Best Practices for Data-Backed Negotiation Strategies

“We have strong vendor relationships – we’re getting the best pricing.” A common belief in finance & ops teams. But here’s the reality: Vendors don’t always price based on what’s fair – they price based on what you’ll tolerate. And without centralized purchase and pricing data, you’re leaving money on the table. Here’s where most teams get it wrong – and what to do instead: ------ (1) The illusion of “great vendor pricing." Most finance & ops leaders believe they’re getting competitive rates. But when companies centralize spend and analyze vendor pricing, they find: – The same SKU purchased at different prices across locations – Missed discounts that should’ve been applied – Gradual price creep – no one’s watching, so vendors push the limits Loyalty to vendors doesn’t guarantee loyalty back. ------ (2) Fragmented spend kills negotiation power. When every team or department buys separately: – You lose out on volume-based pricing – There’s no consolidated view of vendor performance – Finance can’t see the full picture of what’s being spent – or with whom You might be spending millions on indirect – but if that’s scattered across dozens of uncoordinated purchases, your leverage is gone. ------ (3) “We trust our vendors” is not a strategy. Trust is not a substitute for data. Vendors optimize for their margins – not yours. What happens without visibility: – Long-time vendors gradually increase prices – Companies overpay by 10–15% on indirect spend – Finance finds out too late – when budgets are already stretched It’s not about replacing vendors. It’s about managing the relationship – not being managed by it. ------ (4) The fix: Leverage data, not assumptions. The strongest finance & ops teams: – Centralize all vendor spend into one source of truth – Consolidate purchasing to unlock bulk discounts – Track vendor performance and hold them accountable – Use clean data to drive every negotiation The result: Lower costs. Better terms. Total control. ------ Final thought: Great vendor relationships aren’t built on trust alone. They’re built on leverage. If you’re not tracking what’s being spent – and where – you’re already overpaying. Finance leaders who take control of procurement don’t just cut costs. They build smarter, more scalable businesses.

I see lots of different rate structures at ShipScience, and it always amazes me how the combination of small, negotiated changes can add up to transformative savings. Knowing what I know now, here's how I would approach negotiations as an e-comm exec: 1) Before you even start negotiating, get a tight grip on the data. Have a way to run a savings analysis before you begin and at each proposal. Do not just accept the analysis your carrier provides you. Trust but verify. This is a MUST. Analyze average weights, package sizes, and common delivery zones helps you catch patterns—like surcharges or zones that inflate costs. Dial those in operationally, negotiate where you need to.   Monitor historical carrier performance. If certain routes or services keep driving up charges, consider alternative carriers or service levels.  If SLAs are below expectations, use that to your advantage in negotiations. Go way deeper than just your "discounts". Surcharges are critically important to measure/track impact. You also need to know the hard-to-calculate factors like DIM divisor impact and minimum billable impact. Those will often void your deep, short-zone discounts. 2) Negotiate proactively, and keep a tight timeline. Know that everything on your rate card is negotiable. Provide exact details on every element you want the carrier to move on, and requested discounts for each. Ask carriers to outline the thresholds for bonus discounts or waived fees - usually you can get wins by offering upside to the carriers.  3) Review your packaging. Oversized or loosely packed boxes may push you into a higher price bracket. Sturdier, right-sized parcels mean fewer damage claims and improved carrier relationships.  4) Generate maximum (friendly) negotiation leverage. Carriers should know that you're rate shopping shipments and working with multiple carriers. Check your existing contract terms here, but try to manage your carriers into an annual review cycle, giving them the opportunity to earn significantly more business each year with big improvements to their rates. Watch out for trap doors in contractual language - carriers are know to have tricky legal language in their contracts. Make sure that all concessions you give have benefit back to you. And be sure not to lock yourself it unnecessarily, as you'll lose leverage in future negotiations. By focusing on these preventive measures, you’ll protect your budget while boosting delivery reliability. #Shipping #Logistics #Parcel #UPS #FedEx #CostSavings #Business #Ecommerce #Transportation #SupplyChain

#Negotiation Tip Number 4: Gather and Leverage the Data.   In his book “Moneyball,” Michael Lewis quotes John Henry, renowned investment manager and owner of the Boston Red Sox, in reference to a comparison between professional baseball and the financial markets, “People in both fields operate with beliefs and biases. To the extent you can eliminate both and replace them with data, you gain a clear advantage.” Since that book was published, data analytics has become a vital part of how almost every major professional sports team makes decisions. Data is equally important in commercial real estate negotiations. Most CRE professionals realize the importance of obtaining data, but few understand how to fully use it to achieve a successful outcome. In a negotiation while representing a buyer of a low-rise office building in a submarket with dozens of similar-sized office buildings, my team cherry-picked comparable sales and sent them to the seller’s representative, making a case for a purchase price around $90 per square foot. On the contrary, the seller’s representative made the case that the purchase price should be closer to $100 per square foot — submitting their own version of comparable sales as justification. At this point, our team was certainly tempted to accept the invitation from the seller’s broker to play the high-low game. Instead, we evaluated the seller’s comp set to determine how we could either work toward bridging the gap or defend our original position all while trying to achieve our client’s goals. As we dissected both data sets, we were able to see that many of the seller’s comparable sales had already been renovated, while the property being bought still needed cosmetic renovation. That was telling from a qualitative analysis, but the most convincing case came when we put both sets of sales comps on a line graph to show the trend in sale price per square foot over time. This line graph was very helpful for both the buyer and the seller to understand the current value of the property as the next data point in a trendline. Ultimately, they agreed on a purchase price that equated to $87 per square foot. Both sides had data, but it wasn’t until it was dissected and brought to life that anyone truly understood how it brought relevance to the negotiation. #CapitalMarkets, #InvestmentSales, #CRE, #CommercialRealEstate