Negotiation is one of humanity’s oldest practices. The techniques have improved over the years, of course, but the goal is still the same: to close the best deals.
In procurement, negotiation is an indispensable factor and a true art when it comes to develop strategic partnerships in B2B.
Breno Paquelet, an expert in strategic negotiations from Harvard University, is the author of a book called “Negocie sem medo”, published in 2022 (Companhia das Letras publishing house).
According to Mr. Paquelet, the dynamics of negotiations must be fully understood, and we also must keep in mind that the adopted posture can be decisive for the success or failure of any agreements.
Based on his professional experience and academic background, he created a methodology based on five pillars: posture, preparation, communication, tactics and emotions.
See below the details of each negotiation pillar:
Do you see your suppliers as allies or enemies? Posture is a mindset that buyers take to their negotiations. Negotiation can be seen either as a competition process – in which can be only one winner; or a cooperation one – where both parties can win.
The big challenge is to keep balance, because – according to Mr. Paquelet – when you focus only on satisfying the interests of the other party, your posture can become accommodative.
A win-win relationship is vital to build lasting relationships with suppliers – that is, both parties can benefit from any agreements.
Since negotiating is an art, it requires an adequate preparation. Before the negotiation stage, buyers must be equipped with the required information to be more confident and assertive.
Such information can be defined with each business and its demands. It’s also required to know the suppliers very well, such as their strengths and weaknesses, and if there are any supply limitations.
Besides, preparation involves also choosing strategies to achieve more savings and reduce procurement lead time, such as the use of an e-Procurement solution.
Being prepared to negotiate means having important information at hand, feeling safe and knowing how to act in unpredicted occasions and in challenging scenarios.
In procurement, communication between buyers is crucial for an efficient process flow, without any negative impact on the team’s productivity.
Being clear and objective during a negotiation makes the procurement cycle more agile. Additionally, this provides buyers with more time for business growth strategies.
For Mr. Paquelet, listening and understanding ideas and objectives of the other party, during a negotiation, is also important to build a relationship of trust and respect.
Just like in the game of chess, tactics are specific maneuvers you can use to influence the other party during a negotiation.
Being well informed about prices that are practiced in the market, planning and using seasonality in favor of negotiation are some of the possible maneuvers to achieve the best cost-effective purchases.
Despite the several existing tactics, the actual goal must be to arrive at an agreement that serves the interests of both buyers and suppliers, in an ethical and transparent way.
Just like posture, emotions are related to the buyers’ behavioral skills – which can impact a negotiation.
In the case of positive emotions, such as enthusiasm, motivation and security, they can help to establish a relationship of trust and empathy at negotiation time.
On the other hand, negative emotions such as fear, worry and insecurity can undermine the parties’ ability to reach a good agreement.
In a post called “Common feedbacks for a procurement professional” we share some important skills for procurement professionals, with tips of books, movies and TV series.
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