Mark Trowbridge, CPSM, C.P.M., MCIPS
May/June 2012, eSide Supply Management Vol. 5, No. 3
Different techniques work best for different modes of negotiation — in person, by phone and via email. Familiarize yourself with them, and you'll be ahead of the game.
Today's procurement professionals often find themselves conducting negotiations in a variety of mediums. Some complex negotiations take place in the same room as the supplier's representation, in teams or as individuals. Others happen remotely, via telephone or email.
Each mode of negotiating has unique variables which procurement practitioners must consider; otherwise, they may hand over an advantage to a skilled opponent.
Negotiations are generally most productive when conducted in person, either as a team or solo. In this mode, participants have the advantage of both verbal and nonverbal indicators from the other party. And, they don't suffer from the technical limitations (which I'll discuss later) inherent in telephone or email communications.
Several factors make in-person negotiations most beneficial. For team negotiations, these include:
Group synergy — The benefit of team negotiations is based on the well-known principle that the whole is greater than the sum of its parts. In other words, a group usually makes better decisions than can the individuals who comprise the group, working alone.
Strength in numbers — My colleagues and I often train corporate groups and conference audiences around the world in negotiation practices. As the participants in our company's on-site negotiation role-playing workshops learn quickly, a team nearly always has an advantage over a single opponent. Different members of a negotiation team can play key roles that make their approach highly effective.
In-person team negotiations are the optimal format for multi-element, high-value and sole-/single-source negotiations. These negotiations are more effective when conducted face-to-face by a group of people.
Team negotiations are particularly important when decisions must be made during the actual negotiation process. A team composed of empowered stakeholders can use quick caucus or breakout discussions to make decisions which can immediately be reintroduced into the negotiation dynamic with the other party.
In-person individual negotiations — Face-to-face, individual negotiation environments provide greater benefits than arms-length telephone or email negotiations. Many of a typical procurement group's negotiations are one-on-one — especially for standard procurement transactions; it's impractical to pull our internal customers out of their business operations for standard negotiations.
Having a skilled procurement professional represent stakeholders in standard transactions optimizes the staff's time and resources. However, consider the following factors before deciding that standalone negotiations are the best mode for interacting with an important supplier:
Many of today's business-to-business negotiations occur over the telephone. It's important for procurement professionals to remember that things happen more quickly on the phone than in person. Small talk is minimized, and participants are more willing to take extreme positions; people are less inclined to take extreme positions in person. So, be prepared.
Other important factors regarding phone negotiations include:
Additionally, heed these key pieces of advice before conducting a negotiation by phone.
Don't get caught by surprise. An unplanned, unscheduled phone call from a supplier means you may not be prepared to negotiate. Instead, ask if a later time would be acceptable — one that lets you properly prepare.
On the other hand, a surprise phone call by you can be advantageous. Usually, the person who initiates the call is at a distinct advantage. He or she has had time to prepare, isn't taken off guard, can prepare a checklist and can organize support data and materials. You can also use the surprise phone call to set the agenda, thus controlling the issues being discussed.
Today, email is frequently used to negotiate pricing and key points. Complicating this is the increased use of texting; in these scenarios, communications are often significantly truncated.
A client once told me, "If email had been around before the telephone was invented, someone would probably have said, 'Hey, forget email; with this new 'telephone' invention, I can actually talk to people!" And it's true: Whenever we use email to negotiate, we're really holding the relationship at arm's length.
If you do negotiate by email, remember:
Another point to consider is that you may, technically, put a legally binding contract in place by agreeing to something the other party offers in an email. In a court of law, a contract can be formed by a written offer and acceptance of that offer. Certain bodies of law (including the most recent changes to Article 2 of the Uniform Commercial Code) now explicitly regard electronic correspondence as being "in writing."
It's a much better idea to handle contentious subjects and/or complex elements in person than by email or text. If an email exchange isn't progressing as you'd like it to, quickly pick up the phone and speak directly with the other party. Or, better yet, schedule a time to meet in person.
Last but not least, always be aware that there's no way to ensure email communications are kept confidential. At any time, the other party can forward or blind-copy your communications without your knowledge.
Whenever you're developing a strategy for an upcoming negotiation, a key element in your success — or failure — will be selecting the ideal communication "mode" for your objectives. Then, once the mode is selected, you'll need to employ the techniques covered in this article to ensure the best possible interaction.
Mark Trowbridge, CPSM, C.P.M., MCIPS is a principal with Strategic Procurement Solutions LLC (www.StrategicProcurementSolutions.com), where he directs consulting and training operations. The firm has worked with clients like Apple, LG Electronics, Delphi, WSCA, Kraft Foods, Nationwide and BP. Trowbridge regularly trains supply chain groups throughout North America, Europe, Asia, Malaysia and the Middle East. To contact this author, please send an email to firstname.lastname@example.org.
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