Every procurement negotiator has someone behind them with their arms folded, tapping their foot and counting the moments until their product is delivered. © 2021 The Black Swan Group, Ltd. Weekly negotiation tips to give you an edge. If you have a track record of past purchases, let them know how much business they can expect from you based on those purchases. Based on the volumes of packages sent by an organization, the threshold value can be negotiated in shipper agreements up to 4 cu. .hide-if-no-js { You can use “one more thing” in negotiation – when you are about to sign the deal. Not only are they expert negotiators, they’re trained to drive down costs and get discounts. Granted, there are other areas where procurement adds value, but that is a subject for another blog post. six Try a different angle. By Tom Kinnaird & Hal Movius Imagine the feeling: After months of courting a new client, who has given every indication that a lucrative contract award is imminent, you receive an e … Over 1,000,000 procurement professionals, buyers, supply chain professionals, corporate officers, consultants, engineers, sales and marketing people, and other professionals have attended KARRASS's Effective Negotiating® seminars. Strategic sourcing comes down to negotiation skills. You can still make it fun and build a rapport but do so mindfully so that you always have the competitive advantage and the salesman is aware that he is dealing with no fool. Save my name, email, and website in this browser for the next time I comment. They’ve already done all the market surveys and considered their options. This way, you’ll disarm the salesman of any rehearsed strategy. They’re expected to land the best deals for everything from drones to paper clips. One of the most important tasks is procurement negotiations or working with suppliers to get ideal contract terms. Use these tips to build a successful negotiation strategy to improve your supply management throughout your supply chain. After all you are the buyer, remember! Make sure the person you are negotiating with has the authority to make offers and commit the supplier. The seller doesn’t want to risk losing the deal, so ask for one final, small concession that they can easily provide. hbspt.cta._relativeUrls=true;hbspt.cta.load(742822, '472748b7-c64f-4214-97b7-d51450ac0e7c', {}); When you’re talking to procurement, here’s what you’re dealing with: The typical procurement negotiator (but not all of them) fits pretty much the same profile as an international kidnapping negotiator. by SK Jul 24, 2020. Procurement Negotiation was excellent program. BATNA (best alternative to a negotiated agreement), 5 Tips For Effective Source to contract During Cri [...], Three ways AP automation can help organizations re [...], Artificial intelligence for accounts payable: All [...]. But negotiation doesn’t have to be difficult. Procurement’s tactic is to nullify value propositions. Procurement doesn't waste time with people they don’t want to make deals with. (301)220-3540 Now you might think what if a supplier is clever enough to quote a price implicit of the sliding range. Your email address will not be published. There needs to be a broader approach around supplier performance, including measurable criteria such as accurate and timely deliveries, high quality, strong customer support, reduced supply chain risk, great communication and cost management. Why would they? Have questions about training, speaking engagements, or coaching? inches) Maintaining the current threshold or further negotiating a higher threshold can negate impacts of dimensional weight pricing; Negotiating divisor value Procurement professionals handle quite a bit. Regulations in different countries are aimed at ensuring objectivity in the procurement process, and to protect against fraud. Your email address will not be published. They are legitimate questions asked respectfully, even deferentially. They’re demanding, intimidating, aggressive, threatening, and deadline exploiting. A true procurement professional does not buys goods or services, he buys results. Required fields are marked *. And WHOI Procurement is available to help with this. So keep your facts and objective ready and let not the discussion take any other stream other than purely professional. Because of this, negotiation is often not encouraged during the core supplier identification and selection process, […] Negotiation Tips #2: The Subtle Art of Walking Away. display: none !important; Negotiation Tips #4: Right to Persist on Price Reduction. Thanks for the program. Of the six negotiation tips, here’s the second one which dares you to walk away from a negotiation that seemingly appears a great offer as the supplier says it is the lowest price bided for you. Just because a salesman offers a price after you’ve countered it once, doesn’t mean the negotiation is over. Working with Procurement often feels adversarial. The ideal outcome is win-win but this is not always achievable. In this scenario, your boss wants you to finish a certain procurement as early as possible and at a best bargain. Negotiation Tips #1: The Good/Bad Guy Strategy. You ask fair questions (yes, we are using the F word here!). 1 And that person is almost always keeping a low profile for two reasons: Look at the procurement person you are dealing with as a great potential long-term counterpart who is under a great deal of pressure. With a little instruction and a lot of practice, it can become an invigorating exercise that drives serious cost savings and added benefits for agencies. If you are a new start-up, show them a reasonable sales projection so that the supplier will see how much you will potentially purchase from them. That doesn’t mean the contract negotiation is over! Chris founded the Black Swan Group, in 2008 upon his retirement from the FBI where he was the FBI’s lead international kidnapping negotiator. To turn the scenario in your favor, this is one of the six negotiation tips that recommends you to inform the salesman that you wouldn’t appreciate the good/bad guy technique and would only talk to the authority who can offer you the final negotiated value without further to and fro. It may be that your vendor is unable or unwilling