As a buyer, you need to interact with suppliers for various deals. The success or failure of the deal depends on how effectively you are able to negotiate with your suppliers. To gain maximum advantage from the suppliers, you need to keep in mind certain principles of
Negotiation is a process in which you and your supplier with conflicting requirements reach an agreement of mutual interest. It is thus all about creating a movement between each other. The objective of the negotiation process is to ensure the supply of five rights: right product or service at the right price, right time, right location and right quantity. You will have to balance these rights i.e. faster product delivery may result in a higher price. When things don’t go according to plan Sometimes the procurement negotiation simply does not run according to plan. Provided below is some information to assist when timings do not go according to plan.
1. Breaking deadlock
A deadlock exists when negotiations reach an impasse or stalemate. Both sides appear to have exhausted all possible concessions which might get the negotiation moving again. Deadlocks can be recognised because there is no progress, frustration levels rise, emotions become more heated and there is a sense of going over old ground and over. Deadlocks can be broken in two main ways:
Changing something- making the situation different
Explaining something- making the situation seem different
Break through can be encouraged by pursuing some of the following options.
- Lead negotiators for both sides meet informally in a neutral environment
- Change the negotiation team.
- Form sub-groups to thrash out issues from various areas of the negotiation such a technical, financial, product testing etc.
- Redefine the problem and then both parties work together to brainstorm possible solutions.
- Bring an outside ‗expert‘ to give a different perspective on the problem.
- Repeat the agency‘s position and add new support or a new angle.
- Change the subject to more easily resolved issues and then return to the deadlock issue.
- Suggest a recess for both parties to consider more fully the other party‘s position.
- Offer a minor (pre-planned) concession as a gesture.
2. Deciding to walk away
When one party walks away from the negotiation, it has the potential to spell the end of the negotiation. It is a sensitive situation that raises questions about how to get negotiations moving again. If it is the supplier who is walking away, it may be worth making the effort to persuade them back to the negotiation.
3. When the other party is unreasonable
A very natural reaction when confronted with a difficult situation or an unreasonable person is to act on emotion without thinking of the consequences. This can cause a loss of focus on the negotiating objective or goal. Responding calmly to provocation allows time for the parties to distance themselves from emotional responses and to act in more constructive ways.
4. Focus on goals
The goal of a negotiation should not be to force the other party to give in to your demands, but rather to satisfy your interests and as many of the other party‘s interest as possible. When confronted by a difficult situation or unreasonable person, it is useful to remind yourself of your negotiating interests. Then resume the negotiation, calmly pursuing your interests.
5. Try to see things from their point of view
Listen to what the supplier is saying, acknowledge their point of view and if possible, agree with them. Acknowledgement does not mean agreement, but rather that their point of view is accepted as one of many potentially valid points of view on the matter. By acknowledging the point the emotional content may be defused.
6. Make it easy for them to say “yes”
It makes no sense to force the other party into an agreement if it is expected to be a lasting one. Instead, it is better to make it easy for the other party to reach their own conclusion thatthe agreement is desirable.
Conflicts results to:
1. Communication breakdown in theory.
2. Unnecessary competition.
3. Can be used to identify flaws in the system.
4. Affects teamwork.
5. Lack of trust among employees
6. Reduced productivity