Leading edgesupplymanagemented1 april2011

Volume 1, Issue 1

Welcome! From Next Level Purchasing Association Founder Charles Dominick, SPSM, SPSM2

Welcome to Leading-Edge Supply Management! I’m excited to share with you the inaugural

issue of the official online magazine of the Next Level Purchasing Association.

In this issue of Leading-Edge Supply Management we’ll focus on the topic of negotiation, a very

important skill for today’s purchasing professional. You can expect upcoming editions of the

magazine to include educational articles and tips; purchasing and supply chain vacancies;

commodity indices; news on upcoming member events; and more!

Due to our green initiative, Leading-Edge Supply Management will only be available in an

electronic format, but I encourage you to download a copy and reference the articles as needed.

After all, this is a great educational resource that contains tips you can use to help make your

job easier!

So, let’s get started!

To your career,

Charles Dominick, SPSM, SPSM2

Using Collaboration In Negotiation: 3 Steps How Can You Collaborate When You Negotiate? Win-win negotiation uses collaboration as opposed to confrontation as the basis for persuasion. In some negotiations where you and your supplier have opposite positions on an issue, you may think that there is no opportunity for collaboration. But there usually is if you use these three simple steps: 1. Have both parties share what their interests are. In our online class "Powerful Negotiation For Successful Buying,"

we teach that an interest is a need that you desire to have satisfied and a position is one scenario that could satisfy an interest. For example, a supplier may have an interest in making a 20% profit margin on its sales to your organization and its position will be that it wants to charge $5.00 per unit. Your interest may be that you achieve a 10% cost savings and your position is that the supplier should reduce the price to $4.50. If you've reached an impasse, it can be more effective to discuss interests rather than argue over positions.

2. Brainstorm to identify several possible solutions. After interests have been discussed, ask the supplier to work

with you to come up with multiple scenarios that would enable both parties to achieve their interests. The goal is not to come up with the perfect solution just yet, but to gather several different ideas that can be later pared down. Don't feel the pressure to do all the talking. Sometimes, a supplier can come up with a good idea and they will be more likely to buy into it - or at least reluctantly honor it - if they come up with it as opposed to you imposing it on them. For example, the supplier may say "I could get the price down to $4.50 if you opted for a single material packaging instead of a two-material packaging. I'd still make 20% because my costs would be lower and you'd achieve your savings."

3. Jointly select the best solution. After brainstorming, you may have to whittle down some of the suggestions that just

don't work. But, hopefully, you've come up with several potential solutions that accommodate both parties' interests. Together, you and the supplier should select one that makes the deal feel like a "win" for both parties.

“Using Collaboration in Negotiation: 3 Steps” by Charles Dominick, SPSM, SPSM2 was originally published in Edition 219 of PurchTips.

Leading-Edge Supply Management™ is published monthly by Next Level Purchasing Association as a free benefit to association members. If you've received a

copy of this magazine from someone rather than downloading it directly from the Next Level Purchasing Association, you can sign up for a free association

membership to have access to this and other free benefits. Just visit http://www.NextLevelPurchasing.com/nlpamag and submit your name and email

address to join the Next Level Purchasing Association. Reproduction of this magazine in whole or in part without written permission by Next Level Purchasing is

strictly prohibited. All rights reserved. ©2011 Next Level Purchasing, Inc.

April 2011 Volume 1, Issue 1

If you are like most purchasers, you are under pressure

to generate lots of cost savings. Unfortunately, the

pressure to boost the bottom line compels some less

skilled purchasers to cross the ethical line. They use

questionable techniques.

There are five common ethics-related profiles of

purchasing negotiators. Which describes you?

The Liar - The Liar will tell any number of lies to a

supplier to persuade that supplier to improve its

terms. An example of a lie would be telling a

supplier that another supplier has a price that is

10% lower when such a statement isn't true.

UNETHICAL!

The Exaggerator - The Exaggerator might not tell an

outright lie, but her words and behavior may be

designed to trick a supplier into thinking that a

larger quantity or longer term contract is to be

expected. The Exaggerator's intent is to get a better

price and not follow through with implied quantity

or term commitments. UNETHICAL!

The Open Book - The Open Book will give a supplier

information about competitors' proposals in order

to persuade a supplier to offer a better deal. Of

course, the competing suppliers expect their

proposals to be kept confidential. UNETHICAL!

