In procurement management, procurement negotiation is a process where experts contact with each other to create agreeable terms for contract.

The parties usually discuss pricing, payment, delivery dates, and timelines. Ideally, negotiations should consider the best options for both parties to build a strong relationship that will be for long-term business. Ultimately, this will create a win-win outcome for both parties

In fact, procurement negotiations are not always easy or successful. Those involved in negotiations may not have considered what is best for everyone. Instead, they may consider what is best for them.

it’s important to do your best to understand who you’re negotiating with and what they’re really aiming for. A great way to do this is to learn about the different negotiation styles people use

How can an excellent purchaser achieve a win-win procurement negotiation?

5 Styles of Procurement Negotiation

There are two elements to negotiation: relationship and outcome. However, the style of negotiation is based on which element the negotiator values more. These are the 5 negotiation styles.

1. Competition: Negotiators who use a competitive style aim at outcome of the negotiation, rather than relationship. This style of negotiator wants to win in negotiation and wants the other side to lose. Usually, negotiators who lean towards this style will do whatever it takes to win.

2. Collaboration: Collaborators balance outcomes and relationships equally, and they consider both important. They want win-win outcomes and long-term relationships, and they will work hard to achieve mutual benefit.

3. Compromise: While compromisers value results and relationships, they are willing to sacrifice a little bit for the sake of reaching agreement. They believe that while winning something they want, they also lose a little something.

4. Accommodation: Accommodating people value relationships more than outcomes and are willing to lose negotiations. The result is a ‘you win, I lose’ style. This is the opposite of the competitive style.

5. Avoidance: In this style, the negotiator does not value the outcome or the relationship. It can simply be thought of as a ‘lose-lose’ model, with one side withdrawing from the negotiations.

Each negotiation style has advantages and disadvantages, and which one you use depends on what you’re trying to do with your Visioner. In the best-case scenario, the goal is the same.

If goals are different, you may need to adjust your approach. The other person may do something unexpected, so you have to be prepared to shift tactics. That’s why it’s essential to plan and understand the 7 stages of procurement negotiations. With this knowledge, you can be ready to adapt to negotiation and move towards success.

7 Stages of Procurement Negotiations

There are 7 stages to any procurement negotiation. Understanding these 7 stages can help you plan and prepare for the negotiation with the best chance of success.

1. Preparation: Thorough preparation is very important. This is when you first acknowledge your negotiation style. Then, you decide on the relationship with the other person and the outcome you expect to achieve. You should also research the other party and, if possible, understand what negotiation style they typically use

2. Opening Remarks: At the opening remarks, both parties state the objectives of the negotiations. At this point, you can find out if the relationship between two parties matches expected outcome

3. Temptation: both parties are ‘testing’ each other to understand each other’s values. Good communication and listening skills are key to this step. Focusing on this stage can help you find opportunities.

4. Proposals: Both sides set out what they expect to achieve at this stage. This is also the time when you and your team may want to consider making changes to your strategy based on each other’s proposals.

5. Bargaining: Based on what has already been said, both parties should come up with a compromise if needed. Ideally, any compromise should be equal and mutually agreeable. For example, look for opportunities to cut procurement costs for both parties. This way, everyone is paying the best price for the goods or services

6. Reach an agreement: Once a compromise has been reached, the parties can reach an agreement. When both parties accept the agreement and sign it, the purchase contract becomes a legally binding document.

7. End: Both parties will receive documents and contracts for their records from the previous stages. After this stage, the negotiations are over.