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Approaches in the negotiating process - Coggle Diagram
Approaches in the negotiating process
There are no opportunities for negotiation during stages 4, 5, 6 and 7.
That is, during the:
-
preprocurement market test and engagement stage
,
-
developing (tendering) documentation
,
-
supplier selection
issuing the Invitation to Tender or Request for Quotation stages
Principled negotiation is based on four fundamental principles:
Insist on using objective criteria.
Invent options for mutual gain, and
Focus on interests, not positions
Separate the people from the problem or issue
Types of conflict:
-Those that arise from the content of the negotiation (what is being negotiated)
-Those that arise from the process of negotiation (or how it was being negotiated)
Identifying the power of the buyer in comparison to the supplier:
PESTLE
Porters 5 forces
Supplier positioning or supplier segmentation
Increase negotiating leverage by consolidating spend with only a few select suppliers, so they become the main suppliers for a certain product
through analytics- run a report to see who you spend the most money with for that product, and negotiate
by making the organisation look like an attractive customer through its contracts i.e cruises, marella big contracts
Conflict arises from:
allocation of risk
Flexibility
Payment terms
Price
Quality
use of own terms and conditions
BATNA (Best alternative to a negotiated agreement)
This is an alternative if the negotiation fails. This alternative may not be attractive, for example, it may mean using a cheaper supplier with a poorer track record, but at least it is an alternative, and this is important
Minimising conflict in negotiation:
-agree ground rules for both parties before the negotiation meeting
-managing different positions in order to win-win
Negotiation could happen at these stages:
-In the bid or evaluation stage of a conventional tender or quotation process
(if they have stated that in the contract that there will be further negotiation)
-During the contract award stage(before the award is given)
-During the delivery of goods or services stage
-During contract performance review, if there is a disagreement over performance the buyer may need to negotiate with the supplier when reviewing their performance against the contract.
-Negotiation will be needed when conducting supplier relationship management and developing end of contract arrangements
Public sector- this normally has restrictions on when and under what circumstances
buyers can negotiate with tenderers
This is because negotiation is seen as non transparent and it's hard to apply the principle of equal treatment.
For example, negotiation isn’t allowed under the Open and Restricted procedures. However, it may take place under competitive dialogue, competitive procedure with negotiation, and innovation partnerships
Types of trust: ( identified by Maro Sako)
competence trust, based on qualifications or certified technical capability
goodwill trust, based on knowing the other party has your interests at heart
contractual trust, where damages can be claimed competence trust
Ways to approach a negotiation
Colaborative/Integrative- win win
Distributive- win loose (max adv to itself)