September 15, 2014
People tend to negotiate naturally and most of the activity is done subconsciously.
Negotiation then becomes a basic and generic human activity applied in business and social circles.
The skill is expected of every diplomat to keep peace with other nations or to solve complex matters and labour representatives to resolve labour matters with management.
For the reason that everyone negotiates about numerous things in various situations, knowledge and skill in negotiation is essential to everyone who works with others or through other people to accomplish objectives.
Procurement deals require massive negotiation and hence the need to have skilled negotiators in the buying team.
The important factor for the success of every negotiation is the need to understand the situation that will be bargained for. The negotiation process takes into account bargaining and poor bargaining techniques lead to poor deals for the organisation.
It is therefore critical to understand the situations that require bargaining, what the process of bargaining involves and how to analyse, plan and implement a successful negotiation.
Bargaining and negotiation are interchangeable in common language, there are normally regarded as the same.
In procurement management, the words mean different things.
Bargaining is more like the competitive haggling over price that happens in open markets, whereas negotiation is more formal. It is a civilised process that occurs when parties try to find mutually acceptable positions to a complex conflict.
Negotiation process is therefore an interpersonal or intergroup process that is intended to address an area of conflict of interest between two parties. Parties have to search for a way to resolve the conflict.
The reason for negotiating is that parties believe that they can use some influence to close a better deal instead of simply taking what the other side will voluntarily give them or let them have. Negotiation is therefore a voluntary, but necessary process in procurement.
It is a strategy pursued by choice; seldom are we required to negotiate.
Negotiation becomes the backbone of all procurement activities. We negotiate to enter into contracts, whether long term or short term. We negotiate during contract management to resolve variations that we meet during the contract. All the five rights of buying are subjects of negotiation.
We negotiate the quality, quantity, price, time and place of delivery. All these attributes have a bearing on each other, when we negotiate, we give and take.
It is expected that both sides modify their positions when demands are interchanged resulting in variations to quality, quantity, time and place of delivery, the tangibles of a negotiation process.
Quality requirements may alter the price and time of delivery. Time requirements may alter the price and quality requirements. On the other hand, price adjustments have a bearing on the quality and time of a delivery. Successful negotiations therefore involve the management of the intangibles as well as resolution of the tangibles.
The intangibles are the deeper psychological motivations that may directly or indirectly influence the parties during the negotiation.
These include the desire to look good to the people you represent, the desire to achieve and the fear of setting precedence when you negotiate.
It is therefore important that the procurement curriculum incorporates negotiation as a subject. In addition, employers must ensure that procurement staff attend at least once a year, training on negotiation techniques.
Nyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: firstname.lastname@example.org