Friday, September 30, 2011

Preparing For the Negotiation

In procurement negotiations the preparation needs to start at the pre-qualification stage where you not only identify whether a Supplier is qualified, but can also look at the cost impact of what they do and how they do it and you can identify any potential problems that you may need to address in your bid / RFP or contract.

The second step in preparing is internal information gathering so you understand what your internal customer needs or wants so you can set your goals and minimums.

The third step is preparing the right bid or proposal documents to both set expectations of what you want and solicit information and options you may want to consider.

When you receive a bid or proposal, you need to analyze it so you understand what the expected issues and will be to prepare for them in the negotiatio. Part of the analysis can be going back to the supplier seeking clarifications on what they have proposed, For example if you provided a draft agreement, you would analyze the Supplier's redline. Look for added conditions, limitations or assumptions that their
proposal was based upon, Seek clarifications on those and consider the impact those will have on the contract and the negotiation. If there are some that you won’t or can’t accept, tell them that to set expectation in advance that those will need to be changed.

Next comes deciding upon what the negotiation strategy should be for the negotiation, developing a negotiation plan and gathering all the tools and team you will need for the negotiation. As the negotiator you need to have built the knowledge or skills to do the negotiation or you need to make sure you have the right people on your team to support you. I would gather the team to make sure they are all aware of their roles and set ground rules for them for the negotiation. You do this to make sure they don't do something during the negotiation that negatively impacts the negotiation.

After you are prepared you schedule the negotiation and provide an agenda. If the other party prepares the agenda, review it to see what’s missing.

Review the other party’s team to make sure that they have a decision maker attending. If they don’t, ask for one to attend.

Want to learn more? The companion book "Negotiating Procurement Contracts - The Knowledge to Negotiate" is now available on