Global Leaders in Procurement & Negotiations (PSCMInstitute.com)

Tag: purchasing

  • Zycus Merlin AI Product Review: Transforming Procurement with Next Generation Intake Capabilities

    Over the last two decades, we’ve witnessed a number of players in the Source-to-Pay (S2P) sector, among them Zycus, Coupa, Ivalua, SAP Ariba, Donkey, Zip, Tonkean, and others.  Zycus has brought forward their new Merlin Agentic AI Suite, which they envision as a leading-edge solution that streamlines, simplifies and transforms the procurement request intake to pay management process.  Their stated goal is to leverage the promise of Agentic AI and drive breakthroughs in user experience, process efficiency, procurement results, and privacy/data security. 

    Given the magnitude of this new product launch, I wanted to explore Zycus’ Intake capabilities in depth – covering my perspectives based on specifications, use cases, and seeing it in action – to show how it drives improvements in traditional pain points in procurement, efficiency, end user experience, and enablement of strategic procurement tasks.  Let’s dive in. 

     Procurement Intake: An Underserved Process

    In nearly all cases, the procurement request or intake process is the first step toward purchasing goods or services. Despite its foundational role, intake has traditionally been a pain point for both end-users and procurement teams due to:

    1. Complex Processes: Manual request forms, multiple approval workflows, and unclear processes and ambiguity in procurement policy create confusion.

    2. Lack of Standardization: Procurement requests are often inconsistent, leading to incomplete or inaccurate data.

    3. Poor User Experience: Procurement tools are frequently unintuitive, discouraging users from engaging early or correctly.

    4. Time Delays: Approval bottlenecks and repetitive data entry slow down the entire procurement cycle.

    For procurement teams, managing this chaotic intake process consumes a significant amount of time, preventing them from focusing on higher-value activities like strategic sourcing, supplier management, and spend analysis.  Just as importantly, end users and their organizations get frustrated by these processes and may use them begrudgingly, or try to circumvent them altogether, neither of which builds goodwill with the procurement organization.  They can in fact add to the “roadblock” perception that procurement tries so hard to shed. 

    Zycus recognized these challenges and built Merlin AI Intake to tackle them head-on with intelligent automation, AI-powered insights, and an intuitive user interface which integrated into Microsoft Teams (MS Teams).  The days of the end user spending endless time trying to self navigate through catalogues with low tech chat bots and hopefully finding the right items from the right supplier are over.  Zycus has introduced a much better way, and I’m impressed.  

     Merlin AI Intake: Key Features and Capabilities

    # 1. Intelligent Guided Buying

    Merlin AI Intake simplifies procurement by leveraging Conversational AI to guide end-users through the request process. Rather than requiring users to navigate complex procurement systems or workflows, the solution offers a user-friendly, conversational interface that resembles consumer shopping experiences.  Spelling errors in your request, or don’t word it just right?  No problem.  Merlin AI Intake accepts descriptive inputs, rather than just requiring prescriptive inputs. I can’t emphasize what a leap forward this is.  “The HVAC system only blows hot air” is something Merlin AI Intake understand and helps you solve.  This is 21st century procurement at its best. 

    – AI-Powered Recommendations: Based on historical purchasing data, organizational policies, and user behavior, Merlin AI suggests the right products or services. For example, if a user needs office supplies, the system can recommend preferred suppliers, approved catalogs, or even suggest quantities based on past usage.  Further, if you go off contract, rather than letting the end user make their own random choices from the supplier wilderness, it makes strong suggestions based on pre-qualifications, and assigns scores to each supplier, helping the decision process to be a smart one. 

    – Policy Compliance Enforcement: Merlin AI ensures all requests comply with procurement policies and organizational guidelines, reducing maverick spending. If a user attempts to request a product from a non-preferred vendor, the system nudges them toward compliant options.  I think Merlin AI Intake will help make tail spends – something that has plagued procurement for all my decades in the business – a legacy problem.

    Interestingly, unlike legacy requestioning systems or even competitor intake offerings, Merlin Intake does not rely on rule-based system to codify the procurement policy. Rule based systems as we know have significant limitations:

    – Can get complicated to configure extensive rules

    – Often procurement policies different by region or Business unit within the same company

    – Every time there is a change or refresh in procurement policy, a reconfiguration is required in the intake system.

    Zycus’ Merlin Intake has used Generative AI for policy enforcement which ensures that the procurement policy is dynamically updated in real time in Merlin Intake for any changes to the underlying policy.

    By delivering these recommendations in real time, Merlin AI minimizes errors, ensures compliance, and accelerates the buying process.  For once, end users will feel like a system was implemented that was to their benefit instead of just for procurement’s benefit.  This is going to drive a much higher organic compliance rate.  

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    # 2. Conversational AI for Seamless Intake Requests

    One of the standout features of Merlin AI Intake is its conversational AI capabilities. Unlike traditional systems that rely on rigid forms, Merlin AI uses natural language processing (NLP) to interact with users intuitively.

    – Human-Like Conversations: Users can simply describe their needs in plain language. For example, instead of filling out multiple fields, a user can say, “I need 20 laptops for the IT team,” and Merlin AI will automatically:

      – Populate the necessary fields.

      – Identify preferred suppliers.

      – Suggest relevant product catalogs.

      – Kickstart the approval workflow.

    – Error Reduction: AI ensures data accuracy by prompting users for missing information or clarifying ambiguous requests. If a user’s input is unclear, Merlin AI might respond with, “Do you mean Dell Latitude laptops or HP ProBooks?”

    This conversational approach dramatically reduces friction, making it easier for end-users to submit requests while improving the quality of procurement data.  It might as well be a procurement person on the other end of the conversation, because that is exactly what end users will experience and perceive – which means huge time savings and improved results for procurement. 

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    # 3. Auto-Classification and Categorization

    One of the traditional pain points in intake management is classifying procurement requests accurately. Merlin AI Intake automates this process through its auto-classification engine.

    – AI-Based Categorization: Using machine learning, Merlin AI automatically categorizes requests based on descriptions, historical data, and product/service taxonomies. For example, if a user requests a “software subscription,” the system tags it under IT services, ensuring the request is routed to the appropriate workflow.

    – Data Standardization: By automating categorization, Merlin AI standardizes procurement data, improving spend visibility and analytics.

    – Routing Optimization: Proper categorization ensures requests are routed to the right category managers or approvers, reducing delays caused by manual intervention.

    This capability not only accelerates intake but also enables downstream processes—like sourcing, purchasing, and reporting—to function seamlessly.

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    # 4. Workflow Automation and Approval Management

    Merlin AI Intake eliminates manual bottlenecks by automating workflows and approvals.

    – Dynamic Approval Workflows: The system automatically determines approval hierarchies based on factors like request value, category, and user role. For instance, a high-value purchase might require manager and finance approval, while a low-value item could proceed with auto-approval.

    – Real-Time Status Updates: Users receive instant notifications on their request status—whether it’s approved, rejected, or pending further input.

    – Escalation Management: If a request stalls at a specific approval stage, Merlin AI can trigger escalations or reminders to avoid delays.

    By automating approvals, Merlin AI significantly reduces cycle times while ensuring proper governance and oversight.

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    # 5. Integration with S2P Ecosystem

    Merlin AI Intake is built in and not bolted on the S2P unlike the standalone intake tools. This means it seamlessly integrates with Zycus’s broader S2P suite and other enterprise systems, creating a unified procurement experience.

    – ERP and P2P Integration: Once a request is approved, it flows directly into downstream procurement processes like purchase order creation, supplier communication, and invoice management.

    – Data Synchronization: Integration with ERP systems ensures that procurement data—such as budgets, GL codes, and supplier master records—remains up to date.

    – Contract Management: If a request involves a contractual agreement, Merlin AI connects with contract lifecycle management tools to identify existing contracts or trigger new ones.

    This end-to-end integration eliminates silos and ensures procurement operates as a cohesive, data-driven function.  It also gives a huge edge over the competition, as the solution is not modular. It’s an enterprise-like solution  – no data handoffs, no modular applications glued together, no more endless privacy and data leakage points of failure.  It’s designed from the ground up as a singular capability, and it shows in every aspect of how it operates. 

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     The Benefits of Merlin AI Intake

    Merlin AI Intake delivers measurable benefits across the organization, transforming procurement into a frictionless and strategic function:

    1. Enhanced User Experience: The conversational AI interface makes procurement intuitive, encouraging higher adoption rates among end-users. Furthermore, end users can access Merlin Intake through the familiar MS Teams (Microsoft Teams) eliminating the need to login to the S2P solution.

    2. Faster Procurement Cycles: Automated workflows, approvals, and data classification reduce cycle times significantly.

    3. Improved Data Quality: AI-powered auto-classification ensures accurate and standardized procurement data.

    4. Cost Savings: By enforcing policy compliance and guiding users toward preferred suppliers, Merlin AI minimizes maverick spending and reduces procurement costs.

    5. Greater Efficiency: Procurement teams spend less time managing requests and more time on strategic tasks like supplier negotiations and category management.

    6. Increased Visibility: Standardized and centralized data enhances spend visibility, enabling better decision-making and reporting.

    7. Scalability: Merlin AI can handle a high volume of requests, making it suitable for large enterprises with complex procurement needs.

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    Key Differentiators for Zycus Merlin AI Intake

    In looking at the key competitors such as SAP Ariba, Jaggaer, GEP SMART, Coupa, Donkey, Zip, and Tonkean, they all have strengths, but there are a few areas where I see Zycus Merlin AI Intake as having a competitive advantage.  I’ve outlined those areas below.  

    AI-Powered Automation: Zycus Merlin AI Intake outpaces traditional competitors like SAP Ariba and Coupa by streamlining procurement intake requests using AI, ensuring accuracy and efficiency. Compared to stand-alone tools like Donkey and Zip, which are ‘bolt-on’ and rely on rules-based automation rather than true AI, Zycus delivers smarter workflows that evolve with organizational patterns and is built-in to the S2P solution.

    User-Friendly Workflow: Zycus’ intuitive interface within the familiar MS Teams, minimizes manual work and friction. While competitors like Ivalua and Coupa often face criticism for steep learning curves, tools like Tonkean provide workflow customization but require significant user input to optimize. Zycus simplifies onboarding and daily use with its straightforward and adaptive design powered through the familiar MS Teams application.

    Scalable and Flexible: Compared to Ivalua or Jaggaer, which require extensive customization, Zycus offers out-of-the-box solutions that adapt quickly to growing organizational needs. Zip and Tonkean provide flexibility for niche applications but often fall short in enterprise-level scalability without significant custom development.

    Seamless Integration: Zycus seamlessly integrates with ERP systems and third-party platforms while focusing on AI-driven value creation. Coupa and SAP Ariba achieve similar integration but with more rigidity. Donkey and Tonkean support integrations but lack depth in procurement-specific functionalities, making Zycus a more specialized choice.

    AI-Driven Insights: Unlike competitors like Zip and Donkey, which emphasize process automation but lack robust AI analytics, Zycus Merlin AI delivers actionable insights into procurement trends, user behavior, and cost-saving opportunities, enabling proactive decision-making.

    Configurable Workflows with AI Enhancement: Zycus offers configurable workflows enhanced with AI suggestions, providing balance between automation and control. While Tonkean focuses on customizable no-code workflows, it doesn’t leverage AI to optimize procurement intake as effectively as Zycus.

    Global Reach and Compliance: With a strong focus on compliance and global scalability, Zycus ensures alignment with regulatory standards across regions. In contrast, Donkey and Zip cater primarily to smaller-scale, localized operations and don’t offer the same level of enterprise-grade compliance features.

     The Future of Procurement with Merlin AI Intake

    As organizations continue to embrace digital transformation, procurement will play an increasingly strategic role in driving cost savings, innovation, and sustainability. Zycus Merlin AI Intake represents a key milestone in this journey, transforming procurement intake from a cumbersome task into a streamlined, intelligent process.

    By combining AI, automation, and user-centric design, Merlin AI Intake empowers procurement teams to operate with greater efficiency, accuracy, and impact. As the solution evolves, capabilities like predictive analytics, deeper supplier insights, and voice-based AI interactions are likely to redefine how organizations manage procurement requests.

    For procurement leaders seeking to optimize their Source-to-Pay processes, Zycus Merlin AI Intake offers a future-ready solution that simplifies intake, enhances compliance, and unlocks the full potential of procurement.

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    Conclusion

    Looking ahead to 2025, my advice to CPOs remains the same: don’t get caught on the sidelines with this.  Agentic AI capabilities in procurement are a game changer.  The train is leaving the station, and CPOs need to mobilize their organizations in the right direction or be left behind. There is an opportunity here to not only elevate end user experiences, but perhaps more importantly, for highly intelligent automation that will extract procurement from so many non-value added transactions and processes in ways never before possible – and allow them to focus on the more leveraged strategic sourcing activities that they were hired to do.  This then furthers procurement’s position not as a cost center, but as a source of enterprise advantage. 

    Zycus has been at the forefront of procurement innovation for over two decades, and Merlin AI Intake demonstrates its commitment to solving real-world challenges with cutting-edge technology. By transforming the procurement intake process with AI, Zycus not only improves efficiency but also enables procurement teams to drive greater business value. In a world where procurement is no longer just about savings but about agility, compliance, and innovation, Merlin AI Intake sets the standard for what’s possible.  From my perspective, the bar has just been set higher.  Much higher. 

  • The 3 Procurement Contract Deadly Sins – Part 3

    We are now down to the 3rd Procurement Contract Deadly Sin.  And it’s the deadliest of them all.  If you did not read the prior 2 deadly sins, these all feed upon each other. Here are links to the other 2:

    The 3 Procurement Contract Deadly Sins – Part 1 – Global Leaders in Procurement & Negotiations (PSCMInstitute.com)

    The 3 Procurement Contract Deadly Sins – Part 2 – Global Leaders in Procurement & Negotiations (PSCMInstitute.com)

    This 3rd Procurement Contract Deadly Sin is also the most commonplace.  Everyone is committing this sin, and everyone is suffering from it.  Worse yet, nobody is talking about it. 

    This deadly sin makes you spend 70-90% of every day in unproductive fire fighting activities.  In unplanned activities.   In activities that become the highest priority, but don’t contribute anything to your career, income, or job results. 

    The final Procurement Contract Deadly Sin is this: writing of contracts for goods and services, instead of for *PERFORMANCE RESULTS*.  

    Let’s follow this painful flow:

    • The end user asks for goods and services. 
    • You solicit or tender for goods and services.
    • You negotiate for goods and services.
    • You contract for goods and services.
    • You receive goods and services.
    • Your end user complains, not about goods and services, but about PERFORMANCE RESULTS.
    • Since the contract was written for goods and services, you have no recourse and no remedies, because you got exactly what you contracted for. It just wasn’t what the end user actually needed.
    • You now have to spend your time fire fighting solutions because your end user is unhappy, your suppliers are confused, and the contract you wrote is useless to help resolve.  And somehow it’s all procurement’s fault.

    Sound familiar?  What would you say if I told you the Fortune 100 is absolutely struggling with this?  How about if I said the Fortune 500?  The Fortune 1,000?   Keep going. 

    The procurement profession is struggling with this issue, from top to bottom, in every industry, in every country, at every level. 

    Is that bad enough for you?  

    And what is being done about it?  Answer: absolutely nothing.  The contract templates are for goods and services and the lawyers don’t have it as a part of their scope to address this. 

    The net result is frustrated end users, frustrated suppliers, and exasperated procurement professionals that are full time fire fighters, against their will. 

    The answer is to rearchitect the entire procurement process so that end user demand is articulated in the form of performance results, performance results are solicited and negotiated for, and performance results are contracted for.

    And guess what happens next?  You guessed right: Performance Results are received.  

    No more frustrated end users.  No more frustrated suppliers.   No more full time fire fighter roles for procurement.  Much more free time on your schedule. 

    This is not just a theoretical panacea – we’ve taken over a hundred companies down this path and helped them transform.  Not a single one has looked back.   It’s the only way to go. And with all those employees no longer spending 70-90% of every day in wasted activities, productivity levels have gone through the roof. And they actually have time to work on strategy.

    If you aren’t working on this transformation, then you are a slave to this profession. It needs to be your #1 focus as a procurement leader.

    Now go off and do something wonderful.

    Be your best!

    Omid G.

    “THE Godfather of Negotiation Planning” ~ Intel Corp

    P.S.  The CPSCM™ IS THE ONLY certification program on earth that does a deep dive on this contract transformation that we just covered. Omid G is your private instructor for 32 very dense and fast paced hours – see the materials and hear his voice throughout – online and on demand!   Learn these skills to put your career and departmental results on the fast track for success.   Contact my office at support@PurchasingAdvantage.com for a free demo for your department or to discuss in-house Procurement & Negotiation Capability Building efforts for your team. 

  • Negotiating with Suppliers that have ALL the Bargaining Power

    I have more and more clients that are struggling with pandemic negotiations with suppliers who hold all the bargaining power.  There’s really only 2 things that can be done to address this:

    1. Change the bargaining power dynamic
    2. Drive Investigative Negotiations and Value Creation

    Or you can keep hammering the supplier on price, but you are already doing that, and you were doing it before the pandemic too.   And right now it’s not working, or you wouldn’t be reading this I suppose. 

    Changing the bargaining power dynamic comes down to identifying the source of the supplier’s bargaining power, and then taking steps to reduce the value of that source and/or increase your bargaining power in turn. 

    The end goal of changing the bargaining power dynamics is to create a circumstance where your offer is perceived as being more desirable than it was previously. 

    I remember something Carlsberg Beer did with their soda ash suppliers (glass bottles are made of 70% sand and 30% soda ash).  The sand was plentiful, the soda ash was not.  They were dealing with a powerful oligopoly – almost a cartel of sorts.

    The soda ash suppliers were dictating the terms and getting them, because there were few alternatives.  Carlsberg didn’t know what to do.  The source of the supplier’s bargaining power was the oligopoly and Carlsberg’s lower volume. 

    Carlsberg couldn’t change the oligopoly, they couldn’t use something other than soda ash, and they couldn’t wave a wand and suddenly increase their volume requirements.  

    Or could they…..

    Carlsberg decided to take a disruptive sourcing move and talk with supply chain partners buying soda ash as well.  They put their requirements together and went to the oligopoly with a massive volume that was irresistible.  All in one take it or leave it contract offer.

    Now the oligopoly companies were going head to head for the business and a sweet deal was landed.  The bargaining power dynamics, once hard as steel, were melted away and the tables were turned.  

    This is just one example of how to change bargaining power dynamics.  You have to dissect the source of the bargaining power and take moves to undo it.  

    The other thing you can do is to drive Investigative Negotiations and Value Creation.   I have endless client examples of this.

    One example is with Tata Steel.   Tata is probably the biggest company in India – a massive conglomerate that has no equal elsewhere in the world that I’ve seen.  You can’t breathe air or drink a cup of coffee in India without Tata being involved.      

    They were negotiating with a German mining equipment supplier, the best in the business.   The Germans tend to do business cut and dry.  They had a hard as steel fixed pricing schedule.  Tata wasn’t going to get a single penny deviation from that schedule. 

    Tata thought about this problem, did some research – Investigative Negotiations – and realized that the mining equipment supplier had zero foothold in India.  How could this be?  But it was true. 

    That meant that they didn’t understand how commercia precedents worked in India.  They explained to the supplier that the volume at stake was not just that of Tata’s. 

    They explained that when Tata buys from a given supplier, this is an implicit seal of approval that the entire country of India uses to start buying from that supplier.  They then went through a myriad of examples. 

    They explained to the supplier that whichever company wins this business also wins the whole of India’s mining business.   This suddenly made the pie much bigger – Value Creation. 

    The rigid German supplier came back on their hands and knees with an incredible proposal to win the Indian marketplace.  Their first deviation ever from their hard pricing schedule.  

    Tata signed the deal, whereby the German party made far less money at the transaction level, but stood to gain FAR more in the aggregate from this new marketplace.   Both parties were thrilled with the outcome. 

    That’s exactly  how you do Investigative Negotiations and Value Creation. 

    If you are trying to solve your supplier bargaining power problems with management escalations and hammering the supplier, you’ll lose a lot of hair, but you won’t accomplish much else.     

    Read this Twice:  Doing what you’ve always been doing in negotiations will only deliver you the same results that you’ve always been getting.  And that’s not good enough.

    Now go off and do something wonderful.  Be your best!

    Omid G.

