Empower Your Business with airSlate SignNow's Lead Qualification System in Vendor Negotiations

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so we have our speaker dr. in the Euro corner so here's the managing director of rice box he's going to present how to negotiate with your suppliers so welcome dr. o'connor professor Monash University but don't be discouraged by that because I've spent the last 10 years busy factories in China doing audits giving advice in sourcing and it's just a passion of mine to go into the factories and actually help batches improve a lot of pro bono stuff I'm doing across the border we in the process I made a course with my colleague Mike Bal me we put on udemy and so if you there is a code here that will give you the whole course for 50 US dollars but I'm not here to sell you anything if you stay at the end I'll give you the code that allows you to get into the course for free okay so hang in there and we'll give value during this process and then failure right at the end so and there's my email here and by the way if you click on trying the source of academy now and click on home link you can download the PDF files we're using today right now so you know that I must be in half an hour I can load this my day you can get it now you got your smartphone you know how that works okay China saucy academy.com so check that out all right setting the scenes of negotiations I want to talk about a few things but here is something that I would ask or a bias where are you where are your strengths and where are your weaknesses so if we were to see three different areas that is structuring the relationship with them supplier the factory the other one is in the due diligence diligence and legal documentation and the third one is in verification in some way I'm talking about the top part because you can have sources lawyers and there's plenty of lawyers out there I want to sell you their services you can outsource this to third-party inspectors well I've got something to say about them - so today's talks the more about the top part but I've got something to say about the other two as we go through what do I do I just like going into the trade shows but everyone could do that you can go and check out the products but what I do is I go to the exact same factories and see ok there was the $6 you f650 FOP product and this was the 30 fo $30 separately fine that's the difference that's the difference in the two factories and so I do encourage buyers to go visit the factory what's it hooked up negotiation it's got everything to do negotiation because you cannot negotiate unless you fully understand the context in which the supplier is supplying goods to you their context is not the trade show here the context is the factory so you go to their context that's where you can get big difference right so which one be your sauce problem you're going to pay more money 30 US dollar if I be fluffer headphones here $6 50 atropine for the headphones here okay you get what you pay for you all know that I cannot either contain psychics okay at the trade show what can you do here is something that I encourage everyone and I Drive my students crazy with this I say stop riding on your smartphone and your computer and get a piece of paper sorry environmentally unfriendly but when you go around a trade show you could bore your visits to the suppliers and you start making the table so you have some compare what does that table look like it may look like this where you have supply one two and three and this is a particular product that doesn't matter but you are putting down different contexts or different dimensions of that product wouldn't God's negotiation all of these things for many of you you're smart it's in your mind you know what supply array is selling for you know a supplier you know what supply see it's in your mind but in negotiation how you can get more tractability negotiation by opening up your page that shows all of the comparisons that you have been doing that the suppliers see them directly indirectly it doesn't matter let the supplier know then take your systematic about this okay all right but if you don't do this on paper that's in your mind how can you tell the supplier oh I know what your competitors are selling for ya or buyer seller tell me that but if you show it on paper you've done your work that's the difference okay negotiation begins with showing that you have done your proof of work proof of work is not just a cryptocurrency time it's your power in the negotiation show that hey you are serious about getting a reasonable deal I say reason I'm talking about you reading the supply reference about a win-win relationship as I about to go on to okay so as you can see there are so many different dimensions our particular product of course electronics here find you can apply this to any product plastics household fashion what have you there are all different dimensions that you can record especially the delivery time especially the moq especially the right the production time the lead time these are things should write down because it's not about happy in mind it's about shadow supplier that you have these different comparisons in front of you okay Wow there's a lot of stuff that you can bring all right what can you learn from third-party inspectors everything please do not outsource to third-party inspectors what do I mean I mean you learn from third-party inspectors that can help me on negotiation how do you learn from third parties practice well you just do this you actually what if you're sourcing knife do they sell knives here I'm not sure how much this but I've expected the knives knives okay one hardship be nice somewhere there are lines okay so if you're interested in buying knives then you need to go to the third page inspector and understand the testing lab that tests knives so what we got here tied by straightedge requires 60 cycles to Carthoris 15 centimeters of special material if it's serrated means you should be under 200 cycles hundred fifty seven bit that would be good to know if you're negotiating with a knife manufacturer you with me here somewhere I learned that from dunno they're Google go online no I went straight to the inspector under us us inspector inspect the lab and find out what are the type of tests involved in the product that I'm negotiating with the supplier here with me okay so the third plane expected there they teaching you so how many of you have gone to one of the third-party inspectors during this trade show anyone know one go and talk to them because