Negotiating Tips Part #2 - Logistics Services

Here is part #2 on some tips for negotiation with logistics providers. Missed part #1?

Never be the first person to name a figure...
This is an expensive lesson to have to learn, but a good one. I do a lot of contract work, and one of the first questions I'm usually asked is "What's your hourly rate?". This is a high pressure question, and I often found myself blurting out a figure that was lower than what I really wanted.

These days, I've learned the importance of getting the other person to say a number first. Now, I respond to that question by asking "What's the budget for this contract?". Often, I'm surprised to discover they're offering me a better deal than I thought they were.

Ask for more than you expect to get...
Once the other person's given their figure, even if it's much better than you expected, say something like "I think you'll have to do better than that". Don't be arrogant or aggressive. Just say it calmly.

When they enquire about your expectations, ask for more than you expect to get. Few people will walk away from a deal once it's commenced, and you can let the other person feel as if they're winning by lowering your "unrealistic expectations" a bit at a time.

Let them believe the final decision doesn't rest with you...
Once a negotiation starts, most people want to get it over with as quickly as possible. Let their impatience beat them. One great way of doing this is to let them believe the person they're negotiating with isn't actually you, but some other "authority figure".

Say something like "Well, I'll have to talk it over with my boss before I can give you a definite yes".

A skilled negotiator will always want to talk to the person who has the final decision, but don't let them do it. Say the person with the authority over the deal wants you to sort things out but still needs to have the final say. Tell them you'll discuss it and get back with an answer tomorrow. Ask them to make sure that's their best offer you can take to your "authority figure".

Don't act too interested...
Just giving the impression that you're willing to walk away can do wonders for getting a better deal. Always play the reluctant buyer or seller.

Don't leave the other person feeling as if they've been cheated...
Many people try to screw every last drop of blood from any negotiation. This is a mistake. If the other person feels they've been cheated, it can come back to bite you. They may not fulfill their part of the deal, or refuse to deal with you in the future.

Most negotiations should leave both parties feeling satisfied with the outcome. Be willing to give up things that don't really matter to you in order to create a feeling of goodwill. For example, if I'm renegotiating my order fulfillment per pick charge, or pack and ship rates downwards, I'll often offer to sign a longer legnth contract. That way, the provider has a commitment for my business for a longer time.

Ken is a 15 year veteran of supply chain logistics and has founded companies in the ecommerce fulfillment and transportation management software markets.

Negotiation Tips Part #1 - Logistics Services

As a logistic professional, negotiation is crucial part of managing relationships with your supply chain vendors - whether it is negotiating carriers rates and contracts, pick and ship rates for fulfillment, or an implementation of a new logistics software to support your operation's Routing Guide.

Don't take it personally...
A mistake that people often make when negotiating is to become too emotionally attached to winning. They shout, threaten and demand to get their way. This is counter-productive.

Most deals are only possible if both people feel they're getting something out of it. If the person across the table feels attacked, or doesn't like you, they probably won't back down. Many people hate bullies, and will be more willing to walk away from a transaction if it involves one.

Keep calm, patient and friendly, even if the other person starts losing their cool. Make sure you leave any pride or ego at the door. You're much more likely to do well that way.

When you are reviewing a proposal from a vendor, don't get suckered by the "rules" trick...
When someone sends me a contract to sign, if there's something on there I don't like, I'll cross it out. I'm also happy to write things I want added in if I think they should be there. Sometimes, the other party will come back to me and say "You're not allowed to make changes to our contracts like that".

This highlights a common tactic used by experienced negotiators. They know many people are sticklers about following rules. So they'll make up official sounding pronouncements and insist that "this is the way it's done" or "you're not allowed to do that". If someone starts trying to box you in by adding rules to the deal, ask them to provide proof that such rules really exist.

Look for Part #2 of this post next week.

Ken is a 15 year veteran of supply chain logistics and has founded companies in the ecommerce fulfillment and transportation management software markets.

Discussing the start up of eRoutingGuide on This Week in Startups

We went live with our new transportation management software site, eRoutingGuide this week. Coinciding with that, I made an appearance on the popular live web show, This Week in Startups (http://www.thisweekin.com/). I was part of the "Ask Jason" segment - looking for some ideas for finding an online community of logistics professionals. Here is a link to the show you can view on YouTube:

http://www.youtube.com/watch?v=SqSaek5yB1s


On August 13th I will be on another start up program http://www.asable.com/ talking about eRoutingGuide. Check out their site as well.

I have a few more appearances lined up in the next few weeks to talk about entrepreneurship with a focus on order fulfillment and other logistics services.