Concession Trading in Negotiation - 10 Surefire Winning Techniques
A good negotiator needs not just a repertoire of strategies, tactics and techniques but also the experience to know when and how to deploy them. The concession strategy lies at the heart of every negotiation as it determines how we should manage the way the negotiation plays out, implementing planned and considered actions and interventions to help us achieve our goals. Yet it is the least planned-for and most avoided component of negotiation preparation.
Here are ten winning techniques to help you develop an effective concession strategy.
Supply and Value Chain Network Mapping
We all know that managing your supply chain efficiently will save your company money and time and reduce risk. But where can you start? If you are considering a realignment of your supply chain, or just want to properly evaluate it, then a strategic supply chain map can be beneficial.
Using Day One Analysis to Drive Out Value in Negotiation
Whilst predominantly used in Category Management and Supplier Relationship Management, Day One Analysis can also be a powerful tool in negotiation planning – particularly when sourcing goods and services. It helps us understand our current position and what scope we might have, if any, to negotiate and then enables us to determine what sort of negotiation we should conduct if we are to maximise our outcomes. It is simple to understand and simple to apply… but can make the world of difference.
Avoiding Bribery and Corruption in Your Supply Chain
Dealing with suppliers could potentially put you at risk of bribery and corruption. In much of Northern Europe, North America, Australia and Japan, such practices are rare and regarded as unacceptable (Global Corruption Barometer, 2013 – http://www.transparency.org/gcb2013). They could also be illegal. Elsewhere, it could just be how business is done and is simply more about building good business relationships.
Negotiation planning: How do you work out what the ‘final price’ should be?
“How do I know what I should pay for this?” is a fair question when planning a negotiation and one I frequently hear being asked, especially by those just starting out. There is a common misconception that somewhere out there lies a magic tool or approach used by the professionals to gain this insight. Sadly, there’s not!
The Power of Alternatives: Why you should never leave the office without a BATNA!
Everyone knows the importance of planning in advance of a negotiation to ensure that we are as prepared as possible to get the result that we want. But do you know what is the single most effective way to dilute or remove the other party’s power in a negotiation?
Why we need SRM like never before
Adapting to survive… why the fittest companies demand the evolution of procurement with SRM at its core
Supplier Relationship Management (SRM) is the trending topic of the moment in procurement circles, but what is driving this heightened interest? Jonathan O’Brien considers why we need SRM like never before and how we can make it happen.
Why contract management is much more than the name suggests – 10 tips for success
In theory, contract management should be straightforward, yet it is frequently misunderstood, under-provided for or regarded as a clerical activity. However, there are often vast differences between the legalities of a contract and the practicalities of enforcing it. Planning and implementing good contract management can make all the difference to the value we secure from any given supplier relationship.
Here are ten tips for success.
The great negotiation race - what we really need to do now Brexit is real: 10 Brexit negotiation tips!
It’s hard to find an article that isn’t asserting a view on Brexit right now, but it’s even more difficult to find one that gives real help and guidance on what business leaders, politicians and the rest of us need to get on and do. There is much talk of the need for negotiation, and lots of it! This article gives a snapshot of the difficulties we face and begins to outline 10 tips around what we really need to do to survive and emerge strong in the new world of Europe – and the international marketplace beyond.
10 questions to help understand and prepare for cultural differences when negotiating
In today’s global market, surely we no longer need to consider the old fashioned idea of cultural differences when negotiating? Wrong!
International commerce means the world is fast becoming a smaller place. As a result it is easy to assume that, if organizations are interacting routinely across geographic boundaries and conducting business in one increasingly universal language, there is no longer a need to consider our cultural differences. Cultural differences shape who we are, and failure to understand these differences and adapt our negotiation approach can doom a negotiation to failure or, at least, deliver sub-optimum outcomes.
Measuring the non-financial benefits of strategic sourcing
CPOs and procurement functions typically need to demonstrate their contribution and the success of their interventions within the organization and across the supply base. Measuring and showing the value of the non-financial benefits delivered presents a challenge. This whitepaper is designed to help CPOs better demonstrate how their function adds value to the organization.
The problem with RFPs – are they an essential tool or are we limiting the potential that the supply base can offer?
RFPs (Request for Proposal) and, indeed, RFQs (Request for Quotation) are key tools in a buyer’s tool- kit. These are almost certainly managed through an online platform and have become increasingly routine where there is an opportunity to run a competitive process. But do they really help bring advantage? And are these tools being used effectively throughout the procurement community?
Five Key Steps to a Quality Category Management Implementation
How to ensure Category Management is successfully embedded across an organization
There is no doubt that Category Management can deliver dramatic benefits to an organization. It has proven well its ability to deliver double-digit savings as well as reduce risk and unlock other sources of value and innovation from the supply base.
Unlocking Innovation From Your Supply Base
How to really do it
It’s difficult to read an article on innovation without seeing Apple mentioned somewhere. The common association of Apple with innovation is old news, but few stop to think about how this actually happened and the lessons that can be learned from this.
Ten Years of Red Sheet
What the last 10 years have taught us about negotiation
The Red Sheet® negotiation approach is the tool of choice by many negotiators and companies the world over, whether in sales, purchasing, HR, project management or security services.
What Lurks In Your Supply Chains?
Why and how supply side CSR is something we must take seriously
Pick up an annual report and you are highly likely to read a Corporate Social Responsibility statement setting out the company’s commitment to making the world a better place.
Buying Your New Car
10 tips to negotiate a better deal
When we buy a new car a good salesperson will make us feel valued and important—after all, they will be incentivized to make the sale. It is true that our leverage is small; we are just one buyer, buying one car, from a dealer acting on behalf of one of the global car giants.
Of Course I Love You!
Five ways to spot if the other party is lying
“Did you pack those bags yourself, Sir?”
“Yes”, I replied, locking eye contact with the Customs officer for as long as possible.
Pay To Play
Good Procurement Practice or Unethical Behaviour?
Pay to play is where a company issues an ultimatum to all or a group of its suppliers to provide some sort of immediate benefit, perhaps a percentage cost reduction or even a lump sum of money, in order to remain a supplier for the future. Such initiatives are not new; in fact they have been around for many years, but suddenly they seem to be making the headlines.
Is it OK to Lie in a Negotiation?
Should we lie when negotiating? Lying is frequently regarded as a necessary component of negotiation, as part of the way the game is played. For negotiation we tend to use slightly different language to make it more palatable and we call it ‘bluffing’ or ‘laying out a position’.
What The Last Recession Taught Me About Truly Effective SRM
The UK is emerging from the biggest global downturn since the Great Depression of the 1930s. On the global scale, positive signs of growth in some countries contrast with deepening economic and political worry in others. In response to this continued period of change and unrest, businesses have had to adapt to the new economic environment. One of the key changes that smart organizations have made is to transform the way they manage their suppliers.
Is Win/Win Really Possible or Even Desirable?
“Negotiation is all about getting a win/win” – This is a suggested approach I frequently hear and a claim found in many negotiation textbooks. But is a ‘win/win’ really possible, and if so, is it desirable? The answer is it all depends. It depends upon the circumstances of the negotiation, your relative position and what you want to get out of the negotiation beyond the deal itself.
The Orchestra of SRM
Ask a procurement professional what “SRM” stands for and they will most likely answer “Supplier Relationship Management”. Ask what SRM is, however, and the chances are you will receive different explanations depending upon whom you talk to.
SRM is a much used term, but one that seems to be used to describe a multitude of different supplier interventions, all serving different purposes.
Sales vs Procurement: Who Can Add the Most Shareholder Value?
It’s hard to work in a modern global business without being touched by some sort of corporate edict to add shareholder value. This modern obsession seems to have begun back in 1981 when former CEO of General Electric, Jack Welch, made a speech in New York where he revealed his aim was to be the biggest, or second biggest, market player and return maximum value to stockholders.
Finding that Breakthrough
This is the thing we all need to find in strategic sourcing and Category Management – the dramatic breakthrough which allows us to move the category in a new direction and capture dramatic value for our organization.
What Your Reception Areas Says to Your Supplier
There is a common feature in all businesses. That is the reception area. Just think about your reception area for a moment. It may well have comfortable chairs and a security mechanism of some sort. There may be copies of annual reports and other company literature lying around. And there is almost certainly a book for visitors to sign in. If you go and look at the visitors book, you will find that the vast majority of visitors are suppliers.
Buying a Rolls Royce
Sometimes we are faced with a buying activity that has a completely different set of parameters surrounding it compared to those we face every day.
Over the last 10 or more years, there has been dramatic transformation of purchasing organizations. We have gone from being the order takers to highly valued parts of the organization and who seek to provide influence and change of approach in a wide number of areas. This is a journey with considerable pain attached, particularly at the outset.
