What is Negotiation ?

Negotiation is the act of working with one or more stakeholders to find an equitable solution to a situation. The goal of negotiation is to get the best possible advantage while agreeing to concessions that encourage the other party to agree to the terms that have been laid out.

There’s an art to successful negotiations, and getting them done requires engaging in good decision-making skills, the ability to listen more than you speak, and using your perception skills to recognize when an offer is good or bad.

RL-005 Ver 1.0 (Jan 24)

Resource Library

Negotiation Basics

Resourc Library

Useful Links

Why is Negotiation important in Procurement ?

Target and

Actual V Target

Owner of the KPI

Reporting

Frequency

Formula of

Calculation

Description of the

KPI

5

4

3

2

1

Improve Data Analytics

Accelerate Digital Transformation

Reduce Spend Cost

Manage & Mitigate Inflation

Reduce Procurement Risk

5

4

3

2

1

Negotiations during a time of crisis help a business maintain its normal operating standards while working with other players to find a workable resolution.

A good negotiation strategy enables both parties to maximize their business value through  improved supply deals that were not previously available.

The overall goal of a negotiation strategy is to get as close to what you want as possible, creating a middle ground approach. 

Negotiations help to increase efficiency in operations through collaboration and common goals.

Negotiating the right price grows the business with the Supplier, and the relationship.

How to prepare for Negotiation

Achieving favourable outcomes

Maximising

Spend Value

Crisis Management

Growth opportunities

4

3

2

1

Owner of the KPI

Reporting

Frequency

Formula of

Calculation

Description of the

KPI

4

3

2

1

Accelerate Digital Transformation

Reduce Spend Cost

Manage & Mitigate Inflation

Reduce Procurement Risk

4

3

2

1

1

Researching the other party’s background helps you understand how it operates, its internal culture, and what affects them the most. This informs you of their strengths and weaknesses, enabling you to take advantage of both aspects during your negotiations. You can better anticipate how they’re going to respond to your proposals.

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The other party in the negotiation also has an interest in coming to an equitable agreement, or else they wouldn’t have engaged in negotiations in the first place. However, their priorities may be different from yours, which is why negotiations are important.

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Defining or setting goals is an important part of the negotiation preparation. Be sure and confident that your stated goals are achievable and well-defined, and be concise. Going into a negotiation without being absolutely sure of what you want can result in you getting less than you’re seeking.

You need to identify potential concessions you’re willing to give, as they can help close the deal sooner rather than later. Make sure that the concessions you offer are ones that won’t weaken your position or give the appearance that you’re trying to play hardball. This is one of the negotiation tips that can lead to poor results if you’re not careful.

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Enhanced and Improved operations

Achieving favourable outcomes

Maximising

Spend Value

Crisis Management

Growth opportunities

5

4

3

2

1

5 Key things to consider in Negotiation

Target and

Actual V Target

Owner of the KPI

Reporting

Frequency

Formula of

Calculation

Description of the

KPI

5

4

3

2

1

Improve Data Analytics

Accelerate Digital Transformation

Reduce Spend Cost

Manage & Mitigate Inflation

Reduce Procurement Risk

5

4

3

2

1

Never be afraid to question or challenge. Remember that anything better than a ‘no’ is an enhancement. Most people want to reach an agreement and will offer some degree of flexibility. 

Avoid entering a negotiation under-planned and under-prepared. It is better to postpone the meeting and delay the business rather than negotiate by instinct.

Don’t put yourself in a position where you will be rushed to reach an agreement. Give yourself time to consider the variables and your approach.

People tend to do business with people that they like and trust. Establishing a rapport will encourage openness and produce better results.

Negotiation is about obtaining value from a relationship and reducing the differences between two parties. A strong set of skills and the ability to use them effectively will deliver maximum advantage.

Why Negotiate ?

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The worst they can say is "No"

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Fail to Prepare, prepare to Fail

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Desperate people agree to Desperate Outcomes

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Negotiating at Arms Length is tough !

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RL-005 Ver 1.0 (Jan 24)

Resource Library

Negotiation Strategies

Resourc Library

Useful Links

3-6 Months out

• Results orientated
• Unwilling to compromise
• Aggressive
• Low cooperation

Environmental Pollution

Effective Negotiation Strategies

Enhanced and Improved operations

Achieving favourable outcomes

Maximising

Spend Value

Crisis Management

Growth opportunities

5

4

3

2

1

Target and

Actual V Target

Owner of the KPI

Reporting

Frequency

Formula of

Calculation

Description of the

KPI

5

4

3

2

1

Improve Data Analytics

Accelerate Digital Transformation

Reduce Spend Cost

Manage & Mitigate Inflation

Reduce Procurement Risk

5

4

3

2

1

• Avoid negativity in the Negotiation process
• If they say no, you can make a different offer or walk away from the table 
• Believe that the other party needs what you bring to the table as much as what we need
• Ensure that positivity is visible during the negotiation
• Be aware of the tone of your voice and non-verbal body language

• As you work on your strategies for negotiation, step back and look at all potential outcomes and what their impact would be
• Understand counter offers and their impact
• Be prepared to walk away and re-evaluate all positions and return to the table

• Become a master at presenting thoughts and ideas so that others see the value
• Be direct when presenting a situation
• Be clear about what is expected
• Discuss ways to apply how it can happen
• Don’t simply talk about what needs to happen, discuss the consequences – how your solution will be beneficial to the other party

• Don’t put all of your cards on the table 
• Only offer a concession when it’s advantageous to you
• Don’t let the Supplier know about the items or areas that you’re willing to concede on
• Always make sure to get something in return as a bargaining strategy
• Maintaining a balance will establish that both parties are equal

• Build good relationships
• Be polite and pleasant  when reaching out to another party for negotiations 
• Don’t let the other party feel as if they’re being taken advantage of
• Engaging in active listening and stay flexible

Effective Negotiation Styles

• Problem-solving
• Win-Win
• Open Communication
• Mutual Benefit

Competitive

Collaborative

3-6 Months out

• Prioritises relationships
• Low Assertiveness
• Yielding
• High Cooperation

Environmental Pollution

• Evades Conflicts
• Objective
• Ignores Issues
• Low Assertiveness

Preferred Negotiation Styles for best results

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Setting Negotiation Objectives

Have a "Clear" mind on what we want to achieve ??

Understand the Negotiation Cycle

1:

Prepare

2:

Plan

3:

Establish

4:

Propose

5:

Look for Signals

6:

Reach Agreement

1:

Savings

3:

Contract Extn'n

2:

New Contract

4:

Improved Performance

6:

Technology

5:

Innovation

The 5 KEY Elements in Negotiation

The first 3 dont Cost us anything

Emotion

Use Phrases such as "How do you think it feel...would you like to report that back to your manager, I am not sure it would be received well by the business"  Emotional responses are usual in deflating an argument based on logic. 

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Logic

Logic is the most common tool used when negotiating. This can be based on actual numbers, industry statistics, benchmarking information, and lastly, cost analysis data. Make sure we are on firm ground with accurate information when using Logic.

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Threat

When using Threat as a negotiation tool make sure we are in a position to follow through. Threat can be a useful tool but can erode any future good will if not used correctly.

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These 2 Require us to give up "Something"

Bargaining

This occurs when variables start to be exchanged. Only concede on items that have little impact on the outcome but, has some benefit to the Supplier.  This helps achieve a win-win scenario

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Compromise

This must be treated as the last resort as the outcome is unlikely to be on our terms.  Compromise normally favours the party who takes a more extreme position and the party that accepts this position will be at the mercy of the offererer.

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