Tips for Successful Negotiation from Procurement Practitioners
CASME RoundTables are unique in that the exchange of ideas and best practice advice originates directly from the procurement practitioners who attend, rather than being led by an instructor. As proficient negotiation skills are critical factors for Procurement’s success, delegates at a recent RoundTable in London were keen to share the different negotiation techniques being effectively used by Procurement to add value during the sourcing process.
Many Procurement professionals receive professional negotiation training during their careers. Good, practical courses tend to focus on role play, case studies and video coaching, with some of the best helpfully critiquing the buyer’s performance and providing guidance on different scenarios where the balance of power varies between buyer and supplier.
In addition to deciding the timing of the negotiation, the buyer should take control of the agenda and determine the roles and responsibilities of others who may be present; devoting particular attention to guiding the stakeholders. Preparation using market intelligence and benchmarking data is critical.
It is advisable never to conduct important, high-value contract negotiations alone. An additional person should accompany the category manager; their role is to carefully observe the proceedings and probably take notes at the same time. During planned breaks the buying team can then review the supplier team’s behaviour and body language, including any perceived indecision, and plan the next stage accordingly. The upfront planning should make it possible to identify a wish list and agree any concessions, having already assessed what is important to both parties and what might be conceded.
Meaningful business relationships are key to encouraging innovation and gaining opportunities to reduce costs, so the buyer should invest time in getting to know the seller’s representatives and establishing authenticity by actively listening to understand the supplier’s perspective.
Negotiations should be practiced in advance and not rushed during the actual process; this will support methodical progression to a mutually beneficial outcome for all concerned.
CASME members wishing to read all the tips discussed at this meeting and previous CASME RoundTables in New Jersey and Singapore, can access the Resource Centre.