Negotiation skill in Category Management

It is often assumed that negotiation training is only relevant to the skills required in the final stage of procurement – the close!  Negotiation tactics should be a top priority for effective Category Management, from the launch of a sourcing project to every interaction with potential suppliers and internal stakeholders.  It goes without saying that business needs are always clearly defined and in line with the organisation’s overall strategy, but all messaging and actions with suppliers need to remain consistent to those end goals.

When people hear ‘negotiation’, they tend to interpret that as meaning ‘leveraging suppliers to reduce price’ but effective negotiation is a skill required throughout the sourcing process to make achieving the “most desirable outcome” MDO possible.   A procurement professionals negotiation skill is required within their own organisation, without a Supplier in sight!

Internally focused negotiation includes promoting ideas and influencing internal stakeholders to achieve the best outcome for not only their business needs, but that of the organisation.  Both supporting and being supported by colleagues to benefit everyone’s skills, wellbeing and input requires skilled negotiation with the different internal stakeholders involved.  Communication is vital across the organisation to ensure everyone is onboard with a specific approach to a supplier.

A procurement executive recently shared how a key Business Executive on bumping into a new potential supplier for a major project enthusiastically told that supplier how great their product was and how “we cannot wait to sign up and get on with the project” not so easy to achieve those cost reductions expected in negotiation after that!   ALL key stakeholders need to understand how they deal with a Supplier is part of the negotiation; effective conditioning produces results.

Whatever your negotiating style, externally focused negotiation should include understanding and mitigating risk within contracts; championing sustainability issues through category choices; exploring new contract relationship and payment models as well as tenaciously driving continuous improvement initiatives in supplier cost and performance.

Negotiation skills are not only about application but also coaching.  We need to enable our internal colleagues, who maybe the daily post-contract supplier managers, to be just as effective as commercial negotiators as our Procurement colleagues.

The value of targeted learning on negotiation across the organisation, not just for Procurement, will be realised with increased value from contracts, improved mitigation of risk and lower costs.  E-Learning is a cost-effective way of delivering relevant, practical training ensuring all team members including new hires and strategic stakeholders are on the same page for driving for those cost reductions at the close.