Negotiating the right deal with your suppliers takes some time to master, but is crucial to avoiding common pitfalls for any procurement manager. When we look at how successful procurement managers govern their travel programs, certain trends and strategies stand out. These tend to include tactics that let you optimize your spending habits and reduce ongoing expenses, which leads to substantial savings over time.
While you may not always get the exact deal that you want when working with travel vendors, it’s important to make the right decisions to avoid common mistakes. Here are six routine pitfalls that you should refrain from when negotiating with any vendor or supplier to ensure business (and travel) success.
Hasty purchasing often occurs in startups and companies with a new procurement department. Don’t feel like you need to order everything right away, as this is not a financially-wise strategy. Plan in a way that allows you to factor in delivery time and inventory setup without sending the entire process into overdrive.
Not being flexible
Procurement managers can be too rigid with their plans which can create obstacles for their entire department. Planning is good for a company, but you need to factor in changes and outstanding circumstances that prompt for a shift in strategy to get optimum results every time. Reviewing policies and procedures on a regular basis ensures avoidance of all negative patterns.
Failing to negotiate
The majority of procurement managers are conditioned to look for deals, but many of them completely overlook the possibility of negotiating. It is not unreasonable to expect discounts from businesses you regularly order from, but unless you ask for it explicitly, no one will be the first to list the deals they offer. Being proactive and looking for an alternative that both parties are content with is perfectly acceptable.
Modification of existing contracts
Revisiting existing contracts is necessary to stay on top of current offerings and ensure you’re getting the best value for your money, but sometimes it can work against you. Procurement managers have existing relations with individual contractors, which translate to better deals and on-time delivery of goods and services, and dissolving an existing contract can directly affect company performance. Sometimes the cost of changing to a new supplier is not viable.
Not keeping track of minor on-going expenses
It is not uncommon that procurement managers fall in the pitfall of only keeping track of substantial expenses related to the supply chain. As a result, other costs start piling up and can add up to a serious sum at the end of the billing period. Smart travel management is necessary to make sure you stay on top of everything that is going on and can retain the firm position of the business.
Adopting an incorrect view of strategic partnerships
Long-lasting business relationships do not mean procurement managers are automatically entitled to higher prices. They have worked hard to be named a strategic partner to an individual supplier, but these working relations are not necessarily final. You need to remain competitive, adhere and develop existing agreements to ensure other companies don’t unseat you.
Is your business spending too much on corporate travel? Calculate your potential savings using our Travel Savings Calculator below: