In time of supply chain chaos, lead negotiators feel they have lost any leverage they had and instantly transition from a strategic leader to a tactical fire fighter. I woke up in the middle of the night as I often do and had to wonder…. Did anyone realize in 2020 that in 2023 we would still be experiencing border back-ups, vessel capacity constraints and lead times that have now been extended as far as 26-52 weeks? As a supply chain executive dealing with clients that are experiencing this on a day-to-day basis, no wonder I don’t sleep. In 2020 I certainly had the sense that the situation would not be short lived. For us in supply chain, personally and professionally we were feeling the wrath.
The situation we now face demands collaboration, collective cross functional interface, and a strong skill set. Negotiations in a demanding purchasing environment is not for those that are unskilled in the art of negotiating. We are experiencing strained relationships with the supply base, cross-functional disciplines have become silos and decentralized, tactical fire fighting is an everyday event and supply chain team members have become fatigued. This fatigue has left many supply-chain associates (lead negotiators) wanting remote only work, no travel and no global interface creating late night or early morning work hours. Inside of this new work paradigm, the skill of “negotiating” is disappearing quietly into the background.
The ability to effectively negotiate is a skill that is refined over time and requires a lead supply chain associate to clearly be able to relate to a clear line of visibility within the supply chain. That full line of visibility includes experience in some if not all the seven disciplines of supply chain.
The Disciplines include:
- Order entry/customer service
- Supplier quality
- Inventory control/planning and scheduling
- Global logistics
Success and sustainability take strategic as well as tactical maneuvers. Let’s begin with the art of “negotiating”. Statistics have shown that collaboration techniques provide results which lead to improved performance, complexity which is shared, flexibility, creativity and trust created for both parties.
The challenge can be overwhelming during volatile times to work collectively and collaboratively internally and externally. The biggest issue today is skill set or the lack thereof …
- Supply chain associates are not only hard to come by but often do not know the art of negotiating. As I have always taught my team members…. stick to the basics.
- Integrity and ethics always come first – remember you must look at yourself in the mirror
- Get the facts and data gathered beforehand, they will speak for themselves
- Lay-out your strategy, feel good content, give aways and must haves
- Role-play, your supplier and their current situation
Know yourself and your organizational goals. All of us in supply chain have our own style when negotiating and this can lead to great contributions. Now is the time to refine our skills and return to the basics. I fondly refer to this as “Negotiations 101”!!!
Renegotiating contracts terms, payment methodologies, material indexes and inventory levels are unavoidable in this environment, being prepared is a must. But how about those organizations that are struggling to find procurement professionals with negotiations skills. Easy…. it all about the training and if you don’t have the people who can train then reach out to those that have experts on hand. Training should include
- Bid Process – RFQ/RFI
- TCO – Total Cost of Ownership
- Negotiation Strategies, including the basics mentioned above
- Business Case Development - including SQ&D approval, engineering, operations and
- Finance approvals.
Yes, there are additional training techniques, but now is the time to return to the basics, negotiate and re-negotiate with fact and data and most importantly with skill and collaboration.
Cornerstone consulting has experts on hand to help you with contract, temp to perm or perm placement of supply chain experts. Contact us for your supply chain needs.
Stay tuned, next month I will be returning with a blog on the importance of the SIOP process.
Mary Blair is an accomplished Supply Chain executive, Blair brings to her role more than 25 years of leadership experience in strategic procurement and supply chain on a global basis. She has led transforming initiatives in the areas of procurement, logistics, and supplier quality, and has a strong track record of building winning teams.