Born or Made? The Negotiator
There’s a question which is often floated in discussions about negotiation – are great negotiators born or made?
It is true that some people seem to have more affinity to some parts of negotiation – we all know the natural dealer, happy to deal and trade, to take or make a position, to rattle the cages of the opposition; but that is only one facet of negotiation. A real negotiator has built a whole range of styles and techniques to suite the particular position that they find themselves in, with a range of short and long term approaches aimed at creating a favorable position.
Purchasing – The Function that Buys the Pencils?
That was the question asked of me by a CEO of a large multinational corporation. I was sitting next to him at a dinner event, looking forward to talking about how I was working to develop capability within his procurement team.
Time is the Enemy
I’m running down a corridor to a meeting with a supplier, a negotiation where I’ve had no time to prepare, but I know I’ll be OK, because I’m a born negotiator.
It has happened to all of us: a lack of details; a lack of big picture, but the capability to somehow get through this; pushing decisions out; regrouping; making space and time to do it right.
Negotiate Better by ‘Being in the Moment’
Much of our lives are scattered through with interruption and diversion: e-mails and phone calls continuously vie for our attention; conversations are interrupted by others being diverted by messages; new tasks and interventions from colleagues break up our flow of activity.
The Negotiation Jigsaw
There’s so much to think about when pulling a negotiation together, it’s like a 5000 piece jigsaw puzzle. There’s stakeholders, and culture and power balance to address; there’s team members to rehearse and prepare; there’s supplier conditioning to get right; there’s all the physical room and route to meeting influencing to work on; there’s even all that detail about what we’re negotiating for and how we might work towards a solution. Just like a jigsaw, but there’s no lid to help us visualise what the finished picture should be.
Searching for Power in Negotiation
Negotiations have within them a search for power—the power to walk away with the things you want. Finding ways to change that balance of power is an ancient human activity, encompassing espionage, war, trade delegations and playground fights. With sufficient power, one side can force the counter-party into a position of disadvantage and seek to benefit from that.
Dealing with Volatility
In workshops and education sessions all over the world, we hear worries about volatility being expressed. Political and financial, market and price, depth and volume are all a concern, and normally have a message attached about how helpless we are, tossed around like a cork on the surface of the ocean.
Facing the Supplier, or Facing the Customer?
Procurement has historically been supplier facing, but should that be all procurement should concern itself with, or should procurement also be customer facing? We consider if category management, or strategic sourcing, should change its aim from the category or supplier-focussed approach to a more customer-focussed approach?
The Importance of Gross Margin When Applying Category Management
Category Management is used in many non-retail sectors, but when it is applied in retail sectors, there is one significant factor which stands out as a consideration—the importance of Gross Margin.
Of course, GM is important in all sectors, even in not for profit (it has the particular challenge of aiming for zero profit). However, it becomes rapidly clear in sectors where the link from buying decision to GM impact is more immediate; in those sectors where the value added by the business is focussed in areas such as availability and distribution, rather than value added by a physical transformation. GM impact is a lot clearer when buying an item to be resold, compared to buying a piece of capital equipment.
And Here’s a Budget Cut We Prepared Earlier!
If ‘annual budget cuts’ are something that happens every year in your organization, this article is worth reading as we consider how this type of approach reflects on commercial organizations and what tactics would be needed to cope with this?
Ten Things to Do to Improve Procurement
Here are ten things you can do to improve procurement in your organization and make a difference to the contribution you are making to your business.
Risk in Procurement and What We Can Do
Everyone understands what “risk” is as a general word, but how often do we think about it beyond the broad term? What happens if we take a risk? Is that risk quantifiable?
There is a great book out on risk and our perception of it, written in an entirely engaging style by an Oxford professor who understands the underlying principles at a fundamental level (The Norm Chronicles, etc). When reading the text, two particular insights stood out for the work we do in Category Management. One is our understanding of how likely a particular risk is. The second is how bad the consequences are, and in particular, for whom? This last point illuminated, in a single statement, the core issue which exists for the development of risk assessment in Category Management. Who experiences the risk?
The Softer Side of Negotiation
My new book Negotiation for Purchasing Professionals was recently reviewed by Peter Smith on the Spend Matters UK website. I read with great interest some of the commentary following the review and I thought it might be helpful to enter the debate and share some thoughts. Peter asked me to do a guest blog spot on his site and I’m sharing the content of that with you here as well.
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