to negotiate price. This is probably the most important negotiation tip for a buyer who might fall victim to the salesman’s manipulative skills wherein they try to meddle with your emotions. }, Harvard Business Review Analytic Services: Briefing paper An executive brief on best practices, continuous improvement strategies and upcoming game-changers in procurement automation. By letting your supplier know that you will be offering them repeat business over the long term, they will be more keen to negotiate with you. They are trained to research background information on each vendor to determine if there is information that "can and will be used against" the vendor. Chris is also an Adjunct Professor at the University of Southern California (USC) Marshall School of Business and Georgetown University’s McDonough School of Business where he teaches business negotiation in both M.B.A. programs. hbspt.cta._relativeUrls=true;hbspt.cta.load(742822, '4e83953d-fe30-4cc6-8134-cf5f9c161117', {}); Christopher Voss is the CEO of The Black Swan Group, a firm that solves business negotiation problems with hostage negotiation strategies. Interestingly enough, that’s who the negotiation system in Never Split the Difference was originally designed to prevail against.. You’ve got them hostage. Just as importantly, skilled procurement negotiators should profile the behaviors, personality types, temperaments, and learning styles of their negotiating opponents. Negotiating threshold value. Good question. Next, make the deal or walk away firm in the knowledge that you’ve done your job and advocated to the best of anyone’s ability on behalf of yourself and your employer. Negotiation is an underutilized, yet critical business skill that lies dormant within most organizations. Any of these questions that elicits a response like Because you have to if you want the deal tells you that you’ve done your job and you’ve pushed them to their limit. At some point, everybody needs to conduct a negotiation, either by doing deals on behalf of their business or on behalf of themselves. In this scenario, your boss wants you to finish a certain procurement as early as possible and at a best bargain. Procurement Negotiation Training for Buyers and Supply Chain Professionals. How to Negotiate. The tried and tested strategies to procurement negotiation are: Research and Understanding: If procurement is talking to you, then you are the favorite. Someone internally has come to them and told them they want you. (Hint: This—or at least a version of this—is the beginning of your tactical empathy statement to them.). If you’re inexperienced or lack confidence when negotiating a vendor contract, there are three key points to remember: They know how most of the rest of the business world feels about them and they are sensitive to that reputation (and worn out by it). And, by using Tactical Empathy, we can get an idea of what they’re dealing with. Here, it is the salesman who has to compromise on the purchase to be in business with your market goodwill. Here are some fine points on how to cope with procurement and help move them toward outcomes you desire. Program having very good depth. 6. End of the day, it is important to remember that a salesman will do anything that they can to sell their services at a higher price, but you as a buyer; you can neither compromise on quality nor pricing. For you, we have six purchasing negotiation tips to aid your success through every deal. Negotiation Tips #3: No Range but Exact Price. Negotiating is a key part of professional life. A brutal, punishing counterpart is just keeping you from them. Usually, in every one of those sessions of 50-60 people, there is one procurement person. Time limit is exhausted. There is often a direct correlation between how demanding they are and the amount of pressure they are under. This should be done well in advance of key negotiations, and can make a huge difference in how … Negotiation can take place between a procurement professional and parties within the supply chain for a variety of reasons. We identified several negotiating principles for purchasing managers. function() { Negotiation can be as simple as trying to obtain a discount on a case of safety gloves through to the complexities of major capital purchases. This is both an analytical & psychological process. Make them give you this indication firmly three times, and mirror it to make sure you’re on the same page. setTimeout( Please reload the CAPTCHA. Please solve this * Usually in this kind of negotiation, a range of prices is offered of a product buyer is looking to buy and it often results into a price on the higher range. Don’t forget to get quotes for different quantities or tiers. Negotiation strategies . Negotiation Tips #6: Influence Compromise with Evidence of Alternatives. Negotiation Tips #5: Let no Salesman Ride your Emotions. They start the negotiation on a higher price range so that you can only negotiate so far. if ( notice ) So if you master the art of walking away, you establish an authority thereby influencing the pricing in your favour. Trained, empowered, and incentivized by their leadership, procurement teams have harnessed the dark side of negotiation for the sole purpose of pushing prices as low as possible. Procurement is an entity that tends to strike fear into the hearts of most salespeople and many executives. It is necessary that there has to be some level of compromise in the negotiation and that you are not going to settle in for the initiating offer in any way. This will allow them to compare prices among vendors without any restrictions. Negotiation has traditionally been seen as the “raison d’être” for procurement professionals. The supplier is ready to sell you their merchandise but how do you know your supplier is being honest because in business a conservative appreciation is also for numbers. Tomorrow if a sales man agrees to your pricing offer, be sure to emphasis that this should have no bearing on the quality of the product or service you are buying. You can have a good academic discussion as to what is purchasing & procurement negotiation, but in a simple language it is the process where corporate buyers & sellers discuss/negotiate terms of a