Buyers Meeting Point procurement by Kelly Barner

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Book Review: Mastering High Stakes Negotiations

AdobeStock_HSNegotiation

I cannot guarantee whether you will be successful after a well-prepared negotiation, but I can 100 percent guarantee failure or finding yourself outsmarted and in a concessionary position if you choose not to do a thorough prep prior to a negotiation.” (p. 38)

 

Mastering High Stakes Negotiations: Both Sides of the Table by Mark M. Bilgin, Ph. D. (BookLocker.com, 2017) is true to its title in that it lays out all of the considerations associated with the most critical, highest dollar value negotiations conducted. In an odd way, however, even meeting that high bar is still selling the book short.

If you are a people watcher, or a student of human behavior, you will absolutely love this book. I was immediately drawn in by the author’s use of case studies, both his own and the ‘outside’ experiences of others to illustrate in colorful but honest fashion the incentives and pitfalls associated with negotiation prep. Negotiation is, at its simplest level, the use of leverage, exchange, and (somewhat) predictable human behavior to bring parties together for their perceived benefit. As a result, you can not be a master negotiator without being aware of and interested in what people say and do. That may come as a great relief to anyone that still thinks negotiation is about aggressively dominating ‘them’ to get what is best for yourself at any cost.

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No Leverage? No Problem: Tips for turning a lack of negotiating leverage into a winning strategy

No Leverage? No Problem: Tips for turning a lack of negotiating leverage into a winning strategy

 “We take a buck, we shoot it full of steroids and we call it leverage.” -Gordon Gecko (Wall Street 2)

 

Leverage - a word that has such meaning it could be used to define itself. When it comes to negotiating, leverage is king. Whether you’re trying to negotiate a multimillion dollar contract or figuring out how to get an extra quart of strawberries included with your purchase at the local farmer’s market, people are always searching for it, and without it you have nothing. Having no ground to stand on when attempting to ask for a compromise from another party is not an ideal position.

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The Legacy Telecom Disadvantage

The Legacy Telecom Disadvantage

How often can you find 80% savings in your telecom bills? When it comes to legacy services, more often than you’d think!

In all industries there are mergers and acquisitions: Telecommunications and Technology being one where M&As occur more frequently than most. These changes can have significant impacts on the products and services customers are purchasing in terms of the actual technology being offered and the prices they are paying for it.

 

I recently completed an audit for a customer in the healthcare industry where I was asked to review their telecommunications invoices and look for more cost effective solutions than their current voice services. The first thing I noticed was how high their bills were for basic voice services - almost 480% higher than normal industry standards! The customer had not really looked at their bills for years and simply continued to pay the same monthly charges thinking all was right as rain. Understandably, patients are the priority for them - not the cost of their phone service. For this specific customer, the technology they had in place was a legacy service where the underlying carrier had recently been bought by a global industry leader, who had subsequently developed more cost effective products offering the same functionality at a much lower price. Unfortunately, carriers do not always offer up the insight into technology changes and lower cost options when it is in their best interest to keep the higher price bills in effect.

Presented below are some quick tips for reviewing your telecom bills to determine if a change in service is viable, beneficial, or more cost effective:   

  • Recurring Charges: How long have you been paying the same price? Pricing changes are common with technology-driven services. If you have had the same price for 3-5 years and under multiple contract terms, it is time to take a look at the market with fresh eyes. There are always compelling reasons or special circumstances for contracting a fixed price for longer terms such as newly implemented networks and systems; but for basic voice services…I don’t think so.
  • Time Passed Since Last Going-to-Market: As mentioned, most telecom companies are continuing to develop new innovative ideas and upgrades to their technology; most likely within 3 years of their current technology. If you have the same service in place for more than 5 years, it is probably time to take a look. I know “if it ain’t broke, don’t fix it”; but why not just get a feel for what is available and for a potentially lower cost? After all, it may be up to procurement to determine when something is ‘broke.’ 
  • Contract terms: When was the last time you looked at your contract? Do you (really) know what your current terms are? If you cannot answer these questions, chances are the answer is probably too long and you are month-to-month or under some ridiculous auto renewal clause. It is important to read the small print in your contract as you could be committing to an unrealistic term length with no out...unless of course you are planning to spend more money with the same supplier for an even longer term.

