
Welcome to Una's Pain Points in Procurement series. Each week, the Una team will explore one of ten common pain points impacting procurement today, and put forth actionable solutions to each of these challenges.
You’ve walked into the negotiation full of confidence, but the situation soon begins to unravel as you realize the supplier is refusing to budge on price. You have savings targets to meet, but you don’t want to pull the plug on this strategically important relationship – so what do you do?
This week, we explore the challenges and solutions involved when supplier negotiations hit an impasse.
There are several ways that negotiations can break down, including:
Negotiation, they say, is 90% preparation and 10% execution. Doing your homework will dramatically increase your chances of a successful outcome.
It’s difficult to find areas of compromise if you know little about your supplier’s context and objectives. Do your desktop research, and don’t hesitate to communicate directly with the supplier to learn as much as you can about their priorities.
Building relationships between the parties can help to build trust and make negotiations more productive. This may involve getting to know each other outside of the negotiation process or finding ways to collaborate on non-negotiation related projects.
What would be the best possible outcome for your organization? What would be the minimum acceptable deal? What would you consider to be a fair deal? Asking yourself these questions before a negotiation will put you in an excellent position to know your boundaries as the conversation evolves.
Your BATNA (Best Alternative To a Negotiated Agreement) is your backup plan if the negotiation doesn’t work out. Just having a BATNA in place will give you confidence and leverage in the negotiation.
There are several approaches that can be used to resolve a standstill. Here are some suggestions:
If negotiations have become heated or if the parties are stuck, taking a break can be helpful. This can allow both parties to cool down and can provide an opportunity to reassess the negotiation and identify new approaches.
When negotiations break down, it may be helpful to revisit the objectives of both parties. This can help to clarify the underlying interests and needs that are driving the negotiation and can provide a basis for finding common ground, or “win-wins”.
Look for areas of compromise that can help move negotiations forward. This may involve finding creative solutions that address the interests of both parties, such as offering incentives or changing the delivery schedule.
If negotiations have become acrimonious or if the parties are at an impasse, bringing in a neutral third-party mediator can be helpful. The mediator can work with both parties to facilitate communication and help identify areas of agreement.
If there are legal issues that are preventing negotiations from moving forward, it may be necessary to seek legal advice. A lawyer can help to clarify the legal issues and provide guidance on how to resolve them.
Sievo lists seven different types of negotiation ranging from competitive to compromising. Be flexible and adapt to the situation by switching approaches mid-negotiation if necessary.
If negotiations have broken down completely, it may be necessary to explore alternative options. This may involve finding a different supplier or re-evaluating the need for the product or service altogether.
Think outside the box and skip the negotiation stage altogether by partnering with a group purchasing organization. As a GPO, Una has already done the hard work for you by standing up a portfolio with over 5,000 pre-negotiated supplier and technology vendor contracts.
Alongside incredible savings made possible by leveraging over $100 billion in buying power (Una members see an average saving of 18-22%), joining Una dramatically increases your speed-to-savings by leaving the sourcing and negotiation process to us.
Learn more about Una membership and how we can help improve your supplier relationship experience: