Strategic Negotiations Practices

Spend Matters is pleased to welcome Robert A. Rudzki as a new contributor. Robert, a former Fortune 500 financial and procurement executive, is now President of Greybeard Advisors LLC, a leading provider of advisory services for procurement transformation, strategic sourcing and supply chain management.

In our experience, too many companies still practice "conventional" or "tactical" negotiations. We could spend a lot of space describing the distinction, but I find that one chart (see the Figure below), can nicely summarize some of the key differences between "old school" and "new paradigm" negotiations.

chart

Are your current practices best described by the left column, or the right? If the former, then you are leaving a lot of value behind.

In a strong 6-phase or 7-phase Strategic Sourcing process, there are often three phases of homework and strategy development before the negotiations phase begins. There is a lot of information to be organized and evaluated before you commence the negotiations phase.

In the absence of data and information, it can be easy to conclude that we should "go with our gut" in negotiations. On the other hand, if we are deluged with data and information, from an effective sourcing process, it can often be just as tempting to "go with your gut." Don't. Instead, create a negotiations strategy worksheet to organize key information in an easy-to-review fashion, all on one page. It can help immeasurably to speed the evaluation and consideration of strategy options, and facilitate the crafting of relevant messages to your suppliers.

-- Robert Rudzki

Prior to founding Greybeard Advisors in 2004, Mr. Rudzki served as Senior Vice President for Bayer Corp. Prior to Bayer, he was an executive at Bethlehem Steel Corp., where he oversaw Bethlehem's global procurement and logistics activities. A frequent speaker at conferences, Mr. Rudzki is co-author of the supply management best seller Straight to the Bottom Line®, and On-Demand Supply Management. He is also the author of the leadership book Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise.

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