The Cheap Date - Despite the fact that he is

engaged in a negotiation situation with the

supplier, The Cheap Date will accept meals,

entertainment, and/or

gifts at the supplier's

expense. Even if such

acceptance does not

actually influence The

Cheap Date's decision-

making, it creates the

perception within The

C h e a p D a t e ' s

organization that he is

being "bought." UNETHICAL!

The Professional - The Professional considers

ethics when negotiating. She knows the

characteristics of the other four profiles and

consciously avoids that type of behavior. And she

does a great job of negotiating, too!

There are so many effective ethical negotiation

techniques available. You should never have to resort

to the practices of The Liar, The Exaggerator, The Open

Book, or The Cheap Date to get the results you want.

Negotiation, Ethics, & You

“Negotiation, Ethics, & You” by Charles Dominick, SPSM, SPSM2 was

originally published in Edition 72 of PurchTips.

How Do You Persuade Your Suppliers?

Are you employing an ethical negotiation strategy?

In this Issue:

2 Using Collaboration In Negotiation: 3 Steps

3 Negotiation, Ethics, & You

4 Negotiating After "No"

5 SPONSOR ADVERTORIAL: Critical Alert! Is Your Fleet Supply Chain Management on Track?

6 A View From the Field: Implementing a Supplier Quality Manual to Execute Supply Strategies

7 A 21-Point Negotiation Checklist

8 Use Negotiation Skills To Elevate Purchasing

SPSM® Certification Question of the Month

9 Price and Commodity Indices

10 Procurement Vacancies

11 Certification and Training Spotlight

12 Beyond the tips…. Is your negotiation recipe missing an ingredient?

The Future of Negotiation: Texting?


One of the strongest negotiation techniques your supplier

can use is to simply say "no." Your ability to distinguish a

real "no" from a "no" used as a negotiation technique is

vitally important. These tips will help you move past the

first few no's and negotiate a better deal.

Shift Focus - Try to shift focus onto another item of value if

you're at an impasse on a particular negotiation point.

Negotiate a longer warranty period. Ask for some free

products or accessories. Gain agreement on firm pricing

for a longer period of

time, a downward price

protection clause, better

lead-times, or seek

greater discounts on

related (or unrelated)

goods or services.

Do The Math - Set emotions aside and walk your supplier

through the business problem you both face. Develop a

"should cost" model to determine if there is room for

additional cost compression. Benchmark the offer you've

received against published industry data from consultants,

trade organizations, etc. Offer to analyze and help reduce

supplier's upstream costs.

Paint A Picture - Sometimes suppliers need help

understanding the implications of not reaching

agreement. Explain the importance of your business to

their bottom line. Describe what their business might

look like 2 or 3 years out if they lose this deal or if the

relationship is damaged. Ask how this future state

would affect their personal performance review,

career or compensation.

Change Players - Insisting on the involvement of a

higher-level supplier representative in the negotiation

might seem elementary, but many negotiators mess

this one up. The trick is to find the highest level

executive who would experience the greatest pain at

the loss of your business. Aim too high and your pleas

may not be treated as high priorities. Done correctly,

your contact will help you fight within the supplier's

organization.

Negotiating After "No"

“Negotiating After „No‟” by Charles Dominick, SPSM, SPSM2 was

originally published in Edition 175 of PurchTips.

How Do You Respond When Your Supplier Says No?

Don’t let a supplier’s “no” spell the end a deal.

As you probably already know, negotiation is a necessary skill for success in purchasing. As a matter of fact your peers

have rated it as the most important skill during an annual purchasing survey in each of the last five years. Unfortunately,

many procurement professionals feel that their past negotiation experience will serve them well today. Guess what?

Much has changed and supplier-friendly win-win negotiation is the new standard. You have less preparation time than

ever. You may even get lured into using the convenient, but often ineffective, method of negotiating by email. If it seems

like you’re at a disadvantage, you are!

But you can quickly get the modern procurement negotiation strategies and skills you need to get the best deals in

today’s environment. Next Level Purchasing's highly personal and interactive online course “Powerful Negotiation For

Successful Buying” will teach you the latest and greatest procurement negotiation strategies so that even the most savvy

sellers will give you the best deals possible.

And better yet, Next Level Purchasing Association members can receive an additional 10% discount if they enroll by April

30, 2011. Use the code NLPA411 during checkout. Don’t miss out, sharpen your negotiation skills today!

Learn more about Powerful Negotiation for Successful Buying at: http://www.nextlevelpurchasing.com/powernegotiation


http://www.nextlevelpurchasing.com/powernegotiation

Sidebar Case Study: 2010 PepsiCo Piston Cup ARI was recognized as a 2010 PepsiCo Piston Cup recipient by the Frito Lay Fleet Team. Frito Lay

cited three areas of exceptional performance that led to the ARI achievement of this award. First, the

ARI team assisted Frito Lay with the successful deployment of over 1,200 Sprinter Route Trucks to the 16 Frito Lay Regions within

the first quarter of 2009. Second, ARI helped Frito Lay meet year‐end financial objectives by providing timely invoicing and financial

reporting. Finally, PepsiCo termed ARI’s signature customer service “unparalleled” and praised ARI as a “truly valuable business

partner.”

SPONSOR ADVERTORIAL

Critical Alert! Critical Alert! Critical Alert!

Is Your Fleet Supply Chain Management on Track?Is Your Fleet Supply Chain Management on Track?Is Your Fleet Supply Chain Management on Track?

Supply chain management ‐‐ it’s a complex topic of the highest criticality. The overarching goals are to minimize

order‐to‐delivery time and drive out costs. Achieving these benefits is possible through value-added, innovative

solutions that measurably improve both fleet asset utilization and total cost of fleet ownership.

So what are these solutions? Today, they rely upon leading‐edge technology and partnerships to order, track and

deploy fleet vehicles along the supply chain. A partner with technology and industry expertise can work with and for

you to effectively keep the entire process on track.

Efficient and Effective Specifications

Supply chain management provides control of the entire vehicle acquisition process. The first step is

standardizing and streamlining the fleet using efficient fleet specification techniques and resources. Skillful

interface with manufacturers and upfitters results in control, centralization and leveraged spend.

Competitive Bidding

To extract the maximum cost savings from the supply chain process, you should meticulously bid out each step

in the process. While this may seem a daunting task, it is the most effective way to achieve supply chain

efficiencies and make the most advantageous sourcing decisions. Through leveraging different suppliers and

processes, it is possible maintain tighter control of the supply chain while determining more accurate

timeframes for delivery.

Strategic Tracking

After specifications and bidding, the asset begins to move through the supply chain. At this point you need to

ensure all tracking mechanisms for that asset are in place. The best methods for tracking along the supply

chain are those that proactively monitor the status of all vehicle orders and clearly interpret the flow of

information as it relates to your business needs. Organizations may want to employ a complete data integration

methodology and weekly status calls with manufacturers and upfitters to proactively anticipate disruptions – and

reduce their impact to a minimum.

While the resources and time required to effectively manage a dynamic and far‐reaching supply chain may seem

daunting, the right partner can help transform it into a strategic business asset. Through partnership you are better

equipped to leverage successful innovations, best practice solutions and system advancements to ensure your

supply chain is tailored to your specific business needs.

Author – Paul Azores, ARI director, strategic consulting, helps customize innovative solutions that streamline complex fleet operations, lower the cost of fleet ownership and create long-term value for clients. ARI, the fastest growing vehicle fleet management company in North America, operates offices throughout the US, Canada, Mexico, Puerto Rico and Europe.

www.arifleet.com


http://www.arifleet.com

Purchasing professionals expend a great deal of time

formulating strategies to meet corporate cost reduction and

new product development goals. And why not? Cost savings

and new product development are what brings value to our

organization and purchasings’ visibility to executive

management. Making use of a well written Supplier Quality

Manual (SQM) is the next step to executing your supply

strategy.

Now that you have proven your strategy by obtaining the

product or service that meets your cost reduction goals, it’s

time to implement a supplier quality manual to sustain your

accomplishment. The supplier quality manual, or SQM, is a

proactive document designed to eliminate post-contract

surprises and events that have the effect of reducing,

delaying, or in some cases, eliminating hard won cost

savings.

There are no “one size fits all” SQM formats, however all

SQMs share the same basic elements that make them

effective. SQMs typically begin with an introductory statement

communicating the corporate mission, informing the supplier

of the corporation’s values and ethics. The next few

statements convey to the supplier the general requirements

that describe the quality management systems, management

responsibility, resource management and product realization.

The last two sections, transaction requirements and the cost

of quality, discuss in detail what the

purchaser will require of the supplier

when executing the contract. These

sections must be very detailed and

unambiguous to eliminate surprises

which can place your cost reduction

strategies in jeopardy. It is a good

practice to reiterate your policy

regarding pricing guarantees, delivery requirements,

minimum order quantities (MOQ) and any other details

needed to execute your strategy. Additionally, the cost of

quality is an essential element to your SQM. The supplier

needs to know the consequences of poor performance.

Include in the cost of quality section your corporate debit

policy for shipping nonconforming material.

Lastly, the supplier needs to take ownership in the SQM

and how it is executed. To accomplish supplier

ownership, include a supplier sign off page that makes

the SQM a part of the purchase order.

“A View From the Field” is a feature written entirely by SPSM-Certified

purchasing professionals. If you are SPSM-Certified and would like to contribute

to this column, please send an original 300-400 word educational article on

procurement to

[email protected]

with a business headshot.

Tim Reis, SPSM

Implementing a Supplier Quality Manual to Execute Supply Strategies

A View From the Field

Upcoming Next Level Purchasing Association Member Events: Members-only Webinar

Purchasing & Supply Management Salaries in 2011

April 26, 2011, at 11:30AM Eastern US Time

How is your purchasing salary impacted by:

Years of experience

Education/Certification

Your organization’s size and industry

Where you live

In this 45-minute webinar, Charles Dominick, SPSM, SPSM2 will cover all this and more.

To register for this free event, login to the association and navigate to the “Webinars” tab. There you’ll find a registration

link, be sure to enter a valid email address as attendance details will be sent to you by email. Registrations may be limited.


Can A Negotiation Checklist Improve Your Results?

As we teach in our online course "Powerful Negotiation For Successful Buying," preparing for a negotiation is

critical for success. Though not intended as a substitute for learning how to prepare or actually preparing,

this checklist can guide your preparation for great results.

Identify the primary supplier to negotiate with.

Identify your second-best option in case you cannot reach agreement with your primary supplier.

Determine the format (i.e., face-to-face, phone) and location of your negotiation sessions.

Invite the primary supplier to negotiate and learn who the supplier's principal negotiator is.

Ensure/insist that the supplier assigns a negotiator with decision-making authority.

Assess your leverage over the supplier.

Determine your overall negotiation strategy (e.g., hardball, collaborative).

Identify all the terms that you will negotiate.

Set targets and least acceptable alternatives for each term.

Determine your negotiation tactics (e.g., threatening to use another supplier, emphasizing the benefits to the supplier of doing business with you).

Decide what to concede if necessary to reach agreement.

Develop a timeline for the negotiation process.

Identify the risks to achieving your terms, timeline, and other goals and plan to mitigate those risks.

Develop and share internally a communications plan stating who must be updated on negotiation progress and what information they must keep confidential.

Review notes from previous negotiations, courses, etc. for tips for success.

Anticipate your supplier's reaction to each tactic.

Create an agenda for the negotiation and practice.

Start the negotiation confidently.

Document agreements made and share with the supplier throughout the negotiation process to ensure that no misunderstandings later derail a negotiation in which you have invested much

time.

Self-assess after each negotiation session and adjust strategy and tactics if necessary.

At the end of the negotiation, help the supplier feel positive about the new relationship rather than feeling like it lost the negotiation.

A 21-Point Negotiation Checklist

“A 21-Point Negotiation Checklist” by Charles Dominick, SPSM, SPSM2 was originally published in Edition 204 of PurchTips.


"seals the deal" with an internal customer and the

purchasing department is involved only at the end, the

supplier is certain of getting the deal and will not bow to

any pricing pressure that the purchasing department tries

to apply.

Salespeople are trained - and many are great - at

manipulating even the smartest professionals who have

their guard down because they don't negotiate every day.

These salespeople know what questions to ask that seem

harmless but actually get the information that they need

to entrench themselves in buying plans and maximize

their margins at the expense of the buying organization.

By having a skilled purchasing professional present at all

supplier meetings about major purchases, it can help the

organization counter these tactics and prevent the

supplier from getting that sense of certainty that results in

high prices. But negotiation isn't the only skill that

purchasing professionals bring to the table.

Many purchasing professionals find themselves in

situations where their internal customers (e.g.,

Engineering) cut deals with suppliers and don't involve the

purchasing department until the moment a purchase

order needs to be created. This is a bad practice.

Many companies recognize the consequences of not

having early purchasing involvement and have policies

requiring the purchasing department to be given an

opportunity to participate in all supplier conversations for

purchases expected to exceed a certain value. If you want

to convince your management to implement such a policy,

start by touting your negotiation skills as follows:

As a purchasing professional, you are an experienced

negotiator. You negotiate frequently, maybe daily.

Negotiation may not be part of your internal customers'

job description. By deliberately keeping you out of a

negotiation, your internal customer is failing to utilize a

resource that can financially benefit the organization.

Suppliers' flexibility with their pricing is dependent on their

perceived certainty of getting the deal. When a supplier

Use Negotiation Skills To Elevate Purchasing Are Your Purchasing Negotiation Skills Underutilized?

“Use Negotiation Skills To Elevate Purchasing” by Charles Dominick, SPSM,

SPSM2 was originally published in Edition 224 of PurchTips.

SPSM® Certification Question of the Month

Question: What are the benefits of earning the SPSM® Certification?

Answer: Next Level Purchasing realizes that employers and purchasing professionals alike want more than just a

purchasing management certification to show for their investment. That's why the SPSM® Certification is designed to

produce measurable benefits to both employers and purchasing professionals alike.

Purchasing professionals who have earned the SPSM® Certification report that they have reaped these benefits:

Getting better jobs ● Getting more respect

Getting excellent performance evaluations ● Getting large pay increases

Employers who enroll their purchasing employees in the Senior Professional in Supply Management® Program can be

assured that their purchasing staff will be able to:

Save more money

Do a better and more efficient job of supporting operations

Minimize and manage risk

Function more independently, freeing up management to focus on more strategic work

Producers Price Index

The Producers Price Index (PPI) measures the change in the

wholesale selling prices that producers charge for goods and services. It is typical for producers to offset rising prices by

passing on the higher costs to consumers in the form of higher retail prices, therefore the PPI is often an early

indicator of inflation. Inflation is a decline in the purchasing power of a currency, for example the USD, where each dollar

buys fewer goods and services than it could previously.

Interpreting the PPI: When the PPI rises, this signals an

increase in inflationary pressures. When the PPI falls, this signals a decline of prices and may suggest an economic

slowdown.

Price and Commodity Indices

Consumer Price Index

The Consumer Price Index (CPI) is used as a measure of

inflation. To calculate the CPI, first a fixed “basket of goods” is determined and a baseline of prices is calculated. Then

changes in price are calculated for each item, averaged and

weighted according to the importance of the item

Interpreting the CPI:A higher CPI indicates that the total price of the basket has increased and it now costs more to buy

that same basket of goods (inflation). A lower CPI indicates that the total price has declined and now it costs less to buy

that same basket of goods (deflation).

Each month we’ll include an updated graph of the PPI and

CPI as well as the PPI graph of an individual commodity.

Send your request for which commodities you would like to

see featured in this section to:

[email protected].

To learn more about these and other indices, we recommend

reviewing the “Inflation & Prices” section of the Bureau of

Labor Statistics (US) website at: www.bls.gov, or by

researching indices calculated in your specific country.

Procurement Vacancies To learn more about these and other vacant positions, visit: http://www.nextlevelpurchasing.com/jobs1

Job Title: Vice President, Procurement Company: Flying Food Group

Salary: Withheld Location: Chicago, Illinois, USA

Job Responsibilities:

Support unit purchasing managers with food cost, vendor contracts and product supply chain.

Ensure unit audits are conducted in coordination with Regional General Managers and/or Finance.

Update Corporate Procurement policies and procedures as needed.

When contracts are due to end, conduct RFP process to a minimum of three (3) vendors.

Continually source for additional national contracts.

Expand food buy programs and increase discount income for both the airline and FFS segments.

Establish controls to address favorable and unfavorable purchasing variances.

Lead teams of unit purchasing managers and the assignment of commodity categories.

Support all ingredient sourcing and related special projects.

Qualifications:

Minimum of a B.A./B.S. degree or an equivalent combination of education and experience

SPSM® Certification a plus

8 or more years in food purchasing related position

Demonstrated experience with key purchasing strategies and implementations

To apply: Send resume via email to: [email protected]

Job Title: Senior Supply Chain Manager Company: CDC– Cameroon

Salary: $120,000 Location: Limbe, Cameroon

Implement procurement strategy and policies.

