It’s so easy to get caught up in day-to-day operations that you don’t have a moment to celebrate nor reflect on the key wins you experience. Hear from 7 Procurement Experts as they reflect on their own successes and the strategies they used to close the big deal.
This article was based on research conducted by Conti Advanced Business Learning (www.cabl.ch), a Swiss training company that specializes in Negotiation & Influencing training.
While preparing for a large negotiation (contract value > CHF 500 MIL.), we had to have senior executive’s approval of our strategy. We influenced the stakeholders by tailoring the message to them and pointing out the things that are most important for that individual stakeholder. The decks we prepared for these meetings were all different, but they all came to the same conclusion (i.e. our strategy). This approach worked beautifully as we were able to show each senior executive that our strategy would match exactly with his goals.
Revisit the rules of the game
Last year we had to renegotiate a really unfavourable letter of intent. The document had been signed without being negotiated upfront, the commitment was very large and the conditions totally unbalanced towards our stakeholder. Our contact appeared not willing to come to a new agreement until we discovered that they just didn’t have the authority to change the old one. With the right escalation, we were able to skip the bottleneck and to reach the right decision-maker, thus negotiating a contract more favourable for us.
Francesco Lucchetta, Director Strategic Supply, Pentair
Moving from single to multi-sourced positions
I moved forward to negotiate with a current contract manufacturer with whom there was very important volume commitment on the yearly sold unit and with high prices. We were in a single source situation, with no active alternatives.
We opted to change our supplier position (from single-sourced to dual sourced) and insisted on a “should be cost” approach & open discussions. The negotiation yielded a 29% cost reduction, a decrease of 75% of committed volumes and improved quality and service through the joint program.
Elodie Cramer, Associate Director, Biogen
Be persistent and decisive in salary negotiation
I was contacted by a company that wanted to set up a Global Sourcing Organization. Their offer was not attractive given I knew they could achieve millions of dollars in savings. Their first offer was a simple rejection from my side. When they made their second offer which was more competitive, I only accepted it on the basis that I could get 7% on top of the total achieved savings. They quickly refused. They refused because it was not in their standard salary methodology. I ensured them that my proposal was fair and I kindly asked them to review their offer. They made a third offer that was relatively attractive but because of their approach, I decided to ask for even more.
After 2 weeks without any news, I called them and thanked them. I reiterated my interest in the company and its global project. I said that I was sorry that we could not find an agreement despite all the efforts made on both sides and I wished them the best however at the last minute and over the phone, they agreed on the package I requested.
Fabrice Hurel, Director Global Indirect Sourcing, Emerson
Explain the external factors that affect the negotiation
One of the overseas suppliers we were buying with didn’t want to commit to selling in USD but in their local currency. Their currency was dropping compared to the USD so our margins were literally vanishing over time. We offered to partner with the supplier to reduce the costs in order to capture back some of the lost margins. To get them to change their ideas, we explained to them that our selling price was very low and that the alternative was pruning the product. This shifted the deal to a more cooperative business relationship.
Romain Roulette, EMEA Procurement Director, Bausch Health
A straightforward negotiation can turn into a lot more
I started negotiating a commodity and finished with a strategic partnership! The negotiation was related to a global deal on furniture. But what was initially regarded as a commodity by my company progressively turned out to be a potential strategic partnership. Through the negotiations and open discussions, the vendor and I discovered that the two companies would have a lot of benefits and intangibles to bring to each other. We ended the negotiations with unbeatable prices and conditions, and a new partner willing to develop new business opportunities with us!
Olivier Cachat, Chief Procurement Officer, IWG.
Involve the right people
It is the first important negotiation of my career. As a young Purchasing Manager at P&G, I was negotiating a long-term agreement with a resin supplier. The standard in the market was to have monthly negotiations while we were able to reach an agreement on a long-term pricing agreement. It was a breakthrough at the time. The key to success was understanding the barriers to an agreement and supporting the Sales Manager to get buy-in from his management and the other internal stakeholders that were uncomfortable with this type of long-term agreement.
These answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.