The way to make the preparation process easy, intuitive and less monotonous is to split it in 3 clear defined steps. After you do that a few times and you include this in your negotiation routine, it will take (in the often case of a supplier you already work with) an unimportant amount of your time, sometimes up to 20 minutes.

However, as a general rule, take enough time to plan. This may be the most productive part of your negotiation actually. There is no pressure. If you are not negotiating alone, but in a team, prepare/delegate/split the preparation work with your team. If there is a new supplier, then the amount of work involved is obviously bigger. In case of your usual partners, you already know the information, just put it in writing. Don’t hurry, think in deep. This gives you the warranty that you leave at the hand of probability only very few variables.

When you have a new vendor in sight, the number of variables being much higher, documentation work takes a bit more time (also, the strategy and tactics adopted for the first meeting are specific).

Back to our 3 steps:

First, we need to define the CONTEXT of our future negotiation, meaning we need to put the frame consisting of all the information we got about the partner, the business involved, facts and figures. Second, we need to define our desired OUTCOME, the final detailed result of our negotiation. And, as soon as this two are clear, we will finally provide the third step, the GAME PLAN, which is strategies and tactics we are going to use according to the context to obtain our desired outcome. Really simple, isn’t it?

Now, another basic rule is: don’t be lazy, put all in writing! Even if you are experienced and you have all this data in mind, because is part of your daily routine, during the course of the discussion you can easily forget important data or arguments, under the pressure or because the discussion is driven in unwanted directions.  Have it all on a sheet of paper or in your laptop, as you prefer. Write a script of how you want the discussion to unfold and follow it. Be flexible in your approach but rigorous in getting the planned OUTCOME.

DEFINE THE CONTEXT

  1. Get all the information you can about your supplier. By the way, if it is the first time you are dealing with, this step is critical and bit more time-consuming than usual. Google-it, get information from the market, visit their website, check out the corporate marketing philosophy, articles in the press about the company, press releases, articles about their staff, CEO. Talk with people in the market. Get references. Get numbers about the company: turnover, number of employees, market share, profit, etc. In other words, get smart. Get information about their direct competitor(s), this might prove to be as valuable as the information about the supplier itself. Information is power and provides you with credibility during the negotiation. Look into your reports and see how similar products as the ones of your new vendor are doing in sales and profits.
  2. From the information you gather, focus on facts and figures – they count the most. If you cannot back-up your affirmation with relevant data, you loose points during discussion, making difficult to obtain your ideal outcome. Also it might make you look weak and unprofessional.
  3. Most of the cases you do not meet for this first time with your supplier so get all the relevant reports from your system. Compare your data with the market data. Compare the trends resulting from your reports with the market trends. During the discussion it might show up that your figures are in your advantage/disadvantage. Get prepared for both situations. Identify the good parts and the unwanted in the reports.
  4. Get “live” information from the sales-floor and feed-back from your colleagues in charge with operations (sales, marketing, and merchandising) about your supplier’s products.
  5. Try to define and understand beforehand your vendor’s needs and expectations. You will refine this during direct discussion but having an idea already about this will help a lot. You need to remain receptive to new information that becomes available in the course of the discussion. Actually, what you will do is to add to your data the framework of the information provided by your supplier.
  6. With current suppliers, identify the concerns you have currently like: old stocks, price issues (acquisition prices, retail prices), margins, stock rotation, quality problems, costumer complaints, etc.
  7. Verify the extent of the other side authority. (tip: try to discuss with the deal makers, whenever possible)
  8. Determine the balance of power in the negotiation – this will have an important role in choosing later on the strategy
  9. Consider the value of your relationship with the supplier. On the short term the use of collateral power might be a successful strategy. One time interaction this might be fine, but if you want to establish a partnership for years, this negotiation style will create resentment and hostility. Avoid positional bargaining and stubbornness in such cases. Loyalty will be valued and will bring on long term more benefits that you get on a one time deal.
  10. Always have the win-win approach. This should actually be the point number 1 when defining the context!

OUTCOME

  1. Decide what you want to get from the negotiation. Make a list, in written. Prioritize. Decide what the musts are, and what is negotiable. In short, put your numbers down.
  2. Now, that you know what you want, decide what you do not want from your negotiation.
  3. Decide the limits: the ideal result of your negotiation, the “realistic one” and also your bottom line (anything less than this would be a deal-breaker). When you determine your “walk-away,” you define the point at which there is no need to proceed with the negotiation. Prior to the start of the negotiations, you must ascertain your own “walk-away” point. Sometimes, this might be your single most important source of negotiating power, so once your “walk-away” point is met, you need to make sure you take action.
  4. When deciding the limits: be prepared to ask. This is one basic rule when you negotiate: if you do not ask, you won’t get. So, how low/high you will ask is for you to consider. Do not be ridiculous, but do not be shy.
  5. Be aware that as long as your limit of outcome intersects the limits of your partner, you may have a negotiation. If your limits do not intersect, there is no common point in your discussion and therefore there is nothing to negotiate.
  6. Identify at least one possible solution – in your view – for the issues mentioned under point 6 on the “context definition”. Create multiple possible solutions. Be prepared to back your proposal with solid arguments.
  7. You already have a common interest with your seller: make more sale volumes, get more profits. Identify what are the other common goals and shared interests. The supplier’s goal will always be to sell in more and you as a buyer to get the best product in the best conditions so you can sell out more with more profit. Try to explore creative options that could work on both interests. Have in mind that as you have one of the main goals to secure the margins – the supplier has at his turn the same target. This is the most common challenging situation with any vendor.

GAME PLAN

  1. Build your negotiation on the common points, rather than on issues. A positive approach will help you solve more and get more out of a negotiation. This does not mean to ignore the problems, just do not base your approach on them.
  2. Always prepare a scenario for the discussion, the actual game-plan. Play the scenario in your mind. Anticipate the responses you might get and prepare the answers. Document the answers beforehand, when defining the context. A scenario is more than a written agenda, is more a dynamic and pro-active tool.
  3. Plan alternatives for any deal (“If-Then”)
  4. Decide what concession you can make and what you need to get in return to this concession
  5. Set the scene for your scenario. Be sure to have a proper space for the meeting. Get an appropriate space/room for the meeting. Be sure to schedule it.
  6. Before entering the room, prepare yourself mentally – like a professional chess player before a competition.  Prepare your attitude like before a sport competition. Try to live your ego out of the discussion. Chemistry sometimes is not very good between discussion partners and in such situations communication suffers a lot if too much ego is involved. Having the right state of mind, physiology, posture and positive attitude before and during negotiation from my experience is another key point in getting what you want from a negotiation.
  7. Prepare to respond to pressure tactics from the other side. Train yourself and learn how to handle such situations.
  8. Remember: you are not negotiating for yourself, but for the retail business you are representing. Same is true for the people in front of you. There is a different kind of responsibility and attitude coming out from understanding this concept.

If you do not prepare for the negotiation, for sure the vendor will do so. Instead of playing from your script, you will play the whole game of negotiation from the script of your supplier. You will be in an unwanted reactive position, instead of taking initiative and lead the dialogue.

If you never done this 3 step process before, it is time to start doing it. Solid preparation will drastically increase your effectiveness. You will perceive instantly better to great outcomes. When you are doing your homework well, lots of good ideas may arise as you are not yet under stress. Even better, like in school, when you are well prepared for a lesson, that gives you peace of mind and the relaxation and this might prove to be the huge advantage when the pressure is rising during important deals.

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