Purchasing

4. Negotiating a Purchase

4.1 Plan ahead for the negotiations.

• Set out objectives and what is negotiable.
• Analyse the strengths and weaknesses of both sides' negotiating positions.
• Anticipate the supplier's negotiating tactics and prepare your response.
• Get a deal that works for you and keeps the seller happy. Do not squeeze suppliers too hard if you are planning to buy from them in the future (see 6).

4.2 Get agreement on your priority issues. For example, availability, quality and payment terms and get the details in writing.

4.3 Agree with the supplier what sort of contract you will use. Verbal contracts are legally binding but difficult to prove in court.

• Your written contract may refer to your own or the supplier's terms of trade, as well as details from your original spec.
• Beware of long maintenance contracts. Read the small print and ask the supplier to spell out your future commitments.
• For important contracts, consider getting legal advice.

4.4 Agree what will happen if problems arise. For example, if goods are faulty, will the replacement be authorised immediately?

• Agree delivery performance standards as a condition of your contract.
• Set penalties for contract infringements, such as missing critical delivery dates.