Supply chain management (SCM) is the broad range of activities required to plan, control, and execute a product’s flow, from acquiring raw materials or services, getting them converted into finished product or solution, and then effectively delivering the same to the final customer, in the most streamlined and cost-effective way possible.
A few days ago, one of my friends asked me, “Why is supply chain role important for any organization?”
Though a simple question, which could have been answered by saying to save cost, but before answering, I asked myself what successful SCM professionals actually do? The answer which I got from my heart and crown chakra was supply chain leaders keep chaos at bay and ensure seamless and most effective synchronization of the activities for the business.
A successful SCM team not just negotiates but contributes holistically towards the entire product lifecycle right from the time a product/solution is being designed till the time it is getting delivered to the desired audience. An effective supply chain team provides an immediate competitive advantage to the organization, allowing business to reduce the inherent market risks.
How to pick the right negotiation strategy during any commercial discussion is a seperate topic by itself. However, in this article we will focus on discussing the key behavioral aspects, which a buyer should inherit before initiating any strategic or big-ticket negotiations.
Know your business needs by asking why
Traditionally, buying methodology was to get the requirements from the user, start looking for potential suppliers, enter into negotiations and establish a competitive price benchmark, using various negotiation methodologies, before allocating the business to the selected supplier. While this approach used to work decently well earlier, but in today’s environment when with every passing day technology is evolving, in fact the pace of technological development is not going to slow down if anything, it will increase. On the other hand, the flow of information is matching the speed of thoughts; under such scenarios, if the traditional approach is followed, unfortunately, the buyer will lose the advantage even before the start of negotiations.
Simon Sinek, renowned motivational speaker and organizational consultant, has very well said that before acting on any requirement, ask why because in this question lies the entire thought process of why the solution is required, why the buying is to be done at all. This is to ensure that till the time buyer is not sailing in the same boat as the user, a successful negotiation cannot be initiated.
After why, comes what. This means what could be the potential ways and solutions for fulfilling the requirement, and is the chosen solution the most efficient one or are there better and leaner solutions available to fulfil the need? Once both these questions are answered, comes how and this is the portion where all of us are quite proficient and well versed.
Bring clarity of thoughts
Buyer needs to have the utmost clarity of what the organization intends to achieve out of the negotiations, which he/she is entering into. This can only happen when the buyer moves away from the dominant focus on unit cost reduction that still prevails in many organizations, to playing a wider and more fundamental role in the organization. While in a negotiation there can be numerous discussion points which will be talked about, a smart buyer should be able to distinguish the critical points for himself and critical points for supplier, which both the parties will not want to compromise on, apart from the price, and reach a mutual agreement on them so as to build a symbiotic negotiating environment because they say a successful negotiation can only happen when both sides establish a trust that their interests are taken care of.
Negotiation is a process which involves a frequent exchange of information, and hence takes time. Teams negotiating are human beings and cannot blurt out everything upfront, just like you would not show all your cards at the outset either. The key is to listen. The information you obtain will tell you about the real interests involved in the negotiations and assist you in creating options and solutions, and conclude with a win-win agreement.
Here are six ways to develop good listening skills:
Never interrupt. Good buyers never interrupt when the other side is talking. If there is any clarification required, pen it down and continue to give your undivided attention. This will ensure that you do not lose your point and the same can be clarified when they have finished, if they have not answered them already (which they often do). Stopping the flow of information is very risky because they may be about to reveal everything you need to know.
Let your body do the talking. Maintain eye contact, nod every so often and occasionally smile as they are speaking. This shows the other person that you are paying attention and makes them feel comfortable about revealing more information.
Sum up in your own words. This indicates to the other person that you have understood what they said. It basically involves summing up what you have heard in your own words at the end of the conversation. This is the time when you can also mold the thoughts of the speaker and get your version included in his pitch.
Frequently seek clarification. Ask questions about what the other person has just said. For example, ‘I am not sure what you mean by….’ It is a further indication that you are paying attention.
Acknowledge the speaker. This does not mean that you have to agree; it just shows the other person that you value their point of view. Be sincere when you acknowledge them and always look them in the eye, even if they are angry or threatening. Once they have been heard, you can go on to show how your point of view is also valid.
Agree as often as possible. Agreeing to what the other person is saying creates a very positive negotiating environment. Find little things to affirm and you will not only set a pattern of the agreement but also make the other person more confident about sharing information with you.
By listening attentively, you will also notice the things the other person does not say and this could tell you a lot. For example, they may be quiet about their reasons for a particular settlement date, which could indicate that they are under more pressure than they want to let on. Make every effort to understand what the other party is really trying to say; read between the lines. Determine whether the words they are saying match their body language.
Power of the pen
English author Edward Bulwer-Lytton in his historical play Cardinal Richelieu said: The pen is mightier than the sword. This statement holds true in any negotiation and a smart buyer has to develop a habit of using this tool effectively for his benefit. Once you have listened completely to the speaker, try to take control of the pen and the board, sum up the entire conversation in your own words on the discussion board. This indicates to the other person that you have understood what they said. This also gives you an opportunity to mold the thoughts of the speaker. However, while writing, you have to ensure that you write the information in such a manner as suits your objectives without modifying the core content, which speaker had just said. Many a time you will observe that by doing so, you will force the supplier to self-negotiate, and they themselves will leave certain points which would have taken time once the negotiations have started.
I am sure that by practicing above behaviors, we will not only become smart buyers but better human beings as well.
Enjoy the negotiations!