Negotiating Fortitude – Pricing in the Parcel Delivery Industry?

Today, how can you tell if you have the best delivery options and pricing? Answer: improve and exercise your knowledge, carrier diversity, and negotiating fortitude. This article is part 3, the conclusion of a 3-part series and will focus on increasing your negotiating fortitude. Negotiating Fortitude: are you willing to do whatever it takes to get the best deal (win-win, fair, & sustainable) for your company? “Whatever it takes” is an intense qualifier…Let’s drill down.

First, start with a great position. The best way to start with a great position is to increase your knowledge and carrier diversity (see the previous articles, parts 1 & 2). Without taking these steps, you are not doing “whatever it takes” to get the best deal because negotiating over service and pricing in the parcel delivery industry is about what you know and what you are willing to do about it. With only one carrier there is nothing you can responsibly do about it.

Next is to start, continue, and strengthen relationships with your carriers. Hopefully, this is already something you are committed to. If not, get going with that right away. It is not only the right thing to do for your company, but for your customers as well. When your carriers care about you and your company, they help you more, help you faster, and help you more meaningfully because they want to help you. Good-will goes a long way and has high value.

Next, be willing to walk away. That is not the goal, especially when you are doing business with people you have relationships with. It is something you must be willing to do though—if your goal is, in fact, to get the best deal. Without a solid alternative, you lack the best edge you inherently possess over a carrier—the ability to take your business away from them.

Next, get offers (not RFP responses). The idea here is to inspire competition within the market without all the negatives that come from RFP’s. You want multiple participants and you want the best offers, but you need your carriers to: feel engaged, be aggressive, and think creatively. The traditional RFP often demoralizes carriers and many checkout of the process, leaving behind the most desperate carriers, or carriers that just submit rates without thinking about how they can help you and your customers best. Do RFP’s work well for some companies? Sure. RFP’s work for companies who have completely figured out everything including their customers wants and needs over the entire next contract period, and just need the lowest commodity price for shipping—as if all carriers offered the same exact service specifications.

Take the concepts that are effective from the RFP process, but you must do more. Encourage your carriers to think through your needs, think through their strengths, and form an offer showing how they can help you best. Treat the offers as a first draft. Comparing and using the best ideas from all of those offers to form a new request that is narrowed down and more focused. Show what you must have, and ask for what you would like to have, then ask for a little more. Display your knowledge of the marketplace strategically. Each session you should ask for something. Then ask if that is the very best they can do. Work towards win-win and you will make great strides if you act to increase your knowledge, carrier diversity, and negotiating fortitude. Your company and your customers will benefit from your expertise.

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Carrier Diversity – Pricing in the Parcel Delivery Industry?