of options
1.Negotiation handled by committee
of officers
2.Entrustment as to price
3.No Negotiation by Single individual
4.Record of proceedings
Who Selects the Negotiating
Committee?
• Members of the Negotiating Committee are
selected by a majority vote of voting members
of the MEC (LEC Presidents).
• Master Executive Council (MEC)
• Local Executive Council (LEC)
Negotiation with the suppliers
Negotiation with the suppliers
Sourcing' or 'Selection
‘Sourcing' or 'Selection of source/s' is a major
challenge for any Purchasing manager. Source of
supply of required materials is basically
selection of a suitable supplier. The Purchasing
manager has to ensure , getting the material /
service from the right source (one of 5 R)
Top 5 Successive Stages of Source
Selection | Materials
Management
1. Searching
2. Selection
3. Negotiations
4. Trial order
5. Rating.
Successive Stage # 1. Searching:
• The need for a material is the starting point.
The search is on to find out the most suitable
supplier. This process begins with the
finalization of specifications in consultation
with technical departments. The identification
of the sources of supply needs I exhaustive
initial survey.
Successive Stage # 2. Selection:
• The buyer is now provided with adequate
information as to the sources of suppliers. The
more intimate knowledge of the supplier is
necessary for right selection. So, specific
information on the supplier’s financial
strength, quality, facilities, efficiency,
industrial relations, technical excellence and
position in industry have to be collected.
•
Successive Stage # 3.
Negotiations:
• The process of negotiations starts after the
completion of screening and selection of the
suppliers. The negotiations or regular basis
and personal contacts and sometimes
conferences with the suppliers ensure correct
and cordial relations between the buyer and
the supplier and his is very essential for
mutual cooperation.
Successive Stage # 4. Trial Orders:
• Through negotiations when both the parties
— the buyer and the vendor — come to
mutual understanding, trial orders are placed,
formally the trial orders do not exceed more
than a month’s requirements. This is done
with a view to test the vendor’s capability in
meeting the buyer’s needs.
Successive Stage # 5. Rating:
•Since there are a number of vendors usually,
the question of rating irises. On the basis of
various considerations, the buyers has to
apportion his requirements among the because
on the correct rating of the vendors depends
there retention or rejection.
Source Selection
1. Financial soundness of the supplier:
The supplier to be chosen should have
a sound financial position.
2. Flexibility: The supplier to be chosen
should be one who is flexible
3. Size of the Supplier: Large supplier with
huge capital are greatly interested in
technological improvements.
4. Past association : In case some supplier
is there with whom the organization is
having old association, the relationship
with the same supplier must be
continued
1.Current price buying : also called market condition
buying, refers to the general method of purchasing in
minimum quantities to replace stock
2. Contract buying: it refers to the policy of the
supplier undertaking to deliver agreed quantities at
intervals over the period specified in the contract
3. Bargain buying: it refers to the policy of buying in
bulk at ‘bargain prices’.
Negotiation with the suppliers

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Negotiation with the suppliers

  • 1. Negotiation with supplier and source of selection Submitted By : Amanpreet kaur (184432)
  • 2. Index 1. Negotiation 2. Before Negotiation ,during & after 3. Process of Negotiation 4. Factors Affect Negotiation 5. Qualities of good Negotiator 6. Types Of Negotiation 7. Sourcing' or 'Selection 8. Successive Stages of Source Selection 9. Source selection
  • 3. Negotiation refers to the communication between buyer and the seller. The basic purpose of negotiation is to discuss the various terms and conditions and state everything clearly so that there is no scope of any doubts. The Purpose of negotiations may be any one/more of the following: 1.Best Price 2.Best Quantity 3.Time of Delivery 4.Terms of Payment 5.Best Quality 6.Place of Delivery
  • 4.
