The art and science of negotiations
By Paul Teague, Editor in Chief -- Purchasing, 6/18/2009 2:00:00 AM
For all the different industries they work in and all the different categories they source, one thing that all purchasing professionals have in common is that they spend time in negotiations. In fact, negotiating skills have traditionally been among the most critical skills that purchasing leaders have exhibited.
But like so many things, negotiations skills have evolved. If negotiations ever required an ability to shout and bang on a table loudly, that time is past. They now involve a search for common ground. The best negotiators possess those two other critical skills important to purchasing professionals: an ability to collect pertinent data on market issues like pricing, supply, financial performance and competition; and the ability to analyze the data and separate it into usable chunks that help make the case.
Dun and Bradstreet's Jim Lawton says the richer the profile buyers can develop of their suppliers and their suppliers' markets the better off they are in negotiations. "You have to know if your suppliers are within industry benchmarks, and if they're not you can tell them to build up their expertise or make their prices more competitive," he says.
Our cover story in this issue reports the preparation steps some buyers take prior to negotiations. And, it points out the preparation steps and some of the tactics those on the other side of the table are likely to employ.
Here are some other tips from the Sourcing Interests Group's resource center, http://www.sourcinginterests.org:
-
Actively listen, and don't interrupt. You may not be as far apart as you think.
-
Don't decide what the other person's opinion is. Ask them.
-
Be open minded and don't be blind-sided by your own assumptions.
-
Ask probing questions, but know when to stop probing.
-
Set time limits for the discussion and keep your emotions in check.
-
Describe consequences for various actions, but don't make threats.
For examples of how buyers have successfully negotiated solutions that work for all parties, see www.purchasing.com/negotiations, our collection of Black Belt Negotiators files.
How to know when the recovery is here
Most independent analysts agree that there are positive signs pointing to the beginnings of a slight recovery in the economy. Consumer confidence is up. Durable-goods orders are up. Indices such as Purchasing's Business Conditions Index and ISM's PMI are up, even if not in growth territory. So what other things should buyers look for to see where the economy is headed?
We asked members of Purchasing's Commodities Council. Here is what they said:
John Anton (steel analyst) and John Mothersole (base metals analyst), of IHS Global Insight: Watch inventories. If they get to abnormally low levels, there could be shortages. Also, watch activity in China. Its stimulus package is gaining traction.
Timna Tanners (steel and construction materials analyst), UBS Investments: Watch for improvements in construction starts and watch steel-production rates. The steel industry is at a 44% utilization rate now. If it gets to 60%, prices could go down further.
Ron Bishop (connectors analyst) of the Bishop Report: Watch R&D spending.
Brian Matas (semiconductors analyst), IC Insights: Watch for any uptick in the price of memory. Prices could jump quickly.
Tom Stundza (general commodities), Purchasing: With resins, watch energy prices.
You can hear their full comments in an on-demand webcast, recorded for members of the purchasingbizconnect online community. Just go to www.purchasingbizconnect.com and create a profile, and check that you want to receive email updates from the community. And, see other positive indicators at www.purchasing.com/positive.
Black Belt Negotiators
07/12/2009Leaders Wanted
06/17/2009Black Belt Negotiators
03/09/2008
Now Playing: 
