Maximising procurement negotiation outcomes through great technique and alignment with category and supplier strategies
Studies repeatedly confirm that most negotiations could produce 50% better results.
ROI for procurement negotiation improvement
can reach more than 50:1.
More than 50% of procurement negotiations focus on price only.
Management of your negotiated spend is a key route to value delivery
Skilled procurement negotiation is one of the most fundamental value delivery mechanisms for procurement and is used on a daily basis in many different contexts, yet most procurement professionals know that few supplier negotiations deliver their targeted value. As a result, many organisations are leaking a significant amount of value from this process. This problem can be resolved by developing an organisational capability in negotiation.
Compelling research into negotiation outcomes reliably demonstrates that the best results come from skilled execution combined with excellent preparation summarised in a formal negotiation strategy that is clearly aligned to existing category and supplier strategies.
The reality is that most negotiations led by procurement teams are not planned and implemented in this systematic way. And as lots of negotiation happens outside of procurement’s control, there is a strong case for a standardised approach that can be applied across an organisation to improve negotiation performance.
Benefits of negotiation proficiency go beyond cash savings
The average category manager controls $150m spend and delivers $2.5m benefit annually (CAPS Research). Much of this spend is negotiated each year, so a 50% improvement in outcomes would more than pay for any investment in upskilling your procurement team in negotiation best practice.
Other benefits of a more structured negotiation approach include:
Process efficiency: being clear on the steps involved and inputs required helps negotiation activities to be completed in the targeted timeframes with the expected resource effort.
Clear roles and responsibilities: it is important to ensure these are clearly defined for negotiation teams for maximum impact.
Outcome certainty: applying a consistent process reduces variation in negotiation results as there is less dependency on individual skill levels and category dynamics.
Our approach to negotiation
Our approach to procurement negotiation helps teams to improve performance, track their progress, measure success and secure rapid payback to programme costs. It is based on four principles.
1. Focus on the buying organisation
We recognise that supplier negotiation is different from other negotiations. We have a deep understanding of the challenges faced by procurement teams and our approach is tailored to the needs of category and supplier managers. Our team has deep experience in supplier negotiations and all case studies are 100% relevant.
2. Harness the full power of the team
Negotiations succeed when all internal parties have a shared understanding of the outcomes required and are aligned. In complex corporate structures this is hard to achieve. Our blended and customised approach secures critical stakeholder commitment and creates high-performing cross-functional negotiation teams.
3. Leverage category and supplier management
Our approach explicitly connects negotiation strategies to related category or supplier strategies and uses many of the same frameworks. It is not a standalone activity. We train teams to leverage category and supplier data to define the negotiation approach. This strengthens the approach and accelerates adoption.
4. Creating a flexible, but consistent way of working
Since all negotiations are different, our approach to capability development in this area is a flexible one that can be adapted to all scenarios. Our materials help teams to create a common language and consistent practice. This makes negotiation more productive, outcomes more certain and the procurement team seen as the organisation’s centre of excellence for negotiation.
How we can work with you to deliver excellent negotiation outcomes
Our consulting, coaching and training services deliver negotiation excellence from the buy-side viewpoint. They are available to both procurement professionals and stakeholders alike.
We blend and customise our three core services to fit your team’s requirements.
Our team of highly experienced consultants plan and execute negotiation strategies on your behalf. We do this for high-value, high-impact categories and suppliers where internal capability or capacity is missing.
We work with your teams on real-life supplier negotiation projects in coaching clinics to reinforce the application of the approach and ensure that the right skills are adopted. We include role-plays, discussions and new tools and negotiation.
Our classroom-based and virtual negotiation sessions combine strategic analysis and planning tools with negotiation focussed skills-building. Led by trainers with deep experience procurement negotiation experience.