  • 6. Before Negotiation 1.Product Knowledge 2.How to Search 3.Person of the same Trade 4.Call your Vendor in the last 5.Go to Manufacturer, Behave like a Whole saller
  • 7. During Negotiation 1.Don’t make the first offer 2.Don't be in a hurry 3.Excepting an expensive price ? Quote first 4.Be a good observer 5.Don’t let him read you 6.Be firm 7.Be a good communicator 8.Don’t speak too much 9.Never accept the first offer 10.Don’t bluff
  • 8. After negotiation Put it in Writing •Write down the details of what you have agreed on. Both of you should review it to be sure the agreement says what you intended. Make sure that you are both OK with what the agreement says. You can write your agreement simply, using ordinary words. Putting things in writing will increase the chances that your agreement will be followed by both of you. Stay Positive •At the end of the session, express positive feelings about the agreement you have reached. This was probably a difficult process for both of you. As hard as it was to get to agreement, share your feelings about the fact that you both succeeded. •“I feel better about this now that we are talking.” •“I appreciate this.” •“I am glad that we were able to work this out together.” •“Thank you.” If Prices are MoreIf Prices are More : Don’t cancel the deal If Prices are Less : He may back out Don’t show your happiness
  • 10. FACTORS AFFECTING NEGOTIATION • PLACE: Familiarity with surrounding helps in boosting confidence. • TIME: Time should be adequate for smooth exchange of ideas & securing agreement before it is to late . • ATTITUDE: Attitude of both parties should be positive, i . e, willingness to make an agreement or deal. • SUBJECTIVE FACTORS: Like relation of two parties involved, status difference, information & expertise.
  • 11. Qualities of Negotiator 1.Preparation and planning skill 2. Knowledge of the subject. 3.Ability to think clearly 4. Ability to express thoughts verbally 5.Listening skill 6.Judgment and general intelligence 7.Ability to persuade others 8.Patience & Decisiveness 9. Considered lots of options
  • 12. 1.Negotiation handled by committee of officers 2.Entrustment as to price 3.No Negotiation by Single individual 4.Record of proceedings
  • 13. Who Selects the Negotiating Committee? • Members of the Negotiating Committee are selected by a majority vote of voting members of the MEC (LEC Presidents). • Master Executive Council (MEC) • Local Executive Council (LEC)
  • 16. Sourcing' or 'Selection ‘Sourcing' or 'Selection of source/s' is a major challenge for any Purchasing manager. Source of supply of required materials is basically selection of a suitable supplier. The Purchasing manager has to ensure , getting the material / service from the right source (one of 5 R)
  • 17. Top 5 Successive Stages of Source Selection | Materials Management 1. Searching 2. Selection 3. Negotiations 4. Trial order 5. Rating.
  • 18. Successive Stage # 1. Searching: • The need for a material is the starting point. The search is on to find out the most suitable supplier. This process begins with the finalization of specifications in consultation with technical departments. The identification of the sources of supply needs I exhaustive initial survey.
  • 19. Successive Stage # 2. Selection: • The buyer is now provided with adequate information as to the sources of suppliers. The more intimate knowledge of the supplier is necessary for right selection. So, specific information on the supplier’s financial strength, quality, facilities, efficiency, industrial relations, technical excellence and position in industry have to be collected. •
  • 20. Successive Stage # 3. Negotiations: • The process of negotiations starts after the completion of screening and selection of the suppliers. The negotiations or regular basis and personal contacts and sometimes conferences with the suppliers ensure correct and cordial relations between the buyer and the supplier and his is very essential for mutual cooperation.
  • 21. Successive Stage # 4. Trial Orders: • Through negotiations when both the parties — the buyer and the vendor — come to mutual understanding, trial orders are placed, formally the trial orders do not exceed more than a month’s requirements. This is done with a view to test the vendor’s capability in meeting the buyer’s needs.
  • 22. Successive Stage # 5. Rating: •Since there are a number of vendors usually, the question of rating irises. On the basis of various considerations, the buyers has to apportion his requirements among the because on the correct rating of the vendors depends there retention or rejection.
  • 23. Source Selection 1. Financial soundness of the supplier: The supplier to be chosen should have a sound financial position. 2. Flexibility: The supplier to be chosen should be one who is flexible 3. Size of the Supplier: Large supplier with huge capital are greatly interested in technological improvements. 4. Past association : In case some supplier is there with whom the organization is having old association, the relationship with the same supplier must be continued
  • 24. 1.Current price buying : also called market condition buying, refers to the general method of purchasing in minimum quantities to replace stock 2. Contract buying: it refers to the policy of the supplier undertaking to deliver agreed quantities at intervals over the period specified in the contract 3. Bargain buying: it refers to the policy of buying in bulk at ‘bargain prices’.