When we presented the opportunity assessment to our healthcare client, they were understandably shocked. We moved forward by leveraging the market-competitive offers to contract a new technology at almost one fifth of the current cost. The soft dollar costs of implementing the new service were eclipsed by the overall savings, making this a huge financial and technological success.

As I encourage you to review your bills more closely, let me add that the idea of tracking down wasted spend and going to market for legacy products and services is not limited to the telecom industry. It can be applied to any business commodity and begins with simply questioning the products and services you’re paying for. 

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Let's End the Buyer-Supplier Negotiation Countertactics Spiral

Let's End the Buyer-Supplier Negotiation Countertactics Spiral

This post was originally featured on Design News.

Every interaction a company has with its suppliers can set off an endless series of tactics and countertactics. It's like a wrestling match. Both sides invest so much time and effort in trying to anticipate the next steps by the other that the focus is turned away from the best interests of their organizations. This comes especially true during the negotiation phase of the procurement process.

Negotiations between buyers and suppliers have traditionally assumed a zero-sum outcome: Each party does not benefit except at the expense of the other. The end result of this tactic/countertactics spiral is a combination of inefficient decision-making, obscured visibility, and contentious working relationships. 

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Keeping Procurement Moving at the Speed of Modern Communications

Keeping Procurement Moving at the Speed of Modern Communications

Many thanks to the Market Dojo team for their cooperation and collaboration on this post - proof that they have attention spans longer than goldfish. 

 

Everywhere you look, there is evidence that the pace of the world is picking up. We share our status instantly in 140 characters or less. Meetings are routinely scheduled for 30 minutes rather than an hour. We check email, make phone calls, catch up on the news, etc. while walking from one place to another so we are fully informed when we arrive. Saying, “Oh, I hadn’t seen that yet...” is likely to be received with skeptical looks and rolled eyes.

 

As an active part of this constantly updating, clipped environment, procurement professionals need to be aware of the general pace of interaction between people and organizations. We have to be both purposeful and accurate if we are going to hold people’s attention long enough to get from them what we need.

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Telecom Contracts: Know What You’re Paying For

Telecom Contracts: Know What You’re Paying For

Over the past few years, the Federal Trade Commission (FTC) has been cracking down on unethical billing practices at major telecom carriers like Verizon and AT&T. This past October, Verizon paid as much as $64.2M in cash and phone credits to settle a class-action lawsuit for over-charging subscribers of their Family Plan[i].

The case against Verizon accused the telecommunications giant of charging Family Plan subscribers for “in-network” minutes that were supposed to be free, or charging customers with additional phones on the plan $0.45 per minute going over the allotted minute allowance (instead of the $0.25 that was charged to the primary phone on the plan).

The FTC also filed suit against AT&T for throttling data for unlimited data plan subscribers when they used over a specific amount of data during a billing cycle. They explained that AT&T failed to adequately inform customers who had signed up for the unlimited data plan that their speeds would be slowed if they used more than a certain amount of data. Even worse, “When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars,” the FTC said in a statement.[ii]

Telecom contracts aren’t designed to be easy to read and understand. As a result, customers frequently end up paying more than they should for their carrier’s services. While the cases of Verizon and AT&T are the result of dishonest billing practices, customers often fall victim to subpar contract terms and conditions, including overpaying or even paying for services they don’t actually need.

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What negotiation skills does procurement need TODAY?

What negotiation skills does procurement need TODAY?

Listen daaahlings, let me tell you a little something about negotiating. Talking about money is so… GAUCHE. No no no, that won’t do at all. Today, enlightened procurement professionals collaborate. We innovate. We partner. We strategize. I do for you… you do for me… we have a relationship. No ugliness, no shoving. After all, there is no need to stoop to talking about dollars and cents. We have people for that. Right? Yes, well, have your people call my people: we’ll do lunch.

Oh please!

We can’t say that procurement no longer needs strong negotiating skills just because many spend categories are now being managed in a more relational way. Making that assertion demonstrates a fundamental lack of understanding about what it means to negotiate. Negotiation is a phase, not an action. There are a myriad of skills required to be an effective negotiator, and they are different for each set of circumstances.

