Selecting and Negotiating with Suppliers
Use a weighted scoring model defined and validated before the RFx is issued. Never change evaluation criteria after receiving bids.
Typical Evaluation Criteria Weightings
- Technical / Quality (30-40%): Compliance with specifications, certifications, quality management system, references
- Commercial / Price (25-35%): Unit price, TCO, payment terms, price revision mechanism, volume discounts
- Service & Delivery (10-20%): Lead times, flexibility, responsiveness, logistics capability
- Sustainability / CSR (5-15%): EcoVadis score, carbon footprint, circular economy initiatives
- Risk & Compliance (5-10%): Financial strength, insurance, GDPR compliance, anti-bribery
- Innovation (5-10%): R&D capability, willingness to co-develop, technology roadmap
Key Negotiation Principles
- Prepare exhaustively: Know your BATNA (Best Alternative to a Negotiated Agreement), your walk-away point, and your ideal outcome.
- Negotiate across multiple dimensions: Price, payment terms, delivery terms, warranty, SLAs, volume commitments, contract duration, intellectual property, liability, exit clauses.
- Use BAFO strategically: The Best and Final Offer is a powerful tool, but only use it once. Multiple BAFOs destroy credibility.
- Document agreements in real time: Send written summaries after each session. Misunderstandings caught during negotiation are fixable; those caught during contract review are costly.
💡 Pro Tip: Always have your contract template ready before entering negotiation. Negotiating on the supplier's paper puts you at a structural disadvantage - you're reacting to their terms instead of setting your own.