Fact Based Negotiation Pack

Instructions

S. No Sheet Name Description

1 Limits of FBN Summary limits for the negotiation including LAS, MSS etc
2 Levers Key levers for the Negotiation
3 Important messages Important messages to be conveyed to the vendor
4 Planning of the meeting Agenda of the negotiation meeting with the supplier

Version Date of revision Updated by

1

Instructions Page 1
 Fact Based Negotiation Pack

RFP No.
RFP description:

Limits of the Negotiations (Objectives / Criterion)

Least
Most Favourable Relative
Acceptable Relative Last purchase
Criterion / Focus Points Proposal Importance for the Supplier Offer Internal Estimate
Proposal Importance
Supplier
details
(MSS)
(LAS)
Price for this lot H H

Delivery Term M L

Period fixed price H M

Period of warranty M M

Support L H

Stock M M

…
Best Alternative To Negotiable Agreement
Apporach other supplier

Limits of FBN Page 2


Strategic Levers - COMPANY
Large amount of this dossier
Total purchase volume of Client is large
compared to sales of Supplier A
Many Suppliers for these products
Client interested in long-term relationship
(contract for several years / certainty)
Client has a large knowledge of the market,
competitors and most important costdrivers
It is an upcoming business, the purchase can
strongly increase in the future.
Other Suppliers take less profit / have a better
cost-structure
We expect efforts, because in the past we have
had many quality problems (10% bad deliveries)
Idem, because in the past we have had many
late deliveries (6% was not on time)
...
Fact Based Negotiation Pack
Levers
Strategic Levers Supplier A Possible Counter Propositions / Actions
This amount represents only a small part of All other customers of the supplier: comparable
the sales of Supplier A for these products share
Supplier A has higher quality standards, High quality no absolute must for these materials
justifying a higher price; Few good suppliers
"Switching costs" of Client are too high; Client Supplier A should take into account the
has few / none alternatives for these products attractiveness of other potential suppliers, certainly
when different services with additional value are
taken into account.
It is possible that we fully outsource these
purchases or integrate them vertically
"Cost-structures are averages and not In advance, collect as much data as possible
applicable on the materials from this specific concerning cost-structure of the supplier;
RFP Convince them of the mutual interest of the
transparency
Client has accepted the price increases when New situation: long term agreement, larger
these were implemented." volumes
"The implementation of Client's new way of
working may increase the cost-structure"
"What will Client do when Supplier A does not Emphasize objectives are a good way to start a
agree with the propositions?" relaionship; long term
Is the same way of negotiation used with all Yes, but only with the shortlisted suppliers
the suppliers?
Payment by Client is late Improved payment system
Levers Page 3
 Fact Based Negotiation Pack

Illustrative only

"Which importantImportant
messagesMessages
increase the possibility to
obtain the MSS?"
(Preferable in keywords and
short sentences)
Larger Purchasevolume by Client, increasing business
Interesting competitors
Price more important than technical aspects
Larger Profit margin of the supplier
Long-term relationship
Bad delivery performance

Important Messages Page 4

 Fact Based Negotiation Package

Fact Based Negotiation Pack

RFP No.
RFP description:

Vendor Offer Commercial Comparison

Last purchase
Criterion / Focus Points Vendor 1 Vendor 2 Vendor 3 Vendor 4 Vendor 5 Internal Estimate RFP term
details
Least offer

Cost element 1
Cost element 2
Cost element 3
Cost element 4
Cost element 5
Cost element 6
Cost element 7
Cost element 8
Cost element 9
Cost element 10
Cost element 11
Cost element 12
Cost element 13
Cost element 14
Cost element 15
Cost element 16
Cost element 17
Cost element 18
Cost element 19
Cost element 20

Delivery Term
Commercial term 1
Commercial term 1
Commercial term 1
Commercial term 1
Commercial term 1
Period fixed price
Offer validity
Period of warranty
Support

Vendor offer comparison Page 5

 Fact Based Negotiation Pack

Planning of the negotiation session

Deviations RFP - Discuss Proposal

Objectives Obtain perception in interests of supplier

Resume for which points the supplier needs to think out a new
proposal (open points --> base for reviewed proposal)
Participants (&
Allocations of
tasks)

Timing

In the first round(s) it is important to

- clear all discrepancies between the proposal from the supplier and the RFP
- answer all the questions for and from the supplier (technical, logistical, …)
- give a first commercial feedback so that, on that basis, the supplier can hand in a revised proposal
After the first round a summary will be made and sent to the supplier:
- the matters agreed during the meeting
- the points to be answered
In the final round it is important to:
- clear out all final discrepancies between the proposal of the supplier and the RFP
- detailed commercial negotiation (see explanation negotiations - by means of FBN case, …)

Planning of the Meeting Page 6