The-Negotiation-Society-Magazine-The-Change-Issue

PRICE
36%
28
QUALITY/
UNIQUE/
SERVICE
14%
TIME TO
DELIVERY
10%
Weight given when choosing suppliers
THE RELATIONSHIP
7%
RISK MANAGEMENT
7%
SUPPLIER REPUTATION
6%
INNOVATION
6%
compared to 0% in China and 38% in Europe.
One reason for this is that sustainability
can still come with additional costs, and few
are willing to pay much more for it. Only one
in five will pay more than 5% for ensuring supplier
sustainable practices (22%). 30% say they will pay
nothing at all. But there is a flaw in this approach
of thinking that procuring sustainable can only
be traded against costs: in a more collaborative
approach a procurement team could trade low
cost variables to obtain more commitment to
sustainability from their suppliers – think
larger volume, longer contract durations,
or public endorsements.
The role of negotiation
While procurement leaders across the world
are stating that criteria such as sustainability,
quality, innovation, and resilience are becoming
more important, there is still a long way to go.
One way to speed this transition is to change
the way procurement departments approach
negotiations, where it shifts from being the last
activity in a sourcing process to incorporating
it as a core element throughout
the procurement process.
At The Gap Partnership,
we segment strategic negotiation
in the pre, during and post
negotiation phases as depicted
in diagram 2. Let’s explore how
each of these steps can support
procurement functions to make
the shift from a focus purely
on cost, to becoming a more
strategic force that supports
the implementation of the
company vision.
The pre-negotiation phase
Too often procurement
departments go to market
with a conformance specification
where the suppliers need to put
SUSTAINABLE PRACTICES 5%
FLEXIBILITY 5%
SCALABILITY 4%
OBJECTIVE SETTING &
STAKEHOLDER ALIGNMENT
PRE-NEGOTIATION NEGOTIATION POST-NEGOTIATION
PRE-CONDITIONING
in a quote based on a detailed
requirement overview. Sure,
there are times where this is
appropriate, but when having
to contribute a competitive
advantage to your company,
procurement professionals
require innovation,
sustainability, and flexibility
from its suppliers in order
to get the best result.
So, what can be done?
It’s essential to engage
early with a wide range of
internal stakeholders. This
enables an understanding of
their different requirements,
facilitating them to think
more widely than just their
immediate need by exploring these requirements
of innovation, sustainability, and flexibility
– and more.
Through this process, clear objectives and
internal alignment needs to be defined
early on in the procurement process.
Once the objectives have been formalized
and the internal stakeholders are aligned, the
market can be preconditioned to what the
expectations are, priming the suppliers to start
thinking more broadly. Then, actively engaging
with suppliers to share information will enable
the identification of opportunities to meet
the objectives set out. All of these activities
are undertaken before the negotiation
has commenced.
“Collaboration with others, trying to create an
end goal and come to a solution that works for all
parties. Problem solving. Development of innovative
solutions.” – Procurement professional,
Consulting, UK
“Meeting people, customers, of different
backgrounds, cultures, scenarios, etc. When you're
faced with entirely new situations you learn a lot.
INFORMATION SHARING
PROPOSING
REPACKAGING
“SHAPING THE TABLE” “AT THE TABLE”
AGREE
IMPLEMENT
REVIEW
IMPLEMENTATION &
MEASUREMENT