By Lucy Patchett
A negotiation model has been developed encompassing steps to ensure that procurement professionals think “more broadly and deeply” about the process.
Colin Linton, Director at business training and consultancy firm Gidea Solutions, spoke to CIPS in the podcast SPEED Negotiation Process about the model that he has developed through his research into contract management.
Linton identifies a negotiation model he has called SPEED, based on the stages Strategy, Planning, Execution, Evaluation and Delivery.
He notes: “It’s easy to assume that negotiating the contract falls broadly into three distinctions: before, during and after the negotiation is concluded. However, the risk of only looking at these three separate stages is that you may miss out on key steps that could help with preparation and enhance chances of reaching a better conclusion”.
Prior to negotiation, procurement professionals need to think more strategically, gathering background information and planning. This plan then needs to be executed, with a review afterwards to understand the effectiveness of the process.
“The important thing to remember at the beginning is that different negotiations require a specific amount of time on each stage, so procurement needs to think about how each stage fits into their broader negotiation strategy”, says Linton.
Linton recommends that procurement professionals prepare their strategy by ensuring that they understand how it aligns with the category strategy, as well as factors such as internal drivers, market dynamics, the importance of the contract to the company and the supply market.
“After, we need to start thinking more tactically and preparing for the negotiation event itself. It’s very easy to say the wrong thing so going into the situation unprepared is very high risk”, says Linton.
This includes logistical considerations, such as whether it is a virtual or face-to-face negotiation, who the participants are and the key messages that need to be communicated.
“We need to think about the behaviours, set very clear targets, ask ourselves what we can trade, what other tactics can be used, and what persuasion and influencing levers can we bring to the table.”
An especially important part of planning is to think about what the other party has strategised and how they might aim to ‘influence’ you.
As many procurement teams have experienced during the COVID-19 pandemic, in times of crisis, planning may be done in a matter of hours. However, it is still important to set targets.
“It’s about thinking about goals and, for life-and-death situations, the target may be assuring supply regardless of price. Understanding the business, engaging with stakeholders and understanding their needs can become even more important at these times”, adds Linton.
The next step is the negotiation situation, which goes through a number of phases, from opening, to exchanging information, using tactics, to a ‘close point’.
Linton recommends being adaptable to different environments, especially virtually during COVID-19, and to think carefully about which channel to use for the negotiation. Being able to see your client through a video can maximise rapport and understanding.
“There’s a difference between hearing what people say and really engaging, and at least if you have the person onscreen you can see what they’re doing and that they’re engaged [through expression]. Whereas, otherwise, you have no idea of the level of influence and understanding that you have.”
By including an evaluation step, procurement can review the process, compare the outcome to initial targets set, and determine what could be improved and which techniques were effective.
Linton emphasises that “the key to reflection” is to think about what needs to be changed – in terms of routine and behaviour – and then build that into your strategy and self-development for future negotiations.
“When we’re in high-pressure situations, we tend to revert to type, go into our toolkit and use the same tools as before as that’s what feels comfortable to us. This is something we need to focus on because the reality is that negotiation is all about behaviour and soft skills. We can improve and change them but it’s difficult in a pressure situation. It’s like a jigsaw, each of these ingredients together, when properly constructed, should increase the chances of a better outcome, but there’s no guarantee as in the commercial world we’re one half of the equation. However, the step that can often be overlooked is evaluation, and seeing what can be done better next time.”
In the final part of the process, procurement professionals need to ensure that the negotiation is followed with “professionalism”.
Linton says: “Credibility will build through effective delivery, so the fact is we make promises and they make promises, so they must be delivered. The more positively you are perceived by the supplier, the better the quality of output you will get from them, and possibly the lower the price. It’s easy to underestimate that you’ve concluded the negotiation, but in reality it’s just the beginning of the relationship”.