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Negotiation is child's play - or maybe not

Negotiation is child's play - or maybe not

When our daughter was in elementary school, she was a tough negotiator. She wanted her independence at a very early age. When it came time for bedtime, we came up with a plan. She could go to bed anytime she wanted up until 8PM. It was her choice. She loved that freedom and the rest fell into place. From our perspective, we wanted her in bed by 8PM anyway but it was all in how it was presented.

Negotiation is something we do every day – sometimes with ourselves and sometimes with others. Should I have dessert, that cookie, that extra glass of wine? Who on the team should do the analysis, the presentation, make that sales call?

In procurement, this is a key skill that constantly needs to be sharp and at the ready. In this article from Harvard, 10 Hard Ball Tactics in Negotiation, it goes through scenarios and areas to avoid.

One that I found interesting was “Trying to make you flinch”. In this case, the other party keeps making harder and harder demands, waiting for you to break. I remember one negotiation I was in, the other party kept trying a variety of tactics and behaviors to make me move or waiver. I stayed the course and eventually they became more reasonable.

Personal insults and feather ruffling” is another one that makes me wonder what are they thinking? We were buying a new car and the salesman insulted us about not being able to make a decision and needing to run home to Daddy. At the time we were married with children and certainly making our own decisions. Needless to say, we did not buy the car at that dealership. I wonder how often that works? It must or they would not do it.

Everything I read about negotiation says to do your homework and be prepared. Know what your BATNA is and stick to it.

Share your thoughts by commenting below or tweeting us @BuyersMeetPoint.

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Which of my 2014 Procurement Webinar Notes got the Most Traffic?

Which of my 2014 Procurement Webinar Notes got the Most Traffic?

Some days I think I eat, sleep, and breathe procurement and supply chain webinars. On a weekly basis I update the calendar. I consider the topics, the speakers, the hosts, the likelihood of promotional content versus thought leadership. I make my recommendations every Monday (on Blog Talk Radio) and share my notes on Fridays.

In 2014 I covered 29 webinars by sharing my notes on Buyers Meeting Point and through social media. They covered a broad range of subjects, including risk, talent, organizational issues, negotiation, and global supply chains. When I look back at the hits per post over the course of the year, there are 5 that stand out for getting over 1K hits each. You might think it was a simple matter of time, and there is something to that – some of our oldest event notes have over 50K hits – but these five events were pretty evenly distributed over the course of the year. They also all have unique hosts, presenters, and topics.

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Book Review: Strategic Procurement

Book Review: Strategic Procurement

“To succeed in business is more complex than it used to be - it is no longer economically desirable to control all the components of your customer value proposition.” (p. 6)

 

Strategic Procurement by Caroline Booth (Kogan Page, November 2014) is a second edition, updated from its original release in 2010. Before I even get into the book’s content, I think it is worth reflecting upon the pace at which the procurement profession is changing. In the four years since Booth first released this book, there have indeed been significant changes in economies and business dynamics, requiring equally significant adjustments in procurement. In the preface, Booth calls out her increased focus on risk and the improved position of procurement, as well as enough changes in M&A involvement to add a whole chapter on it.

 

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Being sincere while resolving conflicts

Being sincere while resolving conflicts

Recently, there was a task that I was to follow up on. I missed it and several months passed. The customer was quite agitated. I contemplated how to respond and repair the situation. I decided the best option was to accept responsibility and sincerely apologize.

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Webinar Notes: How to Become a Better Negotiator

Webinar Notes: How to Become a Better Negotiator

This week’s webinar notes are from an August 21st webinar run by CPP Inc, the provider of the Meyers-Briggs Personality Type Indicator Assessment. The webinar was presented by Pamela Valencia, a CPP Solutions Consultant. The event is available on demand on CPPs site.

 

Being a better negotiator is a topic that you would think had been completely covered by now, but this event offered some new thoughts – even in a compressed 30-minute format. Because CPP is focused on personality, knowing yourself and your fellow negotiators was the core message to this event. Also key was understanding when two dynamics are at play at once so you can divide your reactions to them, and the attitudes they foster.

