In most, if not all,
negotiating scenarios, the best deals and compromises are reached between an
organisation and its Suppliers, where the parties involved in the negotiating
process are removed from the day-to-day operational and administrative tasks of
trading.
Operational and
administrative staff within organisations rarely, if ever, formulate or write
the technical specifications upon which an organisation describes the needs of
its Suppliers. On this basis alone, negotiations with Suppliers should be
undertaken and led by those who have an intimate knowledge of the technical
specification upon which the negotiation will be based.
Those negotiating with
Suppliers must have an objective view of what is being negotiated and a clear
understanding of an organisation's strategic needs without political or
operational bias. A successful negotiating process must balance an
organisation's strategic and tactical needs.
Operational and
administrative staff are deeply involved with the tactical needs of an
organisation and often lack the strategic clarity and visionary intent required
in the negotiating process, and as such, should be involved in, but not lead,
negotiating processes to balance an organisation's strategic and tactical needs.
Negotiating With Suppliers
An organisation and its
Suppliers must be able to negotiate with each other within a scenario where
neither side is viewed as more potent than the other, as each party is equally
reliant on the other to create a mutually profitable trading opportunity. Organisations
must lead the negotiating process to ensure that Suppliers understand their
requirements to enable Suppliers to meet them profitably.
A personal relationship
with an organisation’s Suppliers against whom the organisation will be
negotiating prevents an adversarial relationship from souring the deal before
it starts. If an organisation’s negotiation Stakeholders see themselves as
adversaries in a confrontation with an organisation’s Suppliers, both sides
tend to become defensive and reactive.
An overly heated
atmosphere and anger can unravel the most carefully planned negotiation
process. However, much can be done to avoid the problems and issues when an
organisation tries to establish a “personal relationship” with its Suppliers,
who will be on the other side of the negotiating table.
If an organisation and
its Suppliers did not have divergent needs, negotiations would not be needed.
Both parties within a negotiation process will be asking the other to give up something
within the negotiation, which can create a problematic atmosphere.
Reaching a Mutually Beneficial State
If an organisation’s
Suppliers believe that the organisation is genuinely looking for a mutually
beneficial deal, the organisation is far more likely to make a concession. It
is always good to remember that business is business and that an organisation
must establish itself as the leader in the negotiation process as it has the
requirement to fulfil, which it knows the intricacies of best.
Negotiation
stakeholders should never make personal attacks or attribute any combative
exchange between an organisation and its Suppliers to malice on the part of
their opponent. In this situation, asking for even a tiny concession can be
seen as an encroachment or an attempt to take advantage of the other party.
When things become
tense in a negotiation, it is always best to suggest a break. Taking some time
away from the negotiating table can help the parties within a negotiation
process steer the conversation back to a more convivial personal relationship.
It always pays not to take things personally.
Getting the Best Advantages While Compromising
Understanding what a
Supplier wants from the negotiation can help an organisation to get what they
want. It is wise to remember to get to know the negotiators' positions from the
other side and the people with whom an organisation is negotiating. Focusing on
seeking their cooperation can be the element that closes a deal.
A good negotiator will
build a personal rapport with the person against whom they will be negotiating
before they even get to the table, emphasising the importance of maintaining a
professional but personable approach to managing an organisation’s supply base.
The key is for the
negotiator to frame themselves as a friend first and a negotiator second
to the Supplier, transforming the relationship between the parties in negotiation
from competitors to co-operators to provide a positive perspective on the Supplier
that an organisation is negotiating with.
The Positivity of Negotiations
Positive negotiation
relationships are meaningful with Suppliers because they engender trust, which
is vital to securing an organisation’s best negotiating position with
Suppliers. Consideration of a proposal action entails a risk. People view
negotiations and the associated risks as more acceptable when a proposal is
made by someone they trust.
People tend to respond
to negotiations with similar reactions, as research in the social sciences has
found. If an organisation cooperates and treats its Suppliers with trust and
respect, Suppliers tend to respond in kind. Effective leadership within the
negotiating process is crucial to securing a successful outcome.
The nature of reciprocal trust reinforces the value of taking time to get to know and understand the other party to build rapport with them before an organisation begins to negotiate. It is important not to assume that an organisation can form a bond simply by exchanging a few friendly e-mails before meeting in person. Instead, they should forge a personal connection before the negotiation process begins.
Additional articles can be found at Procurement and Supply Chain Management Made Simple. This site looks at procurement and supply chain management issues to assist organisations and people in increasing the quality, efficiency, and effectiveness of their product and service supply to the customers' delight. ©️ Procurement and Supply Chain Management Made Simple. All rights reserved.