    “THE Godfather of Negotiation Planning” ~ Intel Corp

    www.PSCMInstitute.com 

    P.S. If you want to be a ROCK STAR at driving strategies like the above, check out the 100% online CPSCM™ Certification Program at https://pscminstitute.com/certification/.  You will see the materials and hear my voice throughout, as your own private instructor.  With almost 50% of the Fortune 100 having invested in CPSCM™, there is no equal in the marketplace.  Invest in your career and results today.  

  • Here’s Why Your Legal Dept Holds Up Negotiations

    Here’s Why Your Legal Dept Holds Up Negotiations

    I’ll cut to the chase on this one: The problem is not the legal department.  The problem is you and your procurement dept.  Let me explain.

    There’s really a few pieces involved.  We’ll knock one of them out now.  The legal dept is viewed as overhead.  That means they will never be sufficiently funded, and all stakeholders get impacted by that.  But we can easily overcome this by doing some other things right.  Lets keep going.

    Another part to this problem is that procurement throws red-hot contracts over the fence to legal and asks them to swiftly approve.  You might ask “what else are we supposed to do?”. 

    Well, you have to remember that contracts are risk shifting vehicles, and there are two basic types of risk: legal risk and commercial risk.

    Legal risk includes the potential for financial loss, litigation exposure, vulnerability to damages, public relations exposure, etc.  In short, the legal dept is really focused on limitation of liability, damages, indemnification, insurance, dispute resolution, and intellectual property. That’s their basic scope. 

    And with all the endless hours the legal dept spends in negotiating those clauses, how often have they actually gone wrong for you?  The answer is never.  Most procurement professionals go an entire career without needing any of the provisions that legal negotiated for those clauses.

    So why do we negotiate them at all?  Because they’re like seatbelts.  You put them on 500,000 times in case something happens once.  They’re important, and we need them. 

    Now the remaining clauses are all related to supplier performance.  Clauses that define what the supplier is to deliver, tying payment to performance, and ensuring that there are pre-defined remedies for failure to perform to these measures.

    Do you know how often these factors go wrong? How about almost every single contract you sign!  And do you know how much training your legal dept has in negotiating these clauses?  How about almost none at all! 

    And it’s not their fault.  It’s out of their scope.  It’s in your scope exclusively.  Did you know that?

    Read this twice: The #1 mistake procurement professionals make is to assume that when a lawyer approves a contract, that means it’s a good deal for the business. 

    WRONG.  It could be a terrible deal for the business. The lawyers are just focusing on the legal terms.  The commercial terms, which you are supposed to own, the ones that always go wrong, aren’t a part of their focus at all. 

    And so all the supplier performance trainwrecks that you have are because of the above.  Contracts that are highly effective in mitigating the risk of things that NEVER go wrong, and highly ineffective at mitigating the risks that ALWAYS go wrong!

    Now we get to the third part of the problem.  Our profession likes to save the contract language for last.  We tell the supplier “let’s negotiate price/warranty/leadtime/etc first, then we’ll get to the Ts & Cs.”

    Well, I have news for you.  When you tell that to a supplier, you’ve just become red meat in front of a lion. 

    What they hear you saying is “let’s finalize the commercial terms so you have the business in the bag.  Then once you’ve fully secured the business and have nothing left to lose, we’ll review the contract, and you can redline the entire contract because there’s nothing I can do about it.” 

    Read this twice: Contract terms that are “saved for last” in negotiations will always result in endless heartache for both you and the legal dept.  And those contracts take three times as long for the legal dept to process, because so much more is redlined. 

    And why does the supplier redline so much more when you save the contract for last? 

    Answer: Because they can.  Because you encouraged and incentivized it.  Because they’ve already won the business. 

    The final piece that procurement does wrong which results in the legal morass above is to not be legally savvy themselves and to not have a Service Level Agreement (SLA) with the legal dept. 

    The procurement dept needs to know contract law the same way a mechanic knows a wrench.  The relationship must be that intimate.  And once this knowledge level is established, then an SLA can be negotiated with the legal dept whereby many of the clauses can be negotiated by procurement, absent legal dept involvement. 

    And if you do all the above correctly, by the time the contract goes to legal, the contract will have far fewer redlines, many of the issues will have been resolved by procurement already, and the supplier will not yet have the business in the bag, because the contract terms were negotiated first and not last.  Also, the commercial terms, negotiated by procurement, will be rock solid. 