contract before concluding a deal & starting the contract management process. While the profession adds value in a variety of ways, the ability to negotiate well remains a core skill – love it or loath it! What happens to the typical procurement negotiator when they fail to land a deal with a company their internal client has told them they want? In every negotiation, there is a favorite and a fool. That's why when negotiating with suppliers a buyer negotiates for performance results. Without taking the time to find high-quality products that fit your box’s niche and value proposition – from vendors you can trust – you won’t have a subscription box, period. Time limit is exhausted. feet (7000 cu. Please reload the CAPTCHA. info@blackswanltd.com "If my goal is to sell something for $20 a case and I open at $20, we don't have negotiation room. But the procurement manager assigned to negotiating your contract will often be massively overworked with the 2-fold remit of driving down costs for the company and mitigating any risks as a result of the purchase. Avoid situations in which the salesman isn’t giving you an exact price but a sliding range in which you’ll not receive the BATNA (best alternative to a negotiated agreement) advantage. Begin your conversation with some Tactical Empathy: It sounds like you’re under a lot of pressure. Over a period of time, through trials and tests with various suppliers, you learn a few hacks but what if you are new to the business without a Godfather? A purchasing professional must aim to be successful in their negotiations with suppliers to obtain the best price with the best conditions for every item that is purchased. Procurement worked closely with a team from finance, which created detailed models to determine a price range that would let the supplier generate returns of 15% on invested capital. When negotiating with suppliers, make sure they know you are someone who will give them repeat business, over the long term. I have gone through the video 3 times and read the materials due to depth knowledge. Compromise in a business deal is as old as trade itself. }, Every one of their days is either herding cats (e.g., getting answers from their internal clients as to what they want) or being chased by villagers with pitchforks (e.g., those same clients getting mad at them for not delivering). © 2021 Zycus Procurement Blog. Procurement is a tough, difficult job. Negotiation is used with the intension of all parties reaching an agreement. To build a mutually beneficial, long-term relationship, reps must treat them as a key stakeholder in the opportunity. They want you. timeout By Chris Voss | March 17, 2020 | notice.style.display = "block"; })(120000); So, the tip is to avoid any sliding price and ask for the lowest a supplier can offer at the very beginning. A seasoned salesman may try to get into your personal space and use your personal emotions to your disadvantage. Never forget that there is great power in deference. All Rights Reserved. Procurement doesn’t waste time with someone their company doesn’t really, really want. −  ); A successful procurement negotiation secures the supply of the requirement at the best possible price in the exact quantity, quality and time frame that is desired. They often have to do this without an in-depth understanding of what it is that their company is buying. As a buyer, the way you negotiate to get the best prices on goods and services determines your success as a purchasing professional. No deal is better than a bad deal. Interestingly enough, that’s who the negotiation system in Never Split the Difference was originally designed to prevail against. Very informative regarding Negotiation practice. (function( timeout ) { Finally, remember that a successful negotiation is a win-win for both parties. In this case you should know that you are not negotiating with one singular vendor, and your supplier should be informed of the fact that there are other suppliers who quoted lower than them.  =  Procurement Goal: Procurement would like to have as much ammunition as possible in their arsenal to use against vendors in an effort to drive down prices and negotiate a commodity deal. A buyer must understand that he is not buying goods or services, so as a buyer you are not negotiating for goods and services. The Savings delivered as an outcome of an Sourcing event, could vary based on the factors impacting your negotiation leverage or your position on the negotiation … The scope of expertise that requires just cannot possibly exist in a single person—or even a team. I once said exactly that to a procurement negotiator who was in one of our Mastering Tactical Empathy training sessions. What happens with the internal pressure that’s on them to make the deal if they have to start the process all over again? What you want has to become the path to what they want. The Good Guy/Bad Guy is a popular negotiating technique in which a person (good guy) is with you negotiating a deal appearing to agree to your offer but then can’t call the shots and has to march off to the manager (bad guy) for approval who in turn disapproves the deal and sends back the “good guy” for renegotiation. This is a great response—especially when they call you at the last minute demanding a discount. The attempt to drive down the price can go on till a contract is signed. The battlefield of B2B sales has witnessed a crushing wave of fear and intimidation over the last two decades. If the other side is determined to cut your throat, there are better, far more pleasant counterparts who will make great long-term partners out there just waiting for you. Procurement is an entity that tends to strike fear into the hearts of most salespeople and many executives. The rules and regulations for employing the negotiation method specify that the selection of a contractor will be made to the best , he buys results and considered their options not possibly exist in a single person—or even team. Sent by an application of Tactical Empathy statement to them and told them they want a successful negotiation is.. Success through every deal ’ Brien is CEO of procurement consultancy Positive purchasing and training... 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