Procurement negotiations are the kind of meeting where a lot can happen in a short space of time. That's why preparing well for procurement negotiations is crucial.
Here are four ways to prepare that will stand you in good stead for your next negotiation session:
- Update your information
- Clarify your objectives
- Define your tactics
- Plan the logistics of the meeting
Having a good understanding of your partner or future partner will assist you during procurement negotiations in three ways:
- It allows you to position the discussion from the perspective of growth ("I saw you acquired your main competitor, we'll no doubt have scope for innovation…")
- It provides you with potential arguments ("As this is one of your goals, here's what we could consider…")
- It prevents time from being wasted due to unsubstantiated claims ("You say you can deliver more. However, I read that you closed a site...")
Even if you think you know about the partner you'll be negotiating with, it's best to update your information a few days before the meeting.
For example, you can:
- Read news published on the company's website
- Type the company name into a search engine and browse any relevant content
Finally, brush up on the basics and prepare a document listing the company's key figures and the history of your relationship. Always remember, you're a value-creating buyer!
Identifying how your future procurement negotiations fit in with your challenges for the year is the key to being prepared. Defining your objectives will help guide your approach to discussions.
The most effective way to clarify your objectives is to create a table with four columns:
- Issues you wish to address (price, service, logistics, innovation etc.)
- Improvements or advantages you wish to benefit from
- Arguments supporting your requests
- Concessions you're willing to make in exchange (by setting limits, figures if possible)
As well as ensuring you're thoroughly and objectively prepared for your round of procurement negotiations, the table will help to spell out your strategy and, in turn, allow you to pre-empt your partner's approach.
The table mentioned in the paragraph above will give you a clear sense of your strategy. However, to truly reap the benefits, the best path to success is to choose the most suitable tactic.
Depending on whether the negotiation is part of a recurring series, in response to a crisis or, by contrast, in the context of strong relationship development, you can opt for:
- Thematic negotiation, starting with the issues that are either highest or lowest on your list of priorities.
- Comprehensive negotiation, where all elements for negotiation are weighed up together, with the idea of a compromise on both sides.
We might not think about it immediately, but the meeting environment can often influence the final outcome of a procurement negotiation. By altering the setting and the convenience of the discussions, logistics can determine just how far parties are willing to compromise.
It's easy to see how calm surroundings and comfortable seating can encourage those involved to listen and inspire goodwill. Procurement negotiations that are held remotely for whatever reason, in cold, dimly lit rooms that are tricky to access, are far less conducive to smooth discussions.
The key is to remember that logistics always make a difference. The level of respect shown towards your partner will no doubt be seen as an indication of your willingness to invest in the relationship.
In conclusion, nothing should be left to chance when preparing for procurement negotiations. And if your partners drive a hard bargain, you'll need to be even more prepared.