Purchasing Negotiation Training

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In a Time Crunch? Use This Negotiation Technique!

Save time purchasing negotiation trainingIf there’s one thing that hasn’t changed in 20 years of my training purchasing professionals all over the world, it’s that they are completely swamped. There just isn’t enough time in the day.

Even when you take a vacation, the work doesn’t go anywhere. It waits for you to come back, and then you’re busier than ever.

In particular, the supplier negotiation process takes time, and there are too many suppliers in the hopper to get to them all the way you would like.

Things fall off the plate, deals get under-negotiated, money gets left on the table, deals get negotiated late, things that should go out to bid don’t, and so on.

The purchasing professionals who get to everything are usually corporate martyrs – making their jobs their life, much to the dismay of their friends and family.

Neither situation is good.

What exacerbates the negotiation timelines is that both sides start with opening positions that they plan to move from, which means time spent going back and forth. Additionally, negotiations rarely start and end in one meeting. Multiple sessions are often required. Who has time for all this?

On top of that, negotiations aren’t all we do, right? Staff meetings, customer excursions, supplier excursions, supplier diversity, green initiatives, internal audits, systems implementations, and keeping up with a million metrics not related to negotiations. Something has to give.

Enter one of my favorite strategies to deal with time crunches and slash negotiation cycle time.

The Best and Final Offer (BAFO) Strategy in negotiations is a life saver. It’s not a new strategy, but it’s always been taught as an influencing technique. Lost in the mix is that it is a huge time saving strategy, and that is actually the biggest value this strategy delivers.

It’s a shame that the real value of this negotiation tactic has been completely overlooked. It’s not about improved results, it’s about improved time to results. I haven’t seen this angle covered anywhere.

The key is to *not* actually convey to the supplier that you are using this approach because of time urgencies. Then you are exposing yourself to being pushed against the wall.

Chinese suppliers are known for doing this. They will often announce a contract signing date in advance, and on a 3 day trip to negotiate, they will spend the first two days taking you on fancy tours. Reality hits in day 3 , and with no time left to spare, you are forced to agree to things under duress, and not likely in your favor.

To avoid this scenario but still reap the benefits, the way you pitch this to the supplier is something along these lines:

“I’d like to convey how I’d like our negotiations to proceed. I want for us to cut straight to the chase. I am assessing multiple suppliers, and I need to have a mechanism to help me best assess where everyone stands. If suppliers aren’t putting their most aggressive proposal up front, then it creates extra work for all parties involved to get to the bottom line, and in the end, I may end up picking the supplier with the most aggressive opening position, but not the most aggressive bottom line position, which I think you will agree is a problem.”

“Given that, what I’d like you to do is to come back to me with your Best and Final Offer. I’m asking the same of the other suppliers. My intent is to make a decision from what I get back with no further discussions, so please be sure to come back with your best foot forward; you might risk the business otherwise. I’m asking suppliers to get me their proposals by ________. Can you support that date?”

Just like that, you’ve slashed negotiation cycle time!

Remember, you are the one with the money. You don’t need to solicit opinion on negotiation processes. You also don’t need to explain why you want to take a particular tact. You also don’t need to ask if suppliers will comply with your desired approach. You can just tell them.

Some purchasing professionals aren’t comfortable with making mandates to suppliers like this. This is a flawed perspective. This is not mandating, this is leadership.

And suppliers will comply. Remember, their job is to support your success, not to just sell you goods and services. If they don’t have this attitude, then somewhere along the line, you didn’t set expectations properly.

Like everything else, this is not a one size fits all approach. This should be one of many items in your bag of tricks, and you have to know what to use and when, without being predictable.

I’m doing purchasing and negotiation training all over the world during the rest of this year – As of now, I’ll be hitting 3 different continents at a minimum (Africa, Asia, and South America). Why not put your company on my roadmap?

The #1 impediment is the belief that it’s not a good time for training right now. It’s never a good time for training. You will have to force the issue or it never gets done.

Send me a note and let’s talk about how to catapult your capabilities and career as well as your departmental results!

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