Drive Savings with Contract Negotiation Best Practices

Best practices in contract negotiations

SIG University Certified Sourcing Professional (CSP) program student Jessica Maki works at Driven Brands. She shares what she’s learned about contract negotiation and how she is implementing newly learned best practices and techniques to score bigger wins and drive more savings for her company.

In the CSP program, students focus on the hard and soft skills of sourcing, including strategic sourcing and outsourcing methodologies, as well as best practices in negotiations.

Negotiation planning plays a big part in the procurement industry. Procurement is always looking for the best price, best supplier performance and cost savings for the organization. In SIG University’s Certified Sourcing Professional program, I learned several key factors when it comes to negotiating with suppliers including preparation, best practices, and what to do versus what not to do. Throughout my experience as a procurement specialist, I’ve learned to apply these important techniques during the negotiation process, and it has helped me become a more confident negotiator. 

Procurement Process Across the Spectrum 

I have been in the procurement industry for four years. I previously worked in the warehouse/forklift industry and now work in the automotive industry. Although they are very different worlds, the procurement process still remains the same. In my first job as a Procurement Coordinator, I quickly learned to meet with new suppliers and seek out new services and products for our organization. I only had my colleague to look to for guidance since I had no prior experience. I quickly learned to scope out suppliers that will best help our organization as a whole.

One of the biggest projects I accomplished was locating a new janitorial company for seven facilities. I interviewed and received quotes from three different companies. Two had similar pricing and the other was much cheaper. After reviewing the proposals, I set to work to negotiate the best rate among the suppliers for our organization. After the meeting, I was able to receive a lower price with the preferred vendor and also saved the company 20 percent. Looking back at my experience with this project and completing this particular lesson in the SIG University module, I have a completely different perspective of the process. There is a lot of preparation involved for the negotiation process and learning best practices in order to reach your goal.

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Applying Contract Negotiation Best Practices

One key factor that stood out to me the most within the contract negotiation lesson is listing out the elements that can be considered as must-haves, wish list and go-for-it items. I realized this step would have been useful in my previous project of overall cost savings within our brand. Recently, I worked on a project to provide an overall cost savings on office supplies. The supplier sent me a full purchase history of non-core items from the previous year. I analyzed the data and sent it back with the highest purchased items to be added on our core program. We had a goal to receive $40,000 in savings a year, but I was able to negotiate an extra $20,000. I utilized most of the key factors mentioned in the lesson, such as analysis, preparation and setting a goal in place. After reviewing the section on listing out the must-haves and wish lists, this would have made the conversation much easier to explain with the vendor on our overall goal.

Although I had prior experience with negotiation over the last few years, this lesson has taught me so much more than I expected. There are so many aspects to this topic that will help me continue growing within my role and organization. For example, knowing to provide yourself the Best Alternative to Negotiations Agreement (BATNA) is a great way to have a fall back in case your current goal is not met. I plan to use this as an extra point within my preparation for each negotiation moving forward. As I continue in my role at Driven Brands, I am eager to utilize all the key points within my future projects of cost savings, product/services and standard processes. 

The Certified Sourcing Professional program is a 10-week program that can be completed on-demand so you don’t have to spend critical time away from the office. Get more information on enrolling in this globally recognized certification program to grow your sourcing career!

Jessica Maki, Procurement Analyst, Driven Brands

Jessica graduated from Lenoir-Rhyne University with a B.S. in Business Management. Her background includes working as a Procurement Coordinator at a forklift company that managed the company fleet, provided customer service to service technicians and fulfilled all facility procurement needs. She currently works at Driven Brands as a Procurement Analyst where she helps with corporate cost savings within different areas of the company to help provide better service to customers.