This course provides an introduction to negotiation in a procurement context (i.e., negotiations between a buyer and a vendor/supplier). The objective is to provide the participant with a structured foundation in the preparation and conduct of such negotiations. Since practice is key in building up expertise in negotiation, case studies and exercises/games will be used to supplement lectures.
|Session 1||Introduction to Negotiation in Procurement||– What is Negotiation? What are the different types of negotiation?
– How to classify a particular negotiation?
|Session 1||Preparation for Negotiation||– Why is preparation important? What constitutes good preparation?
– How do you prepare for an important negotiation?
– What is BATNA? Reservation Price? How do you develop your BATNA?
– Barriers and Power in negotiation; Unintended consequences from preparation
|Session 1||The People Factor||– The “Opposition”: Knowing your “opponent”; Difference between organization and individual objectives; Organization levels in negotiation; Building relationships and trust; Cultural differences and similarities
– Your Team: Subordinates & Bosses; Aligning Roles & Responsibilities
|Session 2||Due Diligence on Supplier Cost Structure||– Importance of knowing the supplier’s cost structure
– Finding out about your supplier’s cost structure
– Identifying key cost drivers in your supplier’s operations for this RFQ
– How to best use this information
|Session 2||Understanding your Supplier’s position||– The real motivation behind your supplier’s need to negotiate
– Their financial situation and performance in the stock market
– Do they have specific objectives for this negotiation?
|Session 2||Data at Your Fingertips – Tools & Analysis||– Total Landed Cost / Total Cost of Ownership estimation analysis
– Overall market analysis for this commodity/component
– Impacts of FX variability, INCO terms, other specific negotiation parameters
|Session 3||The 10 Negotiation “Rules”||– Know your stuff; Establish a baseline; Involve your experts
– Check the market; Don’t bluff, but play your cards close
– Maintain integrity; Use tools available; Review all the facts
– Be unpredictable and fast; Find the way that’s a “win-win”
|Session 3||Conducting the Negotiation||– The Physical Setup; The Players; Making the First Offer?
– Distributive and Integrative Solutions; Tactics, Emotions and Conflicts
|Session 3||Ethics in Negotiations||– Questionable Tactics; What is Permissible?
– Lost Opportunities; Bluffing, Fraud and Lying
|Session 3||The Post Negotiation Analysis||– How well do you think you did? How was conflict handled?
– Type of solution achieved; Buyer’s and Seller’s Surplus Estimates
– State of the future relationship; Storing the “lessons learned”
|Session 4||Negotiation Exercises||– Case Studies & Negotiation Games|