Forecast procurement needs. Create and implement KPI's. Maintain procurement files.

Continually develop expertise to support growth for new projects.

Monitor macro trends in supplier and contract base and implement plans to react.

Build and develop relationships with key suppliers and customers.

Lead the procurement group in all phases.

Identify and develop training opportunities.

Order materials and services as per negotiated and appropriately approved.

Prepare purchase requisitions, approve and issues purchase orders in accordance with company policy and negotiated terms and conditions.

Track Purchasing activity and measurements.

Training purchasing Clerks and Salesmen in the department.

Discuss defective or unacceptable new goods or services with users, vendors and others to determine cause of problem and take corrective and preventative action.

Ensure supplier compliance with site and company requirements for safety.

Manage vendor relationships and assist in building effective partnerships.

Qualified candidates should be holders of a bachelor in management, business administration or any related field, SPSM® Certification a plus.



http://nextlevelpurchasing.com/spsm.html


Job Title: Senior Contracting Agent Company: Amtrak

Salary: $63,000 - $80,000 Location: Philadelphia, Pennsylvania, USA

This position is accountable for the life cycle of business needs of the organization & requires experience with various

complex service & material commodities, as well as procurement policy and procedures. Manages all activities related

to a commodity or service, from intent to purchase through delivery. Negotiates complex contracts involving variable

costs and non-standard Terms & Conditions. Maintains the highest code of ethics and conduct. 20% travel required.

SPSM® Certification a plus!


Certification and Training

Spotlight

Dedicated Member of the Month– March 2011

Congratulations to Inna Nirenburg, SPSM! Inna, a purchasing professionals from Pittsburgh, Pennsylvania, USA, completed all six

Senior Professional in Supply Management® Program classes and passed the SPSM Certification Exam during the month of

February and was selected as March’s Dedicated Member of the Month!

2011 Recipients of the SPSM Certification

January

Esan A.—Nigeria

Sheila A.—Washington, USA

Catherine C.— North Carolina, USA

Christine C.—Illinois, USA

Jason C.—Illinois, USA

Angela D.—Ohio, USA

Sandra D.—Illinois, USA

Anil G.—India

Jaikumar G.—India

Peggy G.—Virginia, USA

Preeti J.—India

Kurt K.—Colorado, USA

G.S. L.—India

Divya M.—United Arab Emirates

David N.—Arkansas, USA

Heather N.—Missouri, USA

Richard N.—Minnesota, USA

Jonathan O.—Illinois, USA

Cristi P. - Romania

Jayashree R.—United Arab Emirates

Rajeev S.—United Arab Emirates

Timothy S.—California, USA

Margaret T.—Illinois, USA

Qiong W.—Washington, USA

February

Albernachie A.— West Indies

Jyothi B.—India

Renee D.– California, USA

Terri D.—Ohio, USA

Christopher J.—Illinois, USA

Jana K.– Ohio, USA

Kimberly M.—Wyoming, USA

Bryan M.—Missouri, USA

Sheila O.—Indiana, USA

Terri P.—West Virginia, USA

Julio R.—Alaska, USA

Stephen R.— Ontario, Canada

Adewale S.—Nigeria

Kausar S.—India

Melanie S.—Ohio, USA

VBTSM S.—India

Matthew T.—Arizona, USA

Niculae V.—Romania

James W.—Michigan, USA

March Chris A.– Florida, USA

Darlene B.—Arizona, USA

Lubos B.—Slovakia

(March continued)

Angie C.- California, USA

Charlene C.– North Carolina, USA

McCabe C.—Utah, USA

Milos D.—Slovakia

Nikolay D.—Austria

Kamil F.—Slovakia

Lubomir F.—Slovakia

Kenya G.—North Carolina, USA

Michael G.– Germany

Supratik G.— India

Kenneth H.—Florida, USA

Teresa L.—Arkansas, USA

Ingrid L.– Slovakia

Jamie L.– Illinois, USA

Kimberly M.– Ohio, USA

Rajesh M.—India

Inna N.—Pennsylvania, USA

Ana O.—Belgium

Kathleen O.—Illinois, USA

Debra R.—California, USA

Henrik S.—Denmark

Carrie W.—Indiana, USA

Josh W.—New York, USA

Layne W.—Tennessee, USA

Sarah Z.—California, USA



When you demonstrate how important to your company that an

issue actually is, you'll often be surprised at the creativity that the supplier generates at some point in coming up with a solution

that satisfies you.

