Initial Supplier Negotiation for a New Project

A procurement manager conducts the first round of negotiations with a potential new supplier for a critical component needed for an upcoming project, discussing pricing, delivery terms, and quality standards.

Dialogue

Listen and follow along with the conversation

John (Male)

Good morning, Emily. Thanks for coming in. As you know, we're developing a new product line, and your company, NovaTech, came highly recommended for the critical component 'N-3000'.

Emily (Female)

Good morning, John. It's our pleasure. We're very excited about the potential to partner with your team on this project. We've reviewed the preliminary specs you sent over.

John (Male)

Excellent. Our main focus for this first discussion is obviously pricing, delivery terms, and quality standards. What's your initial proposal for the 'N-3000' based on the volume of 50,000 units per quarter?

Emily (Female)

For that volume, our proposed unit price is $8.50. This includes our standard warranty and quality assurance checks. We believe it's very competitive, given the precision required.

John (Male)

That's a bit higher than our target. We were aiming for something closer to $7.80. Is there any flexibility there, perhaps with a long-term commitment or a larger initial order?

Emily (Female)

I understand your target. While $8.50 is our standard, we could potentially re-evaluate if we discuss a binding annual commitment. Perhaps we could offer a 2% discount if the annual volume exceeds 250,000 units.

John (Male)

That's an interesting point. Let's flag that for future discussion. Regarding delivery, our project timeline is quite tight. What's your standard lead time once an order is placed?

Emily (Female)

Our standard lead time for the 'N-3000' is 6-8 weeks, depending on existing production schedules. However, for a new project like yours, we can prioritize the initial batch to 5 weeks to help you meet your launch date. We'll need solid forecasts soon.

John (Male)

Five weeks for the initial run would be very helpful. Our quality requirements are non-negotiable; we need less than 100 DPMO. Can you confirm your capabilities to meet this standard consistently?

Emily (Female)

Absolutely. Our current DPMO for similar components is well below that, consistently at 80 DPMO. We conduct 100% automated optical inspection and rigorous batch testing. We can provide our full quality documentation for your review.

John (Male)

Excellent. That's reassuring. Let's schedule a follow-up for next week to dive deeper into the technical specifications and perhaps discuss a sample order. Thanks for your time, Emily.

Emily (Female)

Thank you, John. We look forward to it. Have a good day.

Vocabulary

Essential words and phrases from the dialogue

proposal

A plan or offer suggested for consideration, often in business talks. In negotiations, it means the initial price or terms a supplier offers.

unit price

The cost of one single item. For example, $8.50 per unit for 50,000 items. Useful in buying and selling discussions.

warranty

A promise from the seller to repair or replace a product if it has problems within a certain time. It shows quality guarantee in supplier talks.

competitive

Offering a good value compared to others, like a low price for high quality. Suppliers use this to say their offer is attractive.

flexibility

The ability to change or adjust terms, like price or delivery. In negotiations, asking for flexibility means seeking better deals.

commitment

A firm promise to do something, like buying a certain amount over time. Long-term commitments can lead to discounts in business.

lead time

The time between placing an order and receiving the goods. Important in projects with tight schedules.

DPMO

Stands for Defects Per Million Opportunities, a measure of quality showing how many defects occur in a million chances. Lower is better for quality control.

non-negotiable

Something that cannot be changed or discussed further. Used for strict requirements like quality standards in contracts.

Key Sentences

Important phrases to remember and practice

What's your initial proposal for the 'N-3000' based on the volume of 50,000 units per quarter?

This sentence asks for a starting offer in a negotiation. 'Initial proposal' means first suggested price or terms. 'Volume' refers to quantity. Use this to start price discussions politely.

For that volume, our proposed unit price is $8.50. This includes our standard warranty and quality assurance checks.

Here, the supplier gives a price quote and explains what's included. 'Proposed' shows it's open to change. Useful for responding to buyer inquiries with details on benefits.

That's a bit higher than our target. We were aiming for something closer to $7.80. Is there any flexibility there?

This counters the offer by stating your goal price and asking if it can be adjusted. 'Aiming for' means targeting. Good for negotiating lower prices without being rude.

While $8.50 is our standard, we could potentially re-evaluate if we discuss a binding annual commitment.

This shows willingness to adjust based on conditions like long-term agreements. 'Binding' means legally required. 'Re-evaluate' means review again. Use to suggest trade-offs in talks.

Our standard lead time for the 'N-3000' is 6-8 weeks, depending on existing production schedules.

Explains delivery time with conditions. 'Lead time' is key business term. 'Depending on' shows variability. Helpful for discussing timelines in supply chain.

Our quality requirements are non-negotiable; we need less than 100 DPMO.

States firm standards using semicolon for connection. 'Non-negotiable' emphasizes no change. Use in contracts to set clear, unchangeable expectations.

We can provide our full quality documentation for your review.

Offers proof of quality. 'Documentation' means supporting papers. Polite way to build trust by sharing evidence in vendor evaluations.

Let's schedule a follow-up for next week to dive deeper into the technical specifications.

Suggests next steps. 'Dive deeper' is idiomatic for more detail. 'Follow-up' means continuing meeting. Ends negotiations positively by planning ahead.