The evolving art of supplier negotiation – more data analytics please!

Yesterday, Barclaycard Payments revealed the findings of its survey in conjunction with Oxford University, asking more than 500 procurement decision makers across the UK from companies of 250-plus employees with a turnover of £6.5million and above, about their procurement priorities. This forms the next phase in a CPO research campaign to determine the attributes that procurement values and in which order.

It came through loud and clear that buyer/supplier relationships are topping the CPO agenda, along with an increasing demand for data analytics in the evolving art of supplier negotiations, which many see as ‘going digital.’

It is irrefutable that either party on either side of the table will benefit from better outcomes if armed with trustworthy, relevant data in any negotiation. But the views on how business negotiation will evolve in terms of the human interface versus a digital one, is clearly dependent on age demographics.

The use of data, and some kind of technology platform on which to run supplier/buyer negotiations, came through as more important to 18 to 34 year olds, who are 2x more likely than the older demographic (of age 55+) to use the technology. This is not surprising for a generation mostly brought up with technology as the first form of communication. However, 8 out of 10 of the entire 500, do see data analytics playing a greater role in their negotiations.

What is surprising is that 66% think digital will overtake people skills as a new generation moves towards online, app and email-based talks over the next ten years or so – maybe as the older generation retires this could be the case. But there remains much discussion from other quarters over the art of negotiation as a real and valuable people skill, and this is recognised by businesses which see this area as a high priority, and plan to spend one-fifth more on negotiation training this year compared to 2019. While one-to-one communication will remain important, it will certainly be backed by and led by useful data insights, which the user will need to understand how to wield.

Of the decision makers surveyed, half admitted lack of confidence in a face-to-face negotiating scenario - that applied to 53% of women and 43% of men. Of those who feel they haven’t been able to negotiate effectively overall, the main cause cited was lack of access to enough data. So data analytics will continue to be in high demand for the negotiation armoury.

As external eyes are looking more and more at how buyers treat their suppliers, naming and shaming on The Prompt Payment Code for example, and new legislation on late payments, it is becoming more and more important for the buying community to be transparent about the information on which they base their supplier interactions. In fact buyer/supplier relationships are appearing higher on the buyer agenda now than ever before – not just for the sake of consumer opinion but because they place greater value on the whole supplier ecosystem to their business.

Paul Fisher, Programme Director of the Oxford Programme on Negotiation at Saïd Business School, University of Oxford, commented: “Ultimately, what’s true across the board is that having accurate, timely and historical data – both internally and from your negotiation counterpart – is absolutely crucial to a mutually successful, high-value outcome … Indeed, the report shows that a lack of data could in fact be holding people back from securing the best possible deal …”

Marc Pettican, CEO, Barclaycard Commercial Payments, said: “It’s encouraging to see businesses acknowledge the importance of data as part of their negotiation strategy. Despite this, many leaders still struggle to get access to the right data in a timely manner.”

To rectify that Barclaycard has developed its Precisionpay Hub to help smooth procurement, take the friction out of the payment process, and provide a layer of meaningful data analytics to suppliers and buyers to help them get the best outcomes from their talks –whichever format they take!

We’ll be talking to Marc in more depth shortly about how Precisionpay Hub works and its benefits, so look out for that coverage coming soon.

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In the meantime, Paul Fisher has produced a set of his own tips to help businesses get the best possible deal, here are his top 10:

Find out as much as you can about your negotiation counterpart. Negotiation is not a competitive sport and the more you can put yourself in the other side’s shoes and find out about them – understanding their pressures and influences – the more likely you are to create value at the negotiation table.

Prepare. Many negotiations fail before they get to the table. Find out about your counterpart, research industry benchmarks, leverage data analytics, secure your internal mandate, agree on goals and put in place an effective negotiation strategy.

Negotiate the process. Where should we meet? What is on the agenda? What are the logistics and timelines? Negotiate an effective process and you are more likely to get a durable agreement.

Separate the people from the issues. There are two core elements to any negotiation – people and issues. Don’t let one destroy the other. For example, don’t let your personal opinions towards your negotiation counterpart impact the negotiation or the difficulties of the issues impact personal relationships.

 Think interests, not positions. Setting out rigid positions at the outset of a negotiation makes it difficult to be flexible. Instead, think of the interests that underly these positions. Ask the question ‘why’.

 Remember that people can see the same issue differently. Each side often has multiple and varying interests, some of which are of high value to attain and others which are of low cost to give away. It’s through each party trading on these differences that real value can be generated.

Make sure you have an alternative away from the table. The better your alternative to a negotiated agreement ((the good old BATNA) and your willingness to walk away, the stronger your negotiation position at the table.

Don’t be afraid to make the first offer. People adjust, rather than create, when making decisions. Therefore, making a first offer can have a strong impact on the negotiation – a tactic known as ‘anchoring’.

 

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