Negotiate like a lion. Or like a fox.
Negotiate like your life depends on it. Negotiations, the main activity of
every Procurement professional. There are tough negotiators, the ones that
shout, and the ones that are going in detail.
I must learn a lot. But I do hope that I can explain how I negotiate.
Procurement teams are negotiating with
everyone. Not only the supplier but as well the stakeholders. The goals are
different, but the process is almost the same. The only difference is that you cannot
walk away from your stakeholder.
No matter how well trained and prepared we
are, negotiations are an emotional thing. Some people will drive you crazy for
no particular reason. You will as well like some. Try not to get into this
trap. Keep the emotions outside. This is a business. Not dating, a fight or
competition of any kind.
Negotiations happen in three phases:
preparation, the meeting, and after the meeting.
Preparation is the most important part and needs at least half of the total
time. We need to collect as much data as possible. To know the major characteristics
of the product/ service. Also, what will be the least acceptable quality level
that our stakeholder will accept? Another important step is to gather market
data. Contact a couple of suppliers and get some prices. Because, if you
present an unrealistic demand to the supplier, he will know that You have no
market data and will bring You exactly where he wants. It is good to know the
supplier, his market share and if possible, their current basic financial data.
Find out more about the salesperson that will come to the meeting. LinkedIn is
usually a great help here. A couple of personal questions at the start of the
meeting can bring the relationship to a much more cooperative level. Moreover,
if there is a "show stopper", a point where the negotiation will not continue,
we must understand the potential effect of this on the company. This is BATNA -
Best alternative to a negotiated agreement. Once we reach BATNA, the
negotiations are unsuccessful.
Time to start the meeting.
The salesperson has years of training focused only on getting the sale done.
Keep Your ego outside, this is not a boxing match. And anyway, using power
rarely brings a good contract. Clarify the general clauses of the contract
first and then move on to the more difficult parts. It creates a general
positive vibration in the room, as everything goes smooth. I got a piece of
good advice on negotiations: first, negotiate and get the price fixed. Then
other clauses: payment terms, incoterms, etc. Always have in mind that the best
contract is a win-win contract. While asking for something, offer something in
return. A longer contract, joint R&D, shorter payment. Some things will not
create any extra cost for your company but can help the supplier.
In one moment, negotiations will stall.
Usually around the price, but it happens around even a non-important sentence.
Do not allow yourself to get emotional. Again, this is not a boxing match. You
should not attempt to win at all cost. Remember the preparation. Review your
notes and see what can you offer in exchange. If it is outside your BATNA, close
the meeting. Do not push further only to close the deal. Do not get defensive
or rude. The fact that the deal was not agreed on this time does not mean that
you will not work with the other party in the future.
Recommended reading:
Disclosure:
This page contains affiliate links. If you click through and purchase an item,
I may earn a commission.
Comments
Post a Comment