Suppliers get tired of saying "no." Your persistence can gently nudge them to figure out something positive to respond with

instead of that dreaded two-letter word...

Good luck!

~ Charles Dominick, SPSM, SPSM2

Beyond the tips…. Is your negotiation recipe missing an ingredient?

After reading this month’s edition of Leading-Edge Supply

Management, you're probably wondering what this "important ingredient" is. And I won't keep you in suspense.

The important ingredient often missing from purchasing

professionals' negotiation recipes is persistence. Just because a supplier refuses a negotiation request of yours doesn't mean that

you should give up.

Keep trying. Be the proverbial "broken record."

As communication methods have changed throughout history,

negotiation has followed. Prior to the industrial revolution, people would negotiate face-to-face when bartering, exchanging

negotiated quantities of corn for negotiated quantities of musket balls.

Then, of course, the telephone allowed negotiators in different

locations to bargain. Finally, in the past 10-15 years, email became

a popular - but sometimes ineffective - medium in which to exchange offers (our online class "Powerful Negotiation For

Successful Buying" teaches when negotiating by email is smart and when it is the most foolish thing a procurement professional can

do). Of course, eSourcing technologies allow for all sorts of online negotiation activities.

So what's next? Stroll through any mall and you're likely to bump

into (literally) a few teens walking while staring intently at their cell phones as their thumbs flail away on the keypad in the process of

texting (also called "txting" or "sending text messages"). These are future representatives of our suppliers.

Is texting the future method of negotiating? Some of you are

probably saying "I hope not." But the reality is that texting is likely to creep into the mainstream negotiation process to some degree

soon.

If you are feeling yourself getting mad, it might be time to read "Who Moved My Cheese?" again.

Now, don't get me wrong. I am not advocating that you go out and

conduct all of your negotiations by text message from this point forward. After all, texting has many disadvantages from a

negotiation standpoint, such as:

You give the other party time to think through their response

You cannot communicate tone-of-voice through texting

Texting (at least when I do it) is often rife with errors

The amount of space you have in a text isn't enough for

discussing any substantial issues

You cannot watch for body language clues from the other

party

There is a higher probability of misunderstanding

And so on...

But when you need a simple response quickly (or want to create

that illusion in order to gain pressured concessions from your suppliers), texting might fit the bill in some limited situations.

Now, texting among teens has its own vocabulary and acronyms, like "ur" (for "your," "you're," or "you are"), "l8r" (for "later"), and, of

course, the old standby from the email days "lol" (for "laughing out loud"). So, do we need a similar vocabulary for procurement

negotiations? I don't know, but just to be safe I'll start one here (&

u can feel free 2 add ur own):

2HI - "Too High," an expression that the supplier's price is too

high, sent in reply to a supplier's text inquiring about the

competitiveness of their offer

BAFO - "Best and Final Offer," as in "send ur BAFO"

DL - "Deal," an expression that you've accepted the supplier's

offer

LTAS - "Leaning Towards Another Supplier," sent in reply to a

supplier's text asking about the status of your decision on proposals, meant to compel the supplier to submit a revised,

more attractive proposal

SYP - "Sharpen Your Pencil," synonymous with "submit an offer

more appealing to me"

Naturally, ethics that apply to traditional negotiation will need to

apply to negotiation-by-txt as well. With the aforementioned high probability of misunderstanding, you want to be careful to not

insult the supplier or behave inappropriately. For example, I would never use "LOL" with a supplier as doing so may insult the supplier

and make the supplier terminate the negotiation. Also, be very careful when using the "F" character, as doing so may indicate the

use of a profanity, as in "Send ur bid ASAFP." My thumbs always inadvertently add unintended letters to messages, so proofread to

ensure that you didn't add that vulgar "F."

While some parts of this post are slightly written in jest, I do feel that texting will rear its head into more and more procurement

negotiations in the near future. Therefore, it is imperative to be prepared.

Never fight change when the writing is on the wall.

From Charles’ Purchasing Certification Blog

The Future of Negotiation: Texting?


http://www.nextlevelpurchasing.com/procurement-negotiation.html

http://www.nextlevelpurchasing.com/procurement-negotiation.html

http://www.nextlevelpurchasing.com/articles/negotiation-ethics.html

Leading edgesupplymanagemented1 april2011

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