Prime Advantage Blog

Creating Abundance in Your Negotiations

Dan Grant on Sep 17, 2015 7:00:00 AM

091715_ImageWe have relationships everywhere throughout our lives. Some we want to keep exactly how they are and some we'd like to change. In the 2015 Purchasing and Manufacturing Survey conducted among our Members, we discovered that procurement relationship management is a critical skill that manufacturers are seeking. This is followed closely by negotiation skills, which is a key component in managing your relationships.

Creating beneficial relationships helps businesses prosper, both from an efficiency standpoint and by producing a long-term partnership that adds value. Building toward these relationships, rather than a best-price, one-time interaction, has changed the way people negotiate in trying to find a longer term win-win scenario.

Traditional negotiation is a lot like buying a used car. You find something you like, you see the price and you attempt to get the most value. This interaction usually leaves one party unhappy about the final outcome. Either the seller didn't get the price he or she desired or the buyer paid more than he or she wanted to for the car. It is the true limited negotiation that most people dread and almost never results in loyal customers who keep coming back for more. This scenario plays out terribly in a business environment when you want an ongoing relationship with a supplier or a customer.

If you are an aggressive negotiator you can get a vendor to the lowest price possible, but they may not see your business as ongoing and could sacrifice other aspects like service, delivery and quality. They may also decide that the business isn't worth it and stop supplying the product at the price you demand. If you put more energy into the negotiation and look at the whole value picture you can find a way to strengthen both parties.

A bigger picture negotiation mentality allows the potential to satisfy both parties, which could start the path to a long-term partnership. To be successful, you have to enter the arena without your armor, be willing to share information, and be honest about limitations and concerns. Providing the obstacles and boundaries to the other party gives you a chance to find a cooperative end point that can be beneficial for both parties.

It does take more work to prepare for this type of negotiation, and one could argue, a more diverse set of skills. You need to think everything through from your perspective as well as from the perspective of your partner. You have to come prepared to lay out your case and present your perspective. You also have to be able to articulate what you would like to see as the outcome to solve the problem at hand.

Getting through the process of finding a mutually agreeable solution will allow both parties to walk away with a positive feeling and those good spirits will pay-it-forward the next time you sit down to solve a problem. If you typically are not a strong negotiator, working towards a creative settlement will give you the security of not feeling like you have to cave to the other person's demand. You are not trying to score the ultimate win; you are trying to solve the problem together.

This may cause some people to sigh, especially if you fancy yourself a strong negotiator. Several studies have surprisingly proven that introverts are strong negotiators. However, they don't put a high value on personal relationships and don't care to put the energy into building or maintaining them. If this is you and you would rather be left alone, check those feelings at the door. You don't have to be friends, but you can find great gains with little energy that will keep you from having to have the exchange again anytime soon.

Good negotiations are the building blocks for solid relationship management. Nobody needs to take a trust fall with their supplier to successfully work together. Respecting one another and being open to solving problems is all it really takes.

Download the 2015 Purchasing and Manufacturing Survey from Prime Advantage

Topics: Manufacturing, Talent and Leadership

Dan Grant

Posted by Dan Grant

Daniel Grant is the President of Prime Advantage, a Chicago-based Group Purchasing Organization for mid-market manufacturers.

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