Company buyers need to think individually first, but then act collaboratively in their negotiations.
This post is an excerpt from Ron’s most current White Paper titled The Art of Collaboration
The art of negotiation is just that, an art, but so is the art of collaboration. This can be as simple as aggregating the spend for copy paper across multiple companies or as complex as sourcing an entire catalog of office supplies and any mix between the two. In order to be successful at this collaborative process, being able to convince all parties in the negotiation that each has something to gain is an important skill. Most companies do not possess these skills. Some procurement solution providers, like SafeSourcing Inc., have both people and tools that do.
This is as true for e-negotiation events as it is for personal negotiations. The question is how the tools and other resources allow the flexibility to accomplish collaborative goals.
The Art of Collaborative Procurement
There was an older article from USA TODAY by Jillian Berman titled, “Negotiate your way to savings”. The lead-in was that Cable TV and cell phone bills are ripe for cutting. A case could be made: so is everything else.
So what is the art of collaborative negotiation? According to Wikipedia, “negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.”
What this means in terms of this discussion and the previously cited article, is that these are tools that assist companies in thinking outside of the box by encouraging suppliers to act on behalf of the collective relative to pricing, services, and other decision making points of interest.
Category Managers, Buyers, and all other people with spend authority need to do the same and the ability to think individually and act collectively when they are developing their specifications and rules that govern their negotiations. Think like this! What if buyers asked themselves how their process would differ if they you were buying this product or service for themselves or their family? What if they were just as aggressive and detail-oriented when it came to their department and company? The simple fact is that no single buyer or group of buyers can assemble, collect, collate, evaluate, and persuade suppliers to act in this manor for this process to be successful on a massive or collective scale. Specific tools and skills are required. Procurement professionals need to be able to make decisions on data, not collect data. Procurement professionals need to be able to apply tactics to drive the required outcome. To do this collaboratively requires today’s modern tools, such as the SafeSourceIt™ family of eProcurement tools.
So when in doubt why not collaborate?
The concept of the whole being greater than the sum of its parts is important, but the art of the process is in defining the “why”. At least that was my intent when I began this paper. A company’s survival may depend upon mastering that art.
Some companies have shied away from new eProcurement tools and collaboration with other companies because either they don’t think their individual spend was large enough to make a difference or they don’t know how to find other companies to partner with. The old saying about the whole being greater than the sum of its parts has a role even in eProcurement, and solution providers can provide the direction required to accomplish this. That is, if it’s the right solution provider. Think about how this concept could help find savings in procurement.
1. Coordinated effort leads to the benefits of scale. SafeSourcing regularly runs events where multiple customers reap the benefits of going to market with a combined larger spend.
2. Working together offers different things to different companies in different proportions. All companies may not be buying the exact items as each other, but combined, the similar items give a vendor the opportunity to offer greater savings than would otherwise be viable.
3. Collaborating can prevent companies from seeking different procurement solutions in the first place. The benefits of working with others may go beyond the simple numbers initially calculated.
4. Collaborating in and of itself might be a new procurement strategy, but a tool and expertise are still needed to facilitate the process.
5. For companies concerned that these tools are an impersonal solution, time is revealing that the internet and electronic solutions are anything but impersonal. They are different and they allow interaction in ways that were not possible before due to communication and time barriers.
Middle of the road traditional procurement practices will not work in the art of collaborative procurement. The same old same old does not work. The pace with which change occurs today requires companies to be able to turn on a dime and think outside of the box. For that, procurement leadership is required, leadership that looks at the art of the process. Leadership that creates and innovates is required for the benefit of all involved in the collaborative process based on their individual needs.
If you’re serious about reducing your cost of goods and services please contact a SafeSourcing Customer Services Account Manager and ask about our risk free trial
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