they will teach you about your product more often than what your supply can teach you okay learn from the third-party inspector they is so important don't just hide it off and they'll do their job they might not do the job either so just work with them your relationship with the inspectors probably more importantly just equally important is your relationship with the supplier okay with tournament negotiations here this helps give you get you more information for negotiations so then what do you do after that you've been the trade show you've got have made a product list and you've done a comparison then you've gone to third-party inspectors when you spoke to them about specific aspects of your product okay so you've got information but use that information put an airtight vault tactile fashion so you can actually show the supply you've been doing your homework okay what do you do now go to the factory well when you go the factory and start doing a comparison again factory one four to five to three and then we can talk about different aspects of guard to the factory know this talk is not just about visiting a factory but visit a factory is an important aspect mother negotiation there are two strategies once you get to the factory state of negotiation two strategies that really I want you to pay attention comes a little bit different from what they teach you at Harvard so will be different from what they teach you in Universal I know because I'm a professor in the university all right and I don't teach my students that stuff I teach what I learned in the field and this is what you learn in the field when you go to a supplier and successful buyers do not do they do not ask these two questions can I see your cost breakdown the second question can I see your QC sheet any of you of us your supplier can I see your cost breakdown and you're probably thinking well supplies will never ever tell you that what they tell you they may just bend the truth a little bit why would you ask that question I want you to think about it because you know me price to a supplier unless I know you can come back again and again again they'll give you whatever price you wanted to start second time that will get you that's one in strength they had a party strategy if you're only negotiating strategy is to beat down on price that's not good strategy but asking for a cus breakdown is not about beating the supply down on price it is about understanding how much the supplier knows about their own business model if they don't know much they may not be here in six months time well here's another tip by the way you bring to the trade show and how many of you have come this your first trade show second third okay here's a tip don't buy from a supplier that you see first time in trade show wait for the second trade show you see all the supplies still there now that supplier is on my list because the supplies gone missin - six months later and none of them their temples still a lot of them then it doesn't help you if you're not by force if I thought I'd be around six months of time you need to negotiate for the second order of the third order no what I mean is you're not as soon as a supplier commits to the second third and fourth but you need to have that in mind that you need to have a reasonable deal on the second order third order fourth order okay so that's the strategy number one getting understand the cost so you wanna know the surprise gonna be around in six months time strategy number two and that is hate to say this try helping the supplier can you do that yes you can it let me show you how strategy number two is about expanding the value share between you and a supplier if you can help the supplier saying money maybe you can share half that say me and that's how you get the price down rather than us in them give me a lot of price before I go away okay what do I do is try and get a value share how do we do that well you do this you get on visit the factory you know that but I just might show you two business models and factories they make a lot of money but the business miles are totally different this factory here is selling to audio manufacturers car car manufacturers in China no international sales and they got heaps of inventory in this showroom we're talking about over a million dollars you aren't million yuan of inventory just hanging around why because we're newly omentum for auto auto manufacturer brings up an asprin order they need to be our supply immediately right to customers very very strong right yeah they're just making us beasts and so are they making money on that yet the main three million dollars u.s. yeah how they doing it they're signed to corporate to associations do they care about party no doesn't matter no because when you get a free USB from a corporate Association you complain if it doesn't work so two different business models but they work what I'm saying here not all factories are the same okay so you go show an interest in finding our house aspire making money sustainably alright first presentation today was about sustainability well gain to know the factory is important before understanding we started telemetry what to do okay what else can we learn for the factories that helps in negotiation one is the separation because you may tell the supplier look I'm a small buyer maybe don't do this for me but when a large buyer comes this is what you need to do and I suppose say wow you'll give me an advice to help me do better for the big buyers yes I want to help you win big business with a big buyers and they love me more in Nam a small buyer but because I'm helping give me advice what some of the advice separation simple advice like thank ok look point advice simple ha mr. Stipe when when when a big buyer comes on and they see all this stacked on each other they don't walk away if they have a comparable factory mr. supply please separate separate all of this and you will get bigger orders from your large customers well will you tell me this well I would have no relationship with you even though I'm only given small orders you would be here so you know you know doesn't supply to do this for you you're doing this for their big customers you give them advice so there's separation here that's example of the difference okay one of the top smartphone manufacturers in center and another manufacturer okay so what else can you do when you're in factory floor there helps in the ghost Jason what on the price point well we we found the problem the QC sheet where the micro SD chip wouldn't go in and wouldn't read properly in