Negotiation Basics

If you’re a proactive organization, chances are that you’ve been trying to re-source your way out of this downturn by taking advantage of recent cost reductions in commodity categories across the board. This means that, if you haven’t started already, you’ll soon be entering into final-round face-to-face negotiations with your (new) preferred suppliers. This means that, if you haven’t already, you should be brushing up on your negotiation skills, starting with the basics.

To this end, Industry Week published a useful article last fall on the Powers of Persuasion that noted that while all good negotiators have the power to persuade in common, no two negotiations are the same and no single strategy will always be effective. Furthermore, some of the most successful negotiations are the result of knowledge and information and that comes from doing research, asking questions and listening. However, there are some basic skills that will always be useful to you, and that you should have mastered before starting any negotiation, including:

  • The Ability to Define Success
    What is a successful outcome to you, and where do each party’s interests lie? This will allow you to find a common denominator that will lead to an agreement.
  • The Ability to Identify Priorities
    What’s a real “need”, and what’s a “want” that can be sacrificed for the greater good? Is 10 days turn-around time essential when 15 days can give you a 10% reduction in cost?
  • An Understanding of Power
    Who has the power? You? The Supplier? And to what extent can the negotiation be influenced?
  • The Ability to Gain Leverage
    You need to insure that you don’t disclose unnecessary information and give the supplier leverage. You also need to do your research and understand your supplier’s situation.
  • The Ability to Deal with Deadlock
    Good negotiators know that a deadlock doesn’t mean a negotiation is dead. They’re prepared to walk away and then come back later with different information and a different perspective, and to even move on to another potential supplier if required.

In addition, good negotiators are aware of the common negotiation mistakes, covered in Next Level Purchasing’s Negotiation No-No’s mini-course, and they don’t make them.