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Negotiating one of the key skills for procurement professionals

Apart from being skilled and experienced in managing relationships with suppliers and managing the resulting relationships in the same region, but Negotiating with suppliers in various global regions can bring unexpected challenges that can sabotage negotiations and relationships can challenge those are strong in domestic markets
So bridging this gap can be done by training procurement professionals and others in the organization, on a worldwide basis, to understand, respect, and appropriately respond to cultural differences in the countries where they are doing business. Second aspect to this the information the buyer and seller have about the product, the relative scarcity or abundance of the product, the availability of product substitutes, and many other factors. The relative leverage of buyers and sellers determines the price and terms of transactions and the nature of business relationships. These initiatives can help to prevent problems and surprises that can occur during new supplier relationships, improve the procurement process, and promote dialogue and continued learning
Key objectives required for demonstrating negotiating skills
1) Determine the ability to question any assumptions and set expectations
2) Have a clear cut expectations set so that the potential suppliers understands and respects and values them
3) Create a methodology to ask and understand the supplier assumptions that could be a differentiating factor for a proclaimed relationship
4) Have cultural diversity as the centre point to bridge the cultural differences using cultural diversity as assets
These all behavioural objectives will help you in price negotiations in a centralized procurement and sourcing domain with better definition of required volumes and supplier consolidation. Another aspect for significant savings from negotiation can generate value engineering collaboration with suppliers, and standardisation and adaptation of specifications in order to optimise utilisation and minimise waste, the larger, more complex set of levers to use during the negotiations makes the process more complicated. Understanding the whole range of available business rules, and carefully planning when and how to use them in the negotiations, will greatly affect the outcome. Effective procurement requires a flexible, well thought-out set of strategies when approaching the negotiation process.
If you want to gain high negotiating skills then there are certain snags that you have to overcome
1) Lack of confidence and failure having assertive approach
2) Gelling debatable behaviour with problem solving
3) Using Threats
4) Having an emotional warfare
5) Details not addressed immediately
6) Failing to commit when agreement seems to be met
7) Getting distracted with the other party’s behaviour
8) Understand the other side’s interests.
To overcome these pitfalls there are some key Qualities that should be observed during negotiations
1)  Be perceived as knowledgeable, reliable, and trustworthy, and as a person who can make the decision
2) Be a good listener
3) Be patient
4) Be skilled in communicating
5) Be a good problem-solver
6) Find common ground for agreement
7) Work through conflicts that arise during the process
8) Summarize points and check for agreement
I hope this will help all the procurement professionals to have a ground for Negotiation to improvise on savings


After going through the content of this blog, I was wondering how much of our perceived skills on negotiation will help in today's world where most of the phases in procurement is done elctronically.

The documents that are required for procurement are generally all carried out elecronically but majorly all negotiations do happen offline like prepartions of a contract we simply cant create contracts electronically without having discussed on price and validity periods for existence of the contract. The terms and conditions should be entered electronically only after common agreement with supplier

The blog seems to extol diplomacy over friendship. The need of negotiation arrived when two parties are at logger head or have divergent views but why can’t we view our suppliers as our friends or as someone with whom we can have a symbiotic relationship.
The moment we change our view form diplomacy to symbiotic relationship our actions will change we will be partners in the overall Value creation for the customer, lets learn from TOYOTA …

I have a certain difference of opinion, especially when we start looking at our suppliers and frame them in a friendship zone, we are loosing on two major factors On Time delivery and Cost benefit analysis as there is a always a way for assumption and there would be unmethodical crisis so it is better we negotiate and draft it so as to follow the right medium. But yes surely we need to build a friendship relationship to leverage the pattern of efficient values created within business partners.

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