How To Influence A Negotiation Early, Part I
PurchTips edition #173
When Does Negotiation Influence Begin?
Waiting for a negotiation to start to begin exerting your influence may be waiting too long. There are three methods of influencing negotiation outcomes early.
Method A - Prevent Backdoor Selling
A timeless negotiation principle is that the less certainty of earning your business that a supplier has, the more leverage you'll have. So, it is important that for large purchases, you maximize your leverage by ensuring that suppliers - no matter how hard they probe - do not get clues that their proposals are acceptable. While purchasing professionals are usually adept at maintaining uncertainty, internal customers are not.
Therefore, the purchasing department should be the first entity in your organization to contact suppliers when a purchase cost is expected to exceed a certain amount. And if someone argues that the cost can't be known without contacting suppliers, then the purchasing department should be consulted when it's reasonable to believe that the purchase might approach the limit.
Method B - Get Involved In Product Design
One of the toughest negotiation scenarios is a sole source situation, where there is only one supplier who can provide a product/service. Sadly, most sole source situations are self-inflicted by buying organizations who engage suppliers in their product design process without purchasing department involvement. Those suppliers creatively lock themselves into long-term business characterized by large annual price increases.
The solution is having a purchasing professional on every design team. This person must ensure that future supplier competition is considered and part/material standardization is encouraged in design decisions.
Getting the purchasing department involved in design can be tough in many organizations. It requires top management support. To get that support, show how sole source situations have resulted in continual cost increases for previously designed products.
The next edition of PurchTips will introduce the third method of influencing a negotiation early.
Do You Want a More Rewarding Procurement Career?
Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.
Earning your SPSM® Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM® Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!
Need Better Performance From Your Procurement Team?
Are you a procurement leader whose team isn't achieving the results you know are possible? Maybe it's not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.
You need a performance improvement plan that's easy to implement and quick to produce results. The NLPA can help.
Download our whitepaper "The Procurement Leader's Guide To A More Successful Team." You'll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.
Are You Getting The Most Out of Your NLPA Membership?
Members of the NLPA get more than just articles like this by email. As a member, you also get access to:
- The Procurement Training & Certification Starter Kit
- The latest Purchasing & Supply Management Salaries Report
- Leading-Edge Supply Management™ magazine
- Members-only webinars 10x per year
- And more!
If you haven't been taking advantage of these benefits, why not log in and start now?
Copyright 2009. This article is the property of Next Level Purchasing and may not be copied or republished in any form without the express written consent of Next Level Purchasing.
Click here to request republishing permission.
By Charles Dominick, SPSM, SPSM2, SPSM3
Other Editions of PurchTips:
|« 172 Procurement ROI & Other Executive Terms||174 How To Influence A Negotiation Early, Part II »|