 

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Spend a little time on the coins

Spend a little time on the coins

Do you save coins in a jar? Over time, the jar can become full to overflowing. It won’t necessarily lead to early retirement but it can make a difference. Sometimes we have then cashed it in for something special which would not have been done otherwise. A little here and there, without using up much time, can add value to your bottom line.

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Wallpapering and negotiating

Wallpapering and negotiating

Years ago, my husband and I decide to wallpaper the dining room. The first and last time we made that decision!! Thankfully the trends are now to paint and not wallpaper. Whew! The roles we took were for me to measure and cut and for my husband to paste and hang. Neither one of us had the right role. I cut backwards from what we needed and he would cause more wrinkles than you can imagine. So we switched and it was like magic! It was a life’s lesson that we refer to now many years later. Know what you are good at and get others to join the team that can cover your weaknesses.

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A Battle of the Sexes, or Just a Battle?

A Battle of the Sexes, or Just a Battle?

It is not unusual for me to get an email from a colleague asking me to read an article or post and then share my two cents. It is unusual that following through on such a request would take me on the wild ride that it did this week.

Let me retrace the steps – starting at the very beginning…

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Recent Comments
Jon Hansen
A woman coming to the defence of a man . . . preposterous. Or at least this would appear to be the consensus based upon the male ... Read More
Thursday, 22 May 2014 08:34
thomasdepaoli@yahoo.com
Let me clarify. Women are far superior in relationship building and getting people to cooperate and problem solve together. Negoti... Read More
Thursday, 22 May 2014 10:04
Kelly Barner
Thank you for joining the discussion Dr. Tom - that quote of yours is one that I have often used in posts or discussion groups as ... Read More
Thursday, 22 May 2014 15:35
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Book Review: Negotiation for Purchasing Professionals

Book Review: Negotiation for Purchasing Professionals

Negotiation for Purchasing Professionals is the second book by Jonathan O’Brien that we have reviewed. Earlier this year we reviewed Category Management in Purchasing. While each of the books has a different focus, they have more in common than just an intended audience. The most striking similarity is a clear desire to improve the knowledge and capabilities of purchasing professionals by capturing O’Brien’s considerable experience and communicating it in a straightforward manner.

 

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Book Review: Buying and Selling Information

Book Review: Buying and Selling Information

Buying and Selling Information, by career salesperson Michael L. Gruenberg, is a guide to help buyers of information services (think subscription-based online databases). Beyond this very specific case, Gruenberg has good advice to offer buyers and sellers of any product or service. He is a salesperson who ‘gets it’ – or understands the need for buyers and sellers to work together for their mutual benefit, and for the benefit of their organizations. In his own words, “It’s all about equal footing, momentum, and success” (xviii).

 

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Webinar Notes: Top-Notch Negotiations – Anyone Can Cook!

Webinar Notes: Top-Notch Negotiations – Anyone Can Cook!

This week’s webinar notes are from an April 9th event presented by Puridiom and Lunney Advisory group. Dr. Soheila Lunney, the president of Lunney Advisory Group and the primary presenter, addressed a number of topics related to a professional environment that increasingly emphasizes collaboration and partnership over the aggressive winner take all approach.

Dr. Lunney is also the co-author of The Procurement Game Plan with Charles Dominick of the Next Level Purchasing Association. You can read my review of the book here, as well as Part 1 and Part 2 of our interview with Dr. Lunney.

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Blog Pick of the Week: Cookies and the Four C's of Negotiation

Blog Pick of the Week: Cookies and the Four C's of Negotiation

Like many people, I had too many sweets and treats over the holiday. It's a new year and I shouldn't even be thinking about cookies. However, I just finished making a batch of oatmeal chocolate cookies for a party tomorrow. Nothing like fresh cookies out of the oven!

Many times my children would want more than the two cookies I was offering. I would offer two , they would want three or four. After a few times back and forth, I would change my offer to ZERO cookies. Then all of a sudden they felt that two cookies was a great option!

In procurement, we are sometimes in situations where we want more cookies than are being offered. Or we want to include cold milk at the same time but that is not available at the price point we are interested in.

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Is the Should Cost Model Obsolete?

Is the Should Cost Model Obsolete?

Q: Does anybody still use the “should-cost” model?

A: Yes, and if they don’t, they should start.

 

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