Deal or No Deal?
As many organisations look to reduce their cost base, negotiating a contract for Printing Services presents an ideal opportunity to help secure a solid financial position. Of course, suppliers are also trying to maintain a good trading position, but this does not mean that a win-win negotiated contract is impossible. It is in both parties interest to enter into an arrangement whereby future cost and revenue targets can be achieved.
However there are important factors that must be addressed if a win-win situation is to be achieved.
While some public sector organisations are often tied into group procurement arrangements there is often scope for implementing local arrangements that do not breach the group processes. This often involves using a short sharp independent specialist as advisor and guide. At the other end of the scale, smaller enterprises may feel that they do not have the scale to negotiate the type of deals that larger organisations can command and may choose the first supplier nearby. This can be a mistake which can last for several years. Irrespective of its size, the organisation should consider the following factors and address any shortcomings before entering into negotiations.
Negotiation Skills
It is essential that those involved in negotiations have the appropriate skills and experience to achieve the best possible arrangement. Some factors to consider during negotiations are:
- What happens if contracted usage levels are not achieved? What is the penalty and is it acceptable? Can I negotiate a better deal?
- What timeframe can be negotiated to complete the additional purchase of products/services caused by a shortfall?
- Are SLAs enforceable and do they provide meaningful penalties for supplier non-compliance?
- What is the total cost of my printing, copying and scanning likely to be over the next 3 years?
Business Relationships
Many suppliers will try to identify those potential customers who have growth potential and work with them to build a strong relationship that other suppliers find hard to breach. By presenting a future plan to suppliers, organisations, especially small organisations, can secure financial arrangements that larger companies can command. Smart suppliers will recognise tomorrow's potential large companies and may be willing to be more flexible in return for an ongoing relationship.
Price
Negotiating the best deal does not always mean securing the cheapest price. Having the experience to recognise that suppliers will often agree to flexible volume discount levels over flexible time periods and may also provide additional free services and support, enables a mutually beneficial contract to be agreed.
However it pays to know how much competitors and larger companies are paying for the same service.
Scale
Smaller organisations or departments should not assume that they will receive a less advantageous deal than their larger counterparts. As mentioned above, more astute suppliers will recognise the potential in smaller enterprises and work with them to secure a lasting business relationship that will bring greater rewards in the future. In particular, smaller organisations can provide benefit to suppliers by agreeing to be reference sites or beta test sites.
Tendering & Framework Agreements
Some public sector organisations are bound by rules on tendering and framework agreements whereas commercial organisations have a choice to tender or not to tender. There are always so many targets and projects to do and not enough time to do them in so tendering can often be seen as an obstacle too far. We often see competitors paying such a difference in their three year costs for printing that it is very clear which ones have taken the trouble to negotiate properly sometimes involving several competitors versus those that take the short cut and are burnt.
By being aware of these factors and addressing areas of concern in the organisation's ability, there is a great opportunity for achieving a successful contract arrangement. Many of our clients recognise the value in having the type of independent advice and support that Greig Ross Associates provides to assist them in achieving a successfully negotiated contract.