    Lets move this profession forward together. You can do this.

    Now go off and do something wonderful.

    Be your best!

    Omid G.

    “THE Godfather of Negotiation Planning” ~ Intel Corp. 

    P.S.  We are pleased to announce our new brand: Procurement and Supply Chain Management (PSCM) Institute.  Our new website is www.PSCMInstitute.com.  We have a special offer waiting for you: sign up for Free Membership and get exclusive access to our Power Purchasing Pro course, normal price $397.  Many other benefits await.  Register now!

  • The Fallacy of At The Table Negotiations

    The Fallacy of At The Table Negotiations

    I saw an article just this last week in LinkedIn describing different scenarios for buyer and seller to go back and forth on negotiation terms for best outcomes – offer, response, counter offer, counter response, etc. 

    It was touted as a game changing system, and was even given a name and trademarked, indicating it was something new and innovative. 

    It’s something I’ve been familiar with since the early 90’s, and I regret that it’s still being taught.

    If you go back to the invention of currency, and probably much earlier, this is how we always negotiated.  Each party trying to get more of the pie in return for less of what they have to offer in return. 

    This was the earliest form of what I call “At the Table Negotiations”.

    Meaning, this trademarked system is hardly new.  Yet it’s highly glorified.  It’s what we picture when there are the greatest stakes of all – with parties intensely negotiating at the table. 

    But all of that is for people who learned how to negotiate by watching TV shows and movies.  Or perhaps as a child, watching your parents barter at the local market. You’re not going to win any negotiations this way.

    Read this twice: Negotiations are won and lost before they ever start.  They are won FAR before you ever engage in At the Table Negotiations.  Anyone who tries to teach you how to win negotiations at the table is at best still stuck in the 1950’s.

    There really needs to be a well rounded approach for achieving success in negotiations.  In fact, the very definition of negotiation success needs to be redefined.

    The 1950’s and prior definition of negotiation success is how much of the pie you can get.  It’s parasitic negotiations.   You gain at the other party’s expense.  Value is being transferred instead of created.

    Negotiation strategies need to involve value creation before going to the table.  This involves researching what keeps the other party awake at night, and creating strategies to help make them more successful out of the deal, while costing your side very little. 

    This is why you are paid the big bucks, and it’s not optional in high stakes negotiations. 

    The other piece that has to be done is bargaining power analysis.  If you find yourself in a negotiation where you lack bargaining power, then you’ve driven yourself to the middle of the desert knowing you have no gas or drinking water.  You can’t let it get to that stage.

    You need to do an in depth analysis of what the source of their bargaining power is.  What exactly and specifically is it that gives them their bargaining power?  You need to understand this FAR in advance of negotiations very, very well.

    What might it be?  Almost anything.  Here are just a few:

    • Perception of highest quality
    • Monopolistic supplier
    • Switching or startup costs associated with adding or switching to new supplier
    • End user or business unit allegiance
    • Production capability
    • Access to critical material(s)
    • Etc.

    Then you need to architect a strategy to change that bargaining power to your favor.  The shift may not happen right away – it may even take years – but you can conspicuously lay the seeds right under the supplier’s nose.  They’ll get the picture. 

    Then there’s internal negotiations.  Most external negotiations fail because of failed internal negotiations.  Being fully aligned on the SOW/Spec hardly qualifies as internal negotiations alignment. 

    There’s alignment regarding procurement and negotiation strategy, sourcing approach, business shifting, standardization, alternative materials, timing, external communications, internal communications, management influencing, deal positioning, cost modeling, vendor evaluation criteria, and so much more.

    This is just skimming the top of things that need to be done in advance of At the Table Negotiations.  If all you are doing is getting trained in and executing to At the Table Strategies, you are stuck in some very old quicksand. 

    The CPSCM™ Certification Program – already invested in by half of the Fortune 100 – will position you to fast track your career and be a Negotiation Godfather.  In exactly 32 days, a huge announcement is coming and all of you need to be paying attention.   CPSCM™ Certification is going to be attainable by everyone.  Don’t miss it.

    Now go off and do something wonderful.

    Be your best! 

    Omid G.

    “THE Godfather of Negotiation Planning” ~ Intel Corp

    www.CenterforPSCMexcellence.org