2 Key Strategies in Planning for Supplier Relationship Win-Win

Earlier this month we wrote “Is win-win in supplier relationships impossible? Andrew Cox thinks so, we’re not so sure” in response to “The Problem with Win-Win” by Professor Andrew Cox, ex Birmingham University, procurement guru, founder of IIAPS (International Institute of Purchasing and Supply) and Chair of its Advisory Board. It sparked further thoughts and we are delighted to feature them in a guest post from Stephen Ashcroft BEng MSc MCIPS, Procurement Risk Consultant, with Brian Farrington Ltd.

Back in 2005 I recall reviewing Professor Cox’s book “Win-win? The paradox of value and interests in Business Relationships.” Cox articulated that win-win, as an expression, is now so overused that it has become meaningless. Essentially, the belief that buyers and suppliers can both achieve their ideal outcomes simultaneously is simply not feasible, because commercial exchange is contested.

Cox is scathing of managers, particularly in Britain, strongly suggesting their lack of commercial competence and entrepreneurship is compounded by the lack of real-world experience in business schools’ faculties. The nature of win-win (one form of mutual gain) and mutuality (different forms of mutual gain) is fully explored for horizontal relationships such as joint ventures as well as vertical relationships, for example, transactions. It identifies three factors for variable performance: the lack of rigour in defining win-win, the over simplistic view of outcomes in business relationships and finally that practitioners (suppliers and buyers) suffer from a lack of objectivity in deal making – described by the author as false consciousness.

The manner in which Cox forensically exposes the shallowness of win-win outcomes is worthy of consideration. No doubt informed by Nierenberg and others such as Nieuweijer, Lax and Sebenius, Lewicki, Saunders and Barry. The conclusion is that uncritical and careless acceptance of the "win-win" notion by buyers is likely to result in suppliers gaining from their naivety (the author figuratively wishes the suppliers good luck in this strategy). Cox fails to present an analysis that probes the quality of pre-negotiation planning and presence of strategies.

What would Cox inject into business negotiations? That is the unanswered question.

For my part planning negotiations and considering whether win-win is possible (which I do believe it is in some situations) is critical. Valuable approaches to planning negotiations have been provided by Greenhalgh’s seven stages of negotiation (which are emphasised by the CIPS syllabus on negotiation), Lysons’ and Farrington’s five stages in the negotiation process or Glasl’s accepted nine stages of escalation.

Two key strategies to consider carefully in planning for win-win are:

Middle Ground Compromise

Compromise is often required to resolve operational and strategic differences. It is the degree of this compromise that is relevant to this consideration – and it is this that requires careful planning and modelling. If one party offers to ‘split the difference’ they are conceding in one move 50 percent of what they were asking for moments before. This is a massive signal to the other party that an amateur is present.  Compromise should be made in small bit sizes.  The offer to concede 50 percent undermines any other stances that have been taken in the negotiations.

Mutually Advantageous Concessions

This is a mature way to negotiate. It means that there is an exchange of concessions between the two parties. It also means that values are being placed on the concessions given and taken. It is vital that these vales are looked at from two points of view. It will require considerable probing (and planning!) to ensure that the concessions are fully understood and no misunderstandings are developing that could later undermine the negotiations.

Summary

Ideally, negotiations should be founded on mutual trust and respect. They should be conducted within a problem solving atmosphere, with sufficient time to tackle all issues. Negotiation planned and undertaken properly always pays dividends but it has also been the subject of a variety of quick-fit solutions and ploys. Some practitioners may hold a view that ‘it’s not like this in the real world.’ Theory, planning and practice indicate that logical persuasion and genuine business objectives is a heady cocktail of professional negotiation behaviour.

 

 

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