Procurement negotiations – Why reliability and trust are important

There’s one aspect of procurement negotiation which sits like an elephant in the room: can we negotiate with a measure of reliability and trust in procurement negotiations with the other party?

This isn’t the same as the concept of ‘good faith’ which has legal standing in many countries although less so under UK law; we are referring here to whether the parties involved can actually believe in the basic direction that the other negotiator is moving in.

This thought was triggered by a Washington Post article, discussing the challenge for lawmakers in the USA in determining whether the strategic direction set by the Whitehouse in certain areas was reliable.  [ https://www.washingtonpost.com/news/the-fix/wp/2017/10/23/the-art-of-the-unreliable-deal-trumps-bad-faith-negotiating-could-undermine-the-gops-agenda-and-his-own/?utm_term=.9f9b60e1823b ].

Although this is an extreme example of the impact of reliability and trust in negotiations, it is an area that many procurement organisations have a challenge with. If we consider the difficulty of getting a firm position for stakeholders in particular areas (examples: volume commitments; particular areas of performance and specification; involvement of Legal post negotiation), there is a good chance of post negotiation changes, which inevitably means that the procurement team has a risk of negotiating from a weak position, or being exposed as unsupported.

This is the whole core of the challenges which we need to face into to be able to deliver complete commercial negotiations rather than price-centred negotiations. Our ability to get the business to line up behind a broad business to business negotiation is critical to our ability to deliver, and to do that we need to excel in a number of areas:

1. Stakeholder management
2. Communications planning
3. Interests identification
4. Negotiables development
5. Negotiation team creation

When we address these areas correctly, our ability to get the business to align behind the negotiation massively increases our credibility within the negotiation.

Although this sounds like a tough ask, there is clearly a level of effort needed to ensure that our own reputations as trusted negotiators are both established and enhanced.