How to successfully negotiate with suppliers

While there may be a certain magic to manufacturing processes — where baseline materials are used to create the items bought and sold in stores — producers are not magicians. In order to make something, they need the core ingredients. In short, they can't make something out of nothing. 

This is a conundrum producers in many industries are facing. Due to a host of problems affecting the supply chain, the gaming consoles, toiletries, automobiles and hot tubs that are typically well stocked are on back order. Manufacturers don't have the building blocks to create what consumers want.

The best way to maintain ongoing supply is by maintaining an ongoing relationship with your suppliers, whether that comes through price negotiation, supplier diversification or other methods. Let's go over a few of them:

Build a rapport
Presumably, suppliers have several different clients that require the same elemental materials to produce their goods. To compete with those other clients, the supplier needs to think of you as someone who is interested in buying before their other customers, especially when there's a shortage issue.

The best way to achieve this status by building a rapport with the supplier. Whether it's through light-hearted conversation or ongoing communication via multiple methods, regular interaction creates the bonds that are fundamental to supplier-producer relationships.

Value creation is crucial to supplier-producer relationships.

Create value for your supplier
The most important interest in business-to-business relationships is self-interest; a supplier has to know what's in it for them to hold their materials for you. This is more easily accomplished when they have understanding of how they're putting themselves in a better position by selling to you. As Harvard Business Review points out, this may be done by opening your supplier up to new and untapped customers or markets, reducing risk and increasing predictability. In other words, if they know you're interested in buying after so many days or weeks, they'll be more inclined to sell to you than someone else who is more sporadic.

Do your research
The key to any supplier-producer relationship is honesty, but if you're brand new to a particular industry or are unfamiliar with the jargon, a supplier may be more interested in selling to someone who has more experience, for the reasons listed above (e.g. it could lead to additional business opportunities through networking). 

Doing your homework can help make you more of an authority. You can do this by leaning on your other business relationships or simply through your own readings and research.

Diversify your suppliers
Establishing a solid base of suppliers accomplishes a few things. For one, if your preferred supplier is out of the material you need, your fallback may have what you need. Secondly, knowing more than one supplier helps with price negotiation. If one is selling for less, you can either buy there or allow a higher-cost supplier to match the price.

Additionally, having multiple suppliers will give you a general idea of their actual costs. This way, you can decide if what they're selling is truly worth your buying it.