Price negotiations emerge as a critical area of focus when there are significant fluctuations in commodity prices. Recently, sales teams have spearheaded these negotiations, attempting to offset the sharp increase in raw materials, labor, and indirect costs through price increases. However, as some commodity prices have started to decline from their peaks, buyers have now begun to lead these negotiation strategies.
Even with good intentions, negotiations can encounter obstacles, resulting in stagnation or deadlock. For those familiar with our knowledge-based negotiation and cost courses, you will know that APD advocates for the collaborative negotiation strategies outlined in the book, 'Getting to Yes'. However, when a negotiation hits a standstill, I turn to 'Getting Past No', a subsequent work by one of 'Getting to Yes' authors, William Ury.
It's not feasible to condense a 200-page book into a brief article, so I'll highlight some essential points from both books that can be beneficial when a negotiation gets stuck.
Firstly, understanding why the negotiation got stalled is crucial. Ury cites five common reasons:
To avoid negotiation standstills, a history of collaborative negotiations, as outlined in 'Getting to Yes', should be applied:
Finally, the most valuable negotiation skill is the ability to stop talking and listen. When a negotiation seems to be at a standstill due to the other party's inflexibility, avoid threats and instead use questioning techniques to understand their positions and underlying interests better. Validate your understanding by summarizing what you've heard and asking for confirmation or further clarification. If they agree with your summary, they are likely more open to considering your viewpoints and interests.
Learn more about APD’s live, online skill development courses for manufacturing purchasing teams:
Cost Management Certification – Identify, analyze, and negotiate better pricing with suppliers
Commodity Leadership Certification – Building and implementing effective commodity strategies
Strategic Negotiations – Planning and conducting common negotiations in manufacturing companies
Advanced Negotiations – Skills to adapt communications for better negotiations
Strategic Sourcing Workshop – Quickly align your supply base and reduce costs
With one phone call, email, or clicking a link schedule a time to speak with the MetaExperts™ sourcing expert. You are just minutes away from getting your improvement initiative started or re-energized.
©2021 All rights reserved, MetaOps, Inc.