Peak season is a big deal in the world of procurement. It’s when businesses shift into top gear, working around the clock to deliver to customers and clients across the globe.
It’s a time when procurement professionals watch as their well-built strategies either hold strong or falter under the pressure of increasing demand and evolving customer expectations. For most large procurement teams, though, planning starts well before Thanksgiving rings the bell at the start of the Holiday season.
But, if your team is on a hunt for actionable strategies to fill in the gaps in your plan or just looking ahead to 2024 for fresh ideas, there are some effective ways they can master the art of negotiation and develop the type of supplier relationships that provide value well through peak season and into the year ahead.
Here at RED BEAR, we teach a negotiation methodology that supports your team in making connections, nurturing relationships, and, inevitably, finding the best outcome for every procurement deal. It’s not about single-use tactics or manipulative strategies; it’s about the knowledge, skills, and behaviors that drive successful negotiations.
Let’s explore how procurement negotiation can be your team’s secret weapon in mastering the peak season push and coming out on top.
Preparing for Peak Season - A RED BEAR Approach
Holiday spending is expected to increase by around 3% in 2023 compared to 2022. Powering this surge in demand is the network of supply chain, logistics, and procurement professionals hyper-focused on delivering these goods and services promptly.
One way to bypass the traditional hurdles in procurement during peak season is to develop robust and reliable, long-term supplier relationships.
With increasing challenges from emerging markets, the connectivity of a globalized industry, and supply chain scars still healing from the COVID-era, there is no mistake that businesses face a unique set of hurdles.
Luckily, one solution can be found not in advanced technology or cookie-cutter tactics but rather in the value of human capital and relationships. Negotiation stands as the bedrock of any successful partnership, whether that’s with long-term suppliers or brand-new vendors. When negotiators can build these strong relationships, they can secure favorable pricing, lock in reliable delivery times, guarantee consistent supply, and, ultimately, bolster their company’s financial health.
It all starts with the right Negotiation Principles and Behaviors, which are at the heart of the RED BEAR negotiation methodology.
Putting the Principles to Work
To put this in perspective, let’s explore one Negotiation Principle in particular: Prioritizing Needs Over Wants, especially in the context of inflationary pressures.
Keeping to our peak seasons/holiday theme, let’s say a toy manufacturer is negotiating with a retailer for a large order ahead of the holiday season. The retailer is pushing hard for steep discounts, citing competitive pricing from other manufacturers and issues related to rising inflation.
On the surface, this demand for a discount seems purely driven by the desire to cut costs. But, a skilled negotiator, understanding the inflationary pressures and aiming to create value beyond price, knows to dig further. Here is how they might engage in a deeper dialogue:
- Ask the Right Questions: The manufacturer’s team might ask open-ended questions about the retailer’s goals for the season and the challenges they face, probing for underlying needs that go beyond just pricing.
- Listening for Unspoken Cues: The retailer might mention concerns about staying competitive and attractive to buyers in this market, hinting at a pressure to perform during this critical sales period.
- Understanding the ‘Why’: Through active listening and probing, the manufacturer's team realizes that the retailer's primary need is not just to lower prices but also to offer unique products that differentiate them from competitors and attract more foot traffic.
With this understanding in hand, the manufacturer’s negotiation team proposes exclusive products for the retailer, leveraging this opportunity to create shared value, suggests joining marketing efforts, and makes promises on delivery schedules to keep them well stocked during peak weeks.
By focusing on the retailer’s underlying needs (enhancing competitiveness and attractiveness to customers) rather than their stated want (steep discounts), the manufacturer's negotiation team, using RED BEAR’s principles, transforms a potentially adversarial negotiation into a mutually beneficial partnership that addresses both parties' needs in an inflationary environment. That’s what we call a “win-win” outcome.
Building Long-Term Supplier Partnerships
When procurement professionals can navigate the often tense environment of peak season negotiations and create win-win outcomes, they don’t just succeed in the moment. Rather, they build trust that can prove invaluable when the next year’s holiday shopping spree is on the horizon.
“When procurement professionals can navigate the often tense environment of peak season negotiations and create win-win outcomes, they don’t just succeed in the moment. Rather, they build trust that can prove invaluable when the next year’s holiday shopping spree is on the horizon.”
This spotlight on long-term relationships is especially important with carrier-shipper partnerships — which often face stress tests during peak season.
When procurement teams build these strong relationships, they can open up new lines of communication that help mitigate some of the pain points and unlock the creative potential of mutual problem-solving.
Handling Conflicts and Setbacks
As an example, a procurement team might negotiate a contract with a shipping carrier for the upcoming peak season. The goal of the procurement team is simple: ensure reliable transportation of goods for their clients during this time.
To build a long-term relationship, the procurement team might not focus on prices or capacities for the upcoming season but instead discuss long-term goals. They try to understand the shipping carrier’s challenges and future plans with the hope of aligning these goals with their own growth strategies.
The procurement team then shares its projections for the upcoming months to help the shipping carrier understand times of high demand in terms of shipping needs and labor. By being transparent and focusing on areas of mutual value, the procurement team can acknowledge the shipping carrier’s operational constraints and make concessions to offer longer-term commitments in exchange for priority service during the peak season.
When negotiators prioritize relationship building, they can move past the purely self-interested/competitive side of negotiations, and balance the collaborative side to unlock creative solutions that break stubborn impasses.
This approach to peak season procurement negotiations not only provides immediate benefits like guaranteed capacity and cost savings but also positions the logistics company well for future growth and stability in a dynamic and evolving industry.
Get Ahead of the Peak Season with RED BEAR
As peak season procurement approaches, the ability to build and maintain resilient supplier relationships becomes crucial for success.
The challenges presented by this high-demand period are not just hurdles to be overcome but opportunities to strengthen partnerships and refine negotiation strategies.
By embracing RED BEAR’s negotiation methodology, negotiators can learn to prioritize needs over wants, ask the right questions, and focus on long-term relationship building to turn peak season pressures into productive collaborations.
Our training gets results. Not only does 45% of the Fortune 500 utilize our methodology, but for every dollar invested into RED BEAR’s workshops, our clients receive, on average, $54 back.
Ready to elevate your negotiation skills and build lasting supplier relationships? Connect with RED BEAR today and prepare your team for peak season success.
