How to Build a Real BATNA Before You Need One

The renewal notice has just arrived, and you’re staring down the barrel of a steep price increase described by the supplier as ‘aligned to market conditions’. With only 30 days until the contract ends, you call an urgent meeting with your procurement colleagues. 

“We have a BATNA, right?”

“Um…”

Sourcing heroes already know the concept that Roger Fisher, William Ury and Bruce Patton introduced in Getting to Yes, so we don’t need to explain the BATNA model here. But a gap lies in the practice. A common mistake is to treat it as a preparation exercise before a negotiation, which produces a list of hopes rather than a plan. 

In reality, a credible alternative takes months to build.

BATNA stands for Best Alternative to a Negotiated Agreement. In procurement, it is the most advantageous, realistic course of action a buyer can take if negotiations with a supplier break down and no deal is reached.

Explore Every Alternative

Most teams list one alternative supplier and call the job done, but best practice is to brainstorm widely and develop the strongest options further. For a supplier contract, that means looking past a second vendor to explore options like:

• A competitive sourcing event 
• Specification change
• Consolidated volume across business unit
• Bringing the work in-house 
• Deferring the purchase
• A contract you can join through a GPO like Una.

It also helps to keep two or three alternatives in play, because your best option can fall through at the exact moment you need it. 

Put a Real Price on Each One

Be sure to compare apples with apples. An alternative rarely matches the current deal point-for-point, which is why it’s a good idea to translate each option into the same terms. 

For example, a supplier quoting 12% less sounds like a win until you add the cost of onboarding and the weeks of patchy service while the new team learns your account. Whatever is left after those adjustments is the real saving. The worst deal you would still accept becomes your reservation price (the highest price you would pay in the negotiation scenario). That number tells you when to walk away.

Spare a thought for the other side as well. How much of the supplier’s revenue do you represent, and how long would it take them to replace you? Remember, your counterpart has a BATNA too, worth thinking through as carefully as your own.

Make the Alternative Believable

If a confident supplier doesn’t believe you have a real alternative lined up, they won’t hesitate to call your bluff. A called bluff will cost you the relationship and any leverage you have, so it’s a good idea to have a written quote and a trial order where the category allows one. 

Keep Your BATNAs Fresh

A BATNA has the shelf life of a banana. Quotes expire, markets move, suppliers merge and your own requirements change, so the alternative you priced last year may not exist at that price today. Tie a review to each contract renewal date and start well before the notice window opens (for critical categories, this could mean six to twelve months out). 

Use a GPO Contract as One of Your Alternatives

A GPO contract is among the quickest alternatives to build, because someone at the GPO has already done the sourcing and the negotiating. Una members can start buying on GPO pricing within days or weeks instead of months. At Una, membership is free and carries no purchasing requirements or exclusivities, so holding the alternative costs you nothing and commits you to nothing.

Our free cost analysis sends your real spend data to its supplier base and returns verified pricing, which gives your BATNA a number built on real quotes. 

A GPO contract only counts as an alternative where Una has a contract in your category. Highly specialized or direct spend may sit outside the portfolio. 

Good luck with the next renewal notice!

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