The following video outlines five sourcing and purchasing strategies, all aimed at lowering supplier prices and/or reducing supply chain and inventory management costs.

These strategies were put forward by someone who worked in sales and marketing for 20 years and wanted to combine the best strategies from the best purchasing negotiation teams. Essentially, these strategies come from the purchasing and procurement agents I have negotiated with. They include the most successful strategies used against me.

The first involves not being too quick to put your money where your mouth is and/or not to express your needs too early during the negotiation process with a seller. Instead, set your price and then use your requests, needs, and/or concessions to drive prices down. For example, agree on a final price and then ask for a discount or reduced price for 1) prepaying all or part of your purchase, 2) quick payment incentives such as net 10-day terms of 1 to 2 percent discount or 3) the increasing volumes or entering into long-term supply contracts or orders.

The second tip involves avoiding veiled threats; these are simply threats that you have no intention of following through. When you threaten suppliers too much without ever following up on a threat, you are simply training them not to take your threats seriously.

Third, pair a high-value concession with a high-value concession. In this case, prepare a list of requests and/or "must-haves/" as a result of the price negotiations. When the seller makes a request, be sure to reply with your own copy of equal value.

Fourth, when it comes to getting price cuts from a seller, sometimes you have to appeal to their better nature. In this case, add a personal touch to your negotiations. Ask for a price reduction by outlining the pressures and demands placed on you as a purchasing agent. In this case, you need to achieve a certain inventory cost structure, so ask your salesperson to help you achieve that.

Finally, keep your supplier honest by continually seeking out competitive bids. Even the best salespeople can become complacent. However, if they know that you know as much about market pricing as they do, these suppliers will be less likely to take advantage of you.

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