The following article was prepared by Mike Taylor, C.P.M., for distribution to ISM affiliate newsletters
Yesterday, several of us were discussing the subject of negotiations and an interesting point was made; How do you negotiate with a friend? With the long term supplier relationships, partnering and cooperation being stressed, many suppliers are becoming more like a friend or business associate than and adversary.
However, to do our job (and they theirs) some negotiation is necessary and as a result you are required to fill roles which may be somewhat competitive and perhaps adversarial. How then do you sit down and negotiate with someone who you might consider a friend?
Don't think it ever happens? Consider the "negotiation" we often go through at home; "Which family will we visit for Thanksgiving dinner?"
First and foremost, I think that an honest relationship is necessary. The long term relationship cannot be built with pretense, false impressions or manipulation. Be up-front in saying to your suppliers; "Even though I am friendly, my loyalties are to my company and I will not consider acting in any less than a professional manner." If the supplier thinks that you are just waiting for the chance to gouge him (or he you) the relationship and the negotiations will not be easy nor very successful.
When approaching the negotiation with long term suppliers, be sure that both sides realize that the object is to reach the optimum solution not to see how much sweat you can take out of the table. Agreement, resolution and decision are the bottom line, not a protracted never ending argument. It also helps if both people keep in mind that the object of being in business is to "DO business" not to NOT do business (mutually profitable we hope).
The gamesmanship, strategy and tactics all have their place in the negotiation. Certainly I don't feel a sense of accomplishment unless I obtain the optimum decision, and I certainly don't expect the supplier will graciously tell me when I have left a bundle on the table. It may take all of the skill of both parties to finally conclude the negotiation at a position they can both feel comfortable with.
Of course there are situations where a no-holds barred, knock-down get the best deal you can negotiation is required. But these types of negotiations usually occur at the end of a relationship, (who gets to keep the TV in a divorce, what will the consequential damages amount to, etc).
Hope this helps!
Read more articles about negotiation and creative contract solutions in the MLTWeb Purchasing Toolbox at http://www.mltweb.com/prof/tools.htm and in the BuyTrain news article archive at http://www.mltweb.com/tools/buytrain/index.htm
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