Supply Excellence — Negotiations: It’s Not About You

Negotiations: It’s Not About You

August 1st, 2007 · by Tim Minahan · No Comments · Supply Management 2.0 Forum, best practices, sourcing

It’s amazing what you can find on the Web. While doing some routine investigation on Empower 2007 speakers, I uncovered a goldmine of supply management strategy papers and presentations published by these presenters.

Consider the Alliance Bernstein CPO Joanna Martinez’s paper on “Immersion Negotiation” techniques that empower buyers to derive best-value awards by being better prepared and focusing on “the people side” of the negotiation process.

Many Supply Excellence readers might remember Martinez from the Supply Management 2.0 forum for her role in the great debate over measuring purchasing performance. This time, she turns her straight talking style to uncover the secrets to effective negotiations.

“In the end, you don’t have to be the best negotiator — you have to be the best prepared negotiator,” writes Martinez in her paper, Negotiation Master Class: Step up to the Next Level. “The more you can understand the positions, cultures, pressures, and backgrounds of your opposites, the more you can use that knowledge to achieve your desired end result.”

There are six core components to Martinez’s Immersion Negotiation approach, which I have summarized below:

Preparation: Start by clearly defining in detail your preferred outcome. After setting your objective, develop a fall back position, or, what Martinez describes as a “BAG (Best Alternative to your Goal).” Finally, Martinez recommends role playing the negotiation with other teammates or an outside coach.
Supplier conditioning: “First of all,” writes Martinez. “Your supplier’s executives must want to do business with you.” She recommends meeting with supplier executives and board members to “sell” your company and to “get the supplier emotionally engaged long before you have to negotiate.”
Build a people strategy: The crux of Martinez’s Immersion Negotiation approach is that “It’s not about you. It’s about them [the supplier]. The more you can understand where your opposite is coming from, the more you can use it to your advantage.” Martinez recommends understanding the backgrounds and pressures on the people you are negotiating with and to determine how you can use that to your advantage.
Understand the other company’s culture: It is equally important to understand the company and regional culture of your opponent and to adapt your negotiation approach to best fit it. For example, Martinez says Americans are more verbal and faster decision makers, while the British culture “is one of a more written approach with more time planning and more stakeholders involved.”
During the negotiation: Martinez says the best negotiators are those who master non-verbal communications. She advises buyers to become a student of body language and adjust your style according to the speech patterns and body positioning of the parties in the room.
Execution: Martinez recommends assigning a value to every component of the negotiation and consider negotiating different elements — such as price and payment terms — separate, if it works to your advantage. She says buyers can also eek out additional cost reductions by proactively identifying duplicative tasks — such as receiving or quality checks — and eliminating them. This joint cost reduction not only drives additional value but it also demonstrates a commitment to partnership with your supplier.

Read Martinez’s full paper here. Or, better yet, hear Martinez’s thoughts on negotiation, risk management, and supply management transformation first hand at Empower 2007. Register or get more information on Martinez and any of the nearly 50 presenters at Empower 2007 here.

Email Forward & Bookmarks