LP Magazine

MAY-JUN 2019

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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Negotiating with Procurement N egotiations between retailers and solutions providers is often a tricky dance. Many times the subject-matter experts, such as asset protection, operations, or information technology, begin the process by engaging with vendors they know who provide the type of solution they need. But most retailers also engage procurement professionals to negotiate the final contracts who may place reducing costs above achieving the right solution for a fair price. We asked three individuals with significant background in the retailer-vendor negotiation process to provide their insights into achieving the right balance for both parties. Robert Kleinman has been associated with AFA Protective Systems his entire career. Thomas Nimblett has twenty years' experience in sourcing and procurement of technology for companies such as Lowe's and Home Depot. Prior to becoming president of the Loss Prevention Foundation, Terry Sullivan, LPC, spent fifteen years in management with Lowe's loss prevention department, the last three as director of LP operations where he was responsible for the department's capital expenditures. What are your primary objectives when negotiating a contract for a retailer and a solution provider? KLEINMAN: We always hope to end up with a contract that reflects a true partnership—one where the solution provider has the ability to make a reasonable profit in return for the retailer receiving the services they desire at a fair price and at a high level of service. When we can achieve all these metrics, we know both parties are satisfied, and the relationship can and will grow. NIMBLETT: Objectives will vary based on the business area's objectives and the company's sourcing/procurement objectives. Many procurement groups are focused on cost savings, and many business areas will have an objective of functionality. While it is possible to bring both objectives together, the challenge comes when neither group understands what the cost baseline is and how functionality is tied to this baseline. What should be the cost and what functionality does the business really need immediately versus long term is a tough equation to solve. The objectives are also impacted by what it is being purchased. Many times the combination of assets and services makes the overall negotiation a complex one, especially when the assets are purchased from one company and services another. If assets are the focus, per asset cost will be critical along with the need for asset protection, such as warranties, returns, and defects. If services are being completed by the asset seller, the expectation is the subject-matter experts should be able to show a complete installation and maintenance life cycle without making the purchase difficult. My primary objectives always target a flexible and thought-provoking supplier when bringing the details above together. If the solution is simplified and the supplier is willing to work with the customer, then the objectives of cost and functionality will certainly be achieved. SULLIVAN: At the end of the day, you will get what you pay for. As a retailer, you should always look for the win-win with the solution provider partner. You have to look at all relationships as partnerships. The primary focus has to be the people you serve. As the director of loss prevention operations for Lowe's, I was serving the stores all day every day. Any pain point they would have would ultimately become my pain point. What are some of the missteps you have seen from your peers when negotiating a contract? NIMBLETT: The biggest misstep is always the planning of the negotiation and balancing the amount of time needed. Many peers fall into a trap of thinking the technology and the services are similar to other negotiations recently done. Many do not realize things are changing quickly, and solutions that were popular last year are not the same solutions this year. Planning to review the changes, understand the changes, and having a way to benchmark the details is critical to setting up the timelines. When the timing is squeezed and the thought is based on "end of year" or "end of quarter" deals, the negotiation will be a tough one because it becomes all about cost. Thomas Nimblett Director, Senior Lead Business Manager, Office of COO IT, TIAA Terry Sullivan, LPC President, The Loss Prevention Foundation Robert Kleinman CEO and General Counsel, AFA Protective Systems 52 MAY–JUNE 2019 | LOSSPREVENTIONMEDIA.COM Brittain is editorial director for LP Magazine. Prior to joining the magazine, he was director of learning design and certification for Learn It Solutions, where he helped coordinate and write the online coursework for the Loss Prevention Foundation's LPC and LPQ certifications. Earlier in his career, Brittain was vice president of operations for one of the largest executive recruiting firms in the LP industry. He can be reached at JacB@LPportal.com. By Jacque Brittain, LPC PERSPECTIVES

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