How Much Time Are You Spending Preparing for Negotiations?
I’m here to break myths and to kill bad practices. We need to start doing business differently as purchasing professionals.
Putting out fires all day is not going to cut it. Hey, I’m not an academic, I’ve been there, remember?
I was doing public and in-house seminars all last week. I over did it and my voice is completely shot in fact. Anyways, I’m always reading body language when I present, and I always know when I catch the audience off guard.
What caught people off guard in one seminar was when I told them that “negotiations are won and lost before they ever start.” They all looked at me kind of funny. Their non-verbal communication was “how could that be?”
Well, think about when you go buy a car. Could you imagine going in cold without having done homework on invoice, dealer buy-back, prices from different dealerships, etc? You wouldn’t.
And the win was in the preparation, not in the negotiation itself. Just ask any championship prize fighter. They train and ten hours a day for one year just to engage in a single one hour fight.
Sure a lot happens in the ring, but it’s what happened out of the ring that is the biggest factor of all.
So why should your negotiations be any different? The answer is they are not.
So my question to you is, what % of your time are you spending preparing for negotiations?
Be honest. Don’t say what you think I want to hear. And I’ve been in your shoes, so we’re in this together.
The truth is this: you are so swamped putting out fires (a “fire” = any unplanned activity that consumes time in your day) that you don’t have the time to prepare the way you’d like for negotiations. I know, because purchasing professionals in every industry in 15 countries have told me so.
What happens then? You become a REALLY good firefighter, but your actual negotiation skills languish, because you never have the time to practice and develop them. It’s a vicious cycle that feeds itself.
Here’s my take: I want you to be spending 80% of your time allocation for a given contract preparing for the negotiations. Sharpening the axe before ever going to cut the tree.
The irony is, if you start doing this up front preparation activity, the backend fires start to go away. The reason is that the root cause lies in not taking the time to address preventative measures up front.
Think of it this way. Suppliers are in the business of making money. Can you blame them? If you are in the private sector, your company is too.
Let me tell you a little secret: Suppliers know exactly how prepared you are…..or aren’t… when you negotiate with them.
And let me tell you another little secret: You’ll never know that suppliers are reading your level of preparation and knowledge. Why?
Because they are TRAINED to act like you are raking them over the coals. They are trained to make you feel like you are the world’s best negotiator.
What happens then over time is about the same as what happens to a car that never gets an oil change. Things don’t run right and you burn out.
Make yourself better. Purchasing is such a great place to be if you do that. You may not directly influence revenue, but you sure as heck influence profit. Do you really know how powerful that is?
Get good at negotiating. Learn how to do cost modeling. Know when to benchmark and when not to. Know how to call the other side’s bluff. Know what tactics they use and how to anticipate and respond to those.
Most of all, learn the supplier’s motivators – the ones that don’t impact TCO – and figure out how to find a Win/Win in the deal by turning those into concessions that you trade for some big TCO wins.
Once you get good at these activities, negotiations will be less of an event than they are today. And forget the benefits this holds for your career and income, you’ll be happier with your job. That’s worth a lot in my book.
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