Procurement teams can face more of a challenge to achieve favorable negotiation outcomes than many other teams, as they often need to manage conflicting objectives. More often than not, a procurement team will be faced with securing goods of the highest possible quality, at the lowest possible prices – in truth, it’s a bit of an oxymoron.
Therefore, it’s imperative for procurement teams to be armed with the best possible negotiation skills, so they can handle anything that’s thrown at them.
The procurement process is often lengthy and complicated, and can involve a vast number of internal and external stakeholders. All of this makes it challenging for procurement teams to manage the procurement negotiation process.
Ultimately, procurement negotiators are charged with the responsibility to secure the best value deals from vendors, all while managing internal stakeholder relationships. Often they’ll be under pressure to save on costs, while simultaneously securing the highest quality goods and services.
Procurement negotiation is exactly as it says – the process by which procurement negotiators communicate with vendors to agree favorable terms within a supply contract. The process is adopted both when negotiating a contract with a new supplier or when negotiating new terms with an existing vendor, as part of the contract renewal process.
However, the procurement process starts long before the negotiator even sits down at the negotiating table (physical or virtual). The organization’s requirements and specifications first need to be drawn up. It may then need to go to tender, carefully managing the relationship with each potential vendor so that everyone is clear on the requirements and has a fair opportunity to bid. The procurement team may need to support internal stakeholders to make their choice of suitable contractor to comply with policies. Only then, may the hard work of negotiating the actual terms for the final contract begin.
Throughout the procurement process, the procurement team will be managing various internal departments such as IT, Finance or Compliance, as well as multiple vendors. Despite the complex chain of stakeholders, the procurement team needs to be constantly working towards agreeing the fairest price and payment terms, delivery methods, timeframes and quality standards.
Procurement negotiation skills can sometimes be overlooked, with many people believing it’s “just about getting a good price”. Nothing could be further from the truth.
As a result, however, many people don’t ever receive formal procurement negotiation training, and instead learn through on the job experience. Although there’s no doubt that on the job experience is valuable, procurement negotiation training can arm you with the tools, tactics and strategies you need to secure your outcomes quickly, efficiently and whilst building effective relationships with your stakeholders.
Procurement negotiation isn’t haggling. It’s not purely about securing a low price for the goods and services that you need. Through procurement negotiation training, you can learn how to identify your true goals in the procurement process, whether it's to have exclusive early access to innovative products, better customer support, or guaranteed delivery timeframes, and then develop the methodologies to secure those goals, every time.
Good communication, persuasion and influencing skills are all part and parcel of the negotiation process. Procurement negotiation training ensures that you’re prepared, long before you enter the negotiation discussion.
Procurement negotiation skills are vital to anyone who works in the purchasing and procurement space. In this role, you may be handling vast sums of money on behalf of your organization, and you’ll need to demonstrate that you can get the job done while adding value.
Purchasing negotiation skills support you in consistently closing complex deals, in less time. All-too-often, people walk into the negotiation room with only the aim of getting a cheap price on the goods or services that they need. Sometimes ill-prepared, they haven’t considered what’s in it for the supplier, which puts them at a severe disadvantage.
By understanding both your own and the supplier’s objectives upfront, you’ll be able to prepare for the potential scenarios that may arise during the negotiation. You’ll have a much better idea of what is your bottom line and the things that you may be more flexible over – for example, can you be more relaxed on price, but you must have everything delivered within a month?
As well as having a clear understanding of both party’s desired outcomes, you’ll be better equipped to recognize the various negotiation styles. It’s useful information to help you communicate better with your supplier.
Finally, procurement negotiation skills remind you that your relationship with the supplier doesn’t end when you’ve both signed the contract. Trust is a core part of the negotiation process, and avoiding mentioning facts that may not be palatable to the vendor can negatively impact the trust between you. It’s worth remembering that the supplier will be around beyond the signing of the contract, firstly to deliver the agreed terms and provide any customer support obligations, and secondly, when it’s time for contract renewal.
Like other forms of negotiation, such as within HR for salary discussions or when Sales teams market products to clients, procurement negotiation needs to start with the essentials.
Scotwork’s Negotiation Foundation Workshop provides you with a clear introduction to the stages of the general negotiation process. Ideal for anyone involved in the negotiation process, regardless of age, experience or industry, the Negotiation Foundation Workshop supports you with practical tools to define objectives and prepare for a negotiation – vital skills in purchasing negotiation.
To extend your skills further, we also offer an Advancing Negotiation Skills training programme. This intensive 2.5 day course is tailored to the needs of individuals and their businesses, and equips them with the skills they need to succeed in complex negotiations that may be looking to secure strategically important objectives for the organization, span international operations, or include team negotiations – all challenges that a procurement team may face.
To really master procurement negotiation skills, however, you need to look beyond the classroom. Many people learn better through experience than classroom training, so when you’re seeking out procurement negotiation courses, it’s worth checking that the training includes practical examples and role play exercises. There’s no better way to embed your learning than through practice in a safe environment.
Through our training programs and customizable solutions, we aim to inspire people and businesses and give them the confidence and control to become great negotiators. Data-driven insights and resources that you can return to again and again after you’ve completed a course mean that you’ll embark on a lifelong journey to develop your procurement negotiation skills. Get in touch today to boost your ROI in the supply chain.