Thursday, February 3, 2011

Negotiation Preparation - Assessing the Supplier's Negotiation Team

Editor's Note. If you searched for "Negotiation Preparation" you may have come to this page.  This entire blog is about learning the information you need to negotiate. There five pages on different negotiation preparation topics.

In Selling, sales people are trained to try to get to the decision maker to find out the problems, needs and preferences of the Buying company because in addition to helping make the sale it also provides critical information that they can use to plan for any negotiation. If you can successfully manage and control those discussions with the goal of maintaining competitive leverage going into the negotiations, its important to quickly size up the opposition for the negotiation. One of the best ways to do that is to simply ask who from the Supplier's side will be attending the negotiation and what their position is within the company.  Many times the real decision maker may not be the individual that leads the negotiation. For example if you ever negotiated with the Japanese you would find that the negotiation may be led by the individual on their team that has the best English language skills while the real decision maker may sit back and quietly observe and then communicate with their team during breaks.

One of the key questions you always need to ask is whether the parties representing the Supplier are able to come to agreement and make decisions. Many times Companies will try to send teams that can’t make decisions, needing to bring everything back to their “stakeholders” or needing to get approval from some invisible third party. There are two ways you can deal with this. You can require the decision makers to be at the negotiating table so you can have first hand, unfiltered discussions of the issues with them. This is the preferred approach. The second approach is to work with them but with a different set of ground rules and expectations. This is where I will simply state that since the decision makers aren’t in attendance, we are proceeding under the understanding is that “nothing is agreed until everything is agreed”. If they comeback from their stakeholders with a position I don’t like or that will impact other things that may have been previously agreed, I reserve the right to re-open those points or concessions that had been previously made.

In negotiations where there will be lawyers, you always want to identify whom the key business leader is that you can talk to, explain the problem, describe the impact or the impact a position will have on winning the business.  In most companies the final decision about which risks to take get decided by the Business. The lawyers are there to give them advice and counsel but many may see their role as one of avoiding all potential risk to their Company.  I’ve described lawyers as being part of the “Revenue Prevention Team” to a Supplier’s Business Manager and have told them that if their lawyer continued to act in the same manner we obviously would not come to agreement. Many times faced with the potential loss of business, the Business Manager will take a more active role in managing and controlling the lawyer or may propose having a simple Business to Business discussion to reach agreement.

Another aspect of assessing the opposition is to look at the Supplier’s team to understand the role they are playing, what their vested interests are and who may be allies on particular issues. The sales person may be in your corner, especially if the need or want to make the sale. Engineering or technical people who may want to work with your team or work on the product or service may be allies. Supplier financial representatives on their negotiating team are almost never be on your side as they focus on the potential cost or risk. Supplier service or quality personnel on a negotiating team may be allies or they may simply be able to be used to help make or sell a point tied to their area. They are usually the least experienced of the Supplier’s team in negotiations and are more likely to provide you with a real, unfiltered answer.

One of the things that can help build rapport with the individual Supplier negotiation team members is to talk to them in their language. Financial people like numbers and formulas. Service people like talking about service issues and problems. Quality people like talking about their quality programs. Sales people always want to talk about the current and potential future business. Speaking to them in terms they understand makes them easier to discuss business with. If you can’t do that on your own, have someone on your team that can.

No comments:

Post a Comment