Stakeholders in Procurement Negotiations

Posted 17/01/2017

There’s a story in every purchasers heart about being given a negotiation to do and the key stakeholder in the organisation has already told the supplier that they have the work. It’s not a one industry thing, or a one country thing. It is universal and the skills to deal with it should be discussed in procurement negotiation training .

Why is this? How can such a situation be so common? Well, there’s a common thread in here, which is both about how we recognise which stakeholders are engaged in a negotiation, and helping them understand what negotiation is about. We should be under no illusion that stakeholders have considered any supplier transaction as a fully rounded activity covering the technical, commercial and legal positions which are necessary. Rather, we should approach stakeholders from the perspective as bright and intelligent people who need the opportunity to think of a negotiation in the round and also able to consider their role in that. 

There are a number of well used techniques we can draw upon from the broader world of Procurement, Category Management and SRM. The first is the stakeholder map, where we can work on identifying all the people who could contribute to / entirely disrupt (delete as appropriate) a negotiation. Using the map, we can take a view of their likely approach to a negotiation and therefore the actions and influencing we may need to develop to make sure they are active in a positive and supportive way. We may need to get as far as a communications plan to ensure that there is a steady level of influencing and story heading towards our stakeholders. We might also want to bear in mind that educating them about the negotiation process will have a longer term benefit beyond just a single event. 

We also need to lean heavily on the concept of business requirements to make sure we have a clear view of all the areas that need to be negotiated - or not negotiated, as the case may be. Again, we will be clarifying areas with our stakeholders, and we will be making sure that we are getting a grip on the expected outcomes in a range of areas. A key part of this is making sure we’re looking at the whole negotiation, and making sure the linkages are clear between different elements. There’s a big risk of separating the negotiation out into a whole stream of different elements and losing the benefit of the cross linkage of different parts. Having said that, there may be areas which we identify where we want to break the linkage (perhaps to defend an area of weakness) but having the whole picture helps do that. 

A third element we can work on with Stakeholders is Supplier Conditioning - how we persuade the suppliers of a particular direction or challenge in the negotiation to make sure we have some level of advantage. Our stakeholders will often hold key parts of the relationships for themselves and as such we need to make sure that the overall story going to the supplier is coherent and aligned across all those talking with the suppliers. 

We may also want stakeholders involved in key parts of the negotiation. If we do that (and it can be extremely helpful), it is useful to make sure the stakeholders understand their role; picking a definite role such as summariser can be useful as it gives them something distinct to do. 

We need to examine our stakeholders roles in negotiations and consider, with them, how that could be improved over time. If we work diligently on this, it will improve our outcomes dramatically. 

I’d encourage you to think about your last negotiation and see if your management of stakeholders was good enough – and what you could do differently next time!.  Feel free to share, so we can learn from each other.

Our next blog in this series is on The Scope of the Negotiation .

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Tagged by topic: Negotiation

  by Allison Ford-Langstaff

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