CPSM Blog

Leading,conducting, and supporting negotiations

In this section 1-A-3 (scroll down for previous post) the supply manager is being asked to both create the strategy for negotiations,do the negotiations and also support negotiations.Most supply managers have experience in negotiating teams and have attended some sort of formal training in this age old  supply management topic. This section is therefore fairly  easy. If your job has not involved a lot of negotiations just think of your last visit to a car dealer and how the sales folks try to negotiate. The sales people have some standard tactics including (a) I have to ask my manager but s/he's away - the missing person technique (b) Offer a very low price estimate for the trade in so that the new car price expectations are moderated, i.e. the buyer stops expecting a great price reduction for the car being bought.(c) spend a lot of time with the buyer understanding preferences and motivations -car- test drive so that the buyer becomes fairly committed to buying just because of the emotional involvement. (d) the sales person wants the customer to be happy and become an advocate for the brand and dealer, so really tries hard for a great fit between the customer's needs and the particular car. 

As a supply manager think of yourself on the other side of the table as the negotiator. Some of the techniques above that work for sales folks work equally well for supply managers on the buy side. Supply folks have the great advantage that they have prepared an RFP, gone through alternate proposals, checked out supplier references and credit before meeting the supplier. Ideally you should be negotiating with suppliers who are equally qualified where your role is not only to get the best deal for your company but also motivate the supplier to do the best it can as the contract gets underway after award. You want your supplier to become a supporter and advocate for your company.

During the process of negotiations having plenty of time, being willing to listen, having data based positions and being willing to walk away are good approaches. This assumes that you have done all the work required at the previous steps of RFP etc so that you have a great slate of suppliers to choose from.

Negotiations has two subsections

I was quickly browsing the next two sections and interestingly these are related to negotiations. The first sections deals with preparing for negotiation (Task 1-A-2) and the section after is about negotiation tactics (1-A-3). Negotiations is a perennial topic in supply management,sales, international business  and multi-cultural situations and everyone is always interested in getting some skills or training in negotiations.

I found it interesting that it really is given two sub-sections in the broader contracting and negotiations section.More on this later...