When Life Gives You Lemons, Make Lemonade
“When life gives you lemons, make lemonade” is a proverbial phrase used to encourage optimism and a positive can-do attitude in the face of adversity or misfortune. Most of us have been in receipt of some lemons recently, or can expect some. It’s important to consider how we are (or will) react, and how a shift in perspective might yield lemonade.
Recent examples in the press, relating specifically to the relationship between suppliers and their clients shows there is an increased amount of pressure. It seems that many organisations are considering withdrawing support from key suppliers or pushing for extended payment terms and price cuts in these uncertain times.
Now there is an obvious and, in many ways, justifiable response to each of these, but before we throw the baby out with the bathwater, let’s consider a different view.
For the supplier this sort of messaging can be seen as abrasive, but perhaps it should be seen as a cry for help (the reasons behind the request may be obvious in the case of a client in a struggling industry) and potentially there may be a welcome opportunity to reset the supplier/client relationship and find mutual benefits. So perhaps it’s an opportunity to negotiate rather than read the riot act?
So as not to get into specifics or make presumptions about any one case, let’s talk broadly about these situations, which are going to become commonplace. With the concept of cutting client costs in mind, as a procurement professional what can we trade in exchange for some supplier goodwill?
- Are there services being bought that you know are complex / bespoke to your organisation and cause the supplier pain to provide?
- Is there an alternative supplier product (which they’ve been trying to sell to you for years) which is cheaper and more readily available that could be supported more easily?
- Could they provide a lower cost service model that would meet your requirements or deliverables and also improve their margin?
- Have you thought of offering a longer term contract for a volume reduction or a decrease in price or those extended payment terms – by giving them more security they may be willing to trade some margin – especially important considering the current forecasts for the economy.
- Conversely, could you pay for products and services upfront for a price reduction?
It’s so important to know where the buyer/seller power lies and not to deploy the same strategy with all. It’s all about deploying the right options with the right providers and ultimately ensuring the entire supply chain survives.