Most U.S. procurement organizations are skilled and experienced in negotiating with suppliers and managing the resulting relationships—as long as the suppliers are in the U.S. Negotiating with suppliers in various global regions, however, can bring unexpected challenges that can sabotage negotiations and relationships—even those that are in the hands of the most domestically skilled and knowledgeable procurement professionals.

Understanding this, Texas Instruments has adopted a comprehensive, yet easy-to-implement, program designed to train procurement professionals and others in the organization, on a worldwide basis, to understand, respect, and appropriately respond to cultural differences in the countries where they are doing business.

The effort began in 2003. The rationale: The mission of TI's Worldwide Procurement and Logistics organization is to provide competitive advantage to TI and its customers in procurement and logistics through what it calls CETRAQ (cost, environmentally responsible procurement, technology, responsiveness, assurance of supply, and quality).

In helping to facilitate improvements in cost, TI initiated a strategy in 2003 to find additional suppliers in low-cost countries and regions, including Eastern Europe and Asia. The procurement organization soon realized that, while it was experienced in negotiating and working with suppliers in general, it needed to better understand cultural differences, so that it could fine-tune these negotiation and relational skills with suppliers in these other countries.

In response, TI began using program materials provided by Cultural Detective, a Lewood, Kans.-based firm. The programs are delivered by in-house personnel to TI teams around the world, and are customized by country, industry, company, and even product. The training showcases existing employee expertise (eg: utilizing the knowledge of TI employees who are from the countries being covered during the training). The goals are to prevent problems and surprises that can occur during new supplier relationships, improve the procurement process, and promote dialogue and continued learning.

Takeaways for participants include behavioral objectives, such as:

• Demonstrate the ability to question assumptions and expectations, both my own and those of the potential supplier, as culturally determined.
• Demonstrate the ability to explain my expectations so that potential suppliers understand and respect them.
• Demonstrate the ability to observe, ask, and learn how to understand supplier assumptions that could make a difference in the business relationship.
• Demonstrate the ability to bridge the differences, using cultural diversity as assets.

One course, delivered in 2005, was the Cultural Detective China Course for procurement team members. "We offered this course because we found there was a marked difference in how suppliers responded in China, compared to what we experienced in other regions," explains Maggie Fischer, business process development, worldwide procurement and logistics. Negotiations did not move at the same pace. TI found that there was a difference between its desire to quickly get to the bottom line and the supplier's need to build up a relationship.

Fischer conducted this class in-house, with her co-facilitator and subject matter expert being a member of the TI organization who was born and raised in China and was able to share specific examples of different value streams in China. This class was followed up with another that targeted negotiations specifically.

After the classes, several participants began to understand why previous visits with Chinese suppliers had not gone as well as expected and said subsequent meetings were more successful. In addition, by understanding their own values better, as well as those of the Chinese, course participants were able to break down roadblocks and build stronger supplier relationships.

"Participants found that, by understanding what was important to suppliers and respecting their values, it has enhanced their ability to come to an agreement," she explains. "Our members better understand how to be respectful of the values of Chinese suppliers."

Fischer said the course also emphasizes that buyers not get frustrated when they experience the additional time commitment to build the relationships. They know this, and they build this into their plans. TI has also been increasing its spend in China by double each year for the last two years, which is also a positive result.

Since that time, Fischer has presented training to TI teammates in the Philippines and Malaysia on understanding the U.S. market and the desire for quick response in the U.S. She will also be presenting "How to Understand the Philippines and Malaysia" to teams in the U.S.

"These training initiatives aren't related specifically to negotiations," she explains. "They are focused on helping these worldwide teams work better with each other."