the audio player so we went back to two stages to find out where the problem is and see that's where we found the problem and then you just walk the supplier around the factory to where the problem is so we go we find that's the problem there the micro SD won't go in there properly already goes in it doesn't breathe properly so that's a big problem right okay so let's go back through the factory to find out what is going on and so first of all it could be weird or actually screwing the electronic spots of the plastic outer casing so let's go to find out where they're doing that and so we see here that they should have a mold so there's this variation in this activity a mold meaning they can slot the whole casing there and doesn't jiggle around okay it's all about producing variation you don't need to be an engineer to give simple advice like that then we got around to the soldering and so this guy here is cross-linked under still looks uncomfortable and then is dipping their surrounding to see it's moving and is soldering again another multi R does reduce variation am i an engineer no every one of you can just observe maybe try this try this okay not just made on a small bias and then listen to me but for when the large customer comes then you win their business okay so that's how you can help what's another way you can help well after talking to one supplier doesn't program our advice right in the conference room of the factory probably thinking well they listened because I'm professor know that they'd have time to listen to you if you don't have anything worthwhile to say okay and so here I was explaining that become the supplier health was with the slow delivery the slow delivery of products they'll always be seen delivery times and I said well tell us about all the different stages of your supply chain I say you need to manage your all materials coming in if you can cut that down and reduce the variation of raw materials coming in then you can actually get deliveries done quicker and over here I was just talking more about different parts other supplied okay you can make things cleaner so okay prepare advise factory ideas these are things you do on the factory and again you're a small potatoes they're not I listen to you but you tell the supplier this is something that large buyers will pay attention to they'll listen to that because the large buyers bring the big money for the factory okay so there we go that helps in your negotiation so these are different things and of course there are many other idea ideas that you can have for negotiations of course you want to maybe I say that your marketing ultimately is in the USA but once you get into that third stage when you in the factory and you start telling them oh the advice I'm giving you it will help you with your big customer they're gonna start forgetting about what you where your market is they're gonna start thinking about wow he's helping me get better business with this customer without that you've got to pretend off my odd map by ultimate markets gonna be USA right so then you should listen to me and if I ask for a 5% discount they need me to give it to me right that's the old-style negotiation okay the other one is help the supply first find ways to help the factory what about after the factory of course you're going to be careful in negotiations because if you see a very plain factory like this and there's a lower in factory here this one may give you the similar price to this fight on the first order but on the second order they can inject the price up and that is exactly what happened one of my clients so I didn't order for these two factories and the product was the product was one of those digital picture frames this one was twenty three US dollar Kobe this one was twenty US dollar trophy on the second order it went straight up the 26 then twenty-eight and each order was five thousand so you do the math suddenly you're paying fifteen thousand US more for the same order the second time then ten thousand more the same order the third time okay why can they do that because look pristine factory everything's perfect so the buyer came to me yeah what do i do what do I do I can't even negotiate with this factory this is too powerful I said let's go back to this one right okay they got problems so what do you do well we take one US dollar out of every unit ordered and put it into third party inspection is order five thousand you put five thousand towards inspection so 20 plus 1 is 21 US dollars now you got five thousand dollars to spend on inspection what can you do with that that can give you ten twelve days of inspection you're just about expect nearly every single item coming off the production line if you can get that assurance then your home and house anyway even though the factory has problems with dust and different things like that okay so think about the power of the supplier then Sun this up three circle control framework develop a relationship with the third party inspection company quite because they can teach you there at the trade show go and visit them today tomorrow talk to them ask them to teach you about your product what is the one thing that I need to know about this product that i'm saucy bank okay the one thing okay use the factory to helping you negotiations you're a small potato give advice in the context say if you follow my advice that will help you get the big potatoes and do better business that's home the go shape with a suppliers it's about helping them first right developing that relationship because you want to the ground in six months 12 months time finally expose just thing about the supplier power sometimes you may need to trade off a brick factory with more investment in third party inspection okay so tonight today's presentation of about factory visits but actually how you can you say to empower your negotiation even if you are a small potato thank you very much dr. O'Connor for the very useful presentation on the strategy to negotiate with their suppliers so now we receive some fractions from floor so any of you have questions for dr. O'Connor please raise your hand we'll pass the mic over to you because I didn't attach that one together this is a three there's the three-toed okay if they use it tonight before it run use and the top one you can download the inside and please email me if you have problems here feel and price box top and wishes [Music] it's been free to raise your hand so yes so you may an email dr. Caulder for more questions then so once again we thank you dr. O'Connor with a really insightful