Here the second round refers to the second time that this blog is discussing Negotiation - the Task 1-A-2. check the earlier discussion on the topic (scroll down). Preparing for negotiations is one of those evergreen topics in supply management and therefore has a pretty hefty 8 questions in the exam. This is also mostly a CPM type of topic and you should have at least attended one class or training in negotiations - so the section should be fairly easy.
There are two big topics in this section ie preparation for negotiation and negotiation philosophies. Let us discuss each in turn.
- Preparing for negotiations obviously is a stage where you have received an offer that does meet all your basic requirements of quality, delivery and price. If you step back and think about it - you encouraged the supplier to bid because you thought that the supplier was competent and was a worthy supplier in the first place. Against this background preparation for negotiations becomes easy. Re-think on some of the key strengths and potential inputs of the supplier and make sure that they appear in the terms of the contract. Next scrutinize the list of must-haves vs. wants when it comes to weaknesses. Let us say the supplier does not have an adequate after sales service team-- and your own people are adequately staffed to handle at least routine issues. In such a scenario you do not need to build in an immediate service call requirement in the contract. However, for exceptional problems the supplier should be willing to bring in deep domain knowledge and top flight technicians so that there is no down-time at your end. In all of this being armed with data particularly from your users is critical. In these days of big-data the more hours you spend preparing for the negotiations ahead of the actual negotiations - the better the outcome. Also, its perfectly fine to ask the supplier for data ahead of the meeting. Note that price is not everything but your objectives is everything in negotiation. In general you should be negotiating only with those suppliers who meet all your criteria and you are only trying to fine tune the contract to deliver success in the business relationship.
- Negotiation philosophies include the traditional win-win, win-lose and lose-lose classifications and is a small part of the section 1-A-2. You want every contract you negotiate to last and perform for your organization. You do not want the supplier to fail in any way and therefore you are looking at a win-win type of strategy. If you did not want to negotiate for prices in low value less critical items remember you could just buy online, saving yourself the entire effort of preparing for negotiation and the actual negotiation time. In other words you will be negotiating on relatively important products,services or projects and in all of these you really want the supplier to be fully committed to doing the best job it can and a win-win philosophy seems desirable depending on the description of the situation and scenario in your question.