How can Effective Negotiation Add Value?

Friday, November 23, 2018

This week the CASME team were in Dubai, where members from the Middle East region attended a RoundTable to discuss how effective negotiation can add value. The top five key takeaways were

  1. It’s the shareholders’ money, not the stakeholders’ - Stakeholders will regularly talk about their budget, or profit and loss account, in an attempt to demonstrate power over Procurement.  Category Managers should remind stakeholders that the spend which is being negotiated and committed does in fact belong to the company and the shareholders.
  2. Procurement delivers enhanced processes, compliance and risk management - No one will admit to being a poor negotiator, and everyone likes to buy!  Procurement must therefore add value to the purchasing activities.  Ensuring compliance, establishing processes and mitigating risk are the top three reasons to demonstrate value when presenting to stakeholders.
  3. Take control - Procurement must be in control of the negotiation.  Set the time, place and other parameters.  Aim to understand more about the supplier, identify who will be conducting the negotiation, and check out their background before conducting the negotiation.  Allow time to plan and consider the options.  Don’t let others take control.
  4. Negotiation training - Refresh your negotiation skills and practice your techniques by training and filming your practice sessions at least once every year.  The video replays provide a basis for critical assessment of the role play negotiations and can help identify areas of strength and room for improvement.
  5. Culture - Procurement must be mindful of cultural impacts that can affect negotiations.  Decide to match nationalities or deliberately plan a cross-match.  If the supplier’s sales account manager is unpopular, then aim to have them replaced.  Do not ignore the significance and value of small talk before the negotiation commences as this can really help build relationships.  Effective negotiation results in a win-win outcome and the buyer/seller relationship is important for success.

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