Knowing as much as possible about the person you negotiate with is always good advice. And it’s no different when the person on the other side of the negotiating table is a procurement professional. Here are some of the types of things you need to know:
- What some common Procurement thought patterns and paradigms are
- What Procurement’s motivations, goals and aspirations are
- What procurement professionals are rewarded for achieving and how they are rewarded
What’s Category Management?
Let’s take a closer look at the first bullet point above, “thought patterns and paradigms”. The biggest change that has shaped procurement thinking over the past 20 years is the evolution of Category Management. It’s a strategic way of looking at all the company’s external spend. The spend is divided into “categories”, hence the name.
Individual categories are aligned with relevant supply markets. So, goods and services bought from the same types of suppliers should be in the same category. A Category Manager is responsible for running his/her category in a business-like manner.
A strategic approach
What makes Category Management “strategic” is that it goes beyond the Procurement function, as it’s part of a wider business process. Therefore, it’s not just Procurement professionals that are members of Category Teams. These teams are a coming together of: a) business stakeholders; b) support functions, such as Finance or Legal; and c) Procurement.
Procurement professionals care about a number of things related to their categories, including:
- Improving stakeholder engagement and satisfaction.
- Improving supplier performance and holding suppliers accountable.
- Influencing as much of the category spend as possible.
- Leading the development of a category strategy in collaboration with key stakeholders.
- Mitigating supply related risks.
- Reducing total costs, as well as delivering savings, cost avoidance and “value”.
- Stakeholders using the deals negotiated, i.e. avoiding deal leakage.
- “Transforming” the category in some way.
If you, as a sales professional, have something compelling to contribute that helps with any of the above, you will be in a better negotiation position to get more of what you want.
Procurement as the trusted business partner
One of the most significant and universally applicable Procurement paradigms is the idea of Procurement as a “Trusted Business Partner”. It’s a paradigm that has been shaped by the evolution of Category Management. As a trusted business advisor, Procurement sees it as its role to unmask true business needs, rather than blindly accepting stakeholder wants.
Being a trusted business partner also means acting as a broker of supply market intelligence and supply market technology. Doing so adds corporate value beyond savings. But Procurement can only play that role if it’s capable of having meaningful and constructive business conversations with stakeholders.
Therefore, objectives and goals of a modern procurement organisation seek to encourage and measure stakeholder engagement. And the breadth and depth of the engagement becomes part of the goals. While most procurement organisations aspire to become “trusted business partners”, many still have a long way to go.
Preparing for negotiation success
Having as much relevant insight about Procurement before you go into a negotiation is one aspect of preparing for success. You also need to think about things such as articulating a value proposition that truly resonates with Procurement, and what tactics to use at the negotiating table. For example, how do you push back against unfair contract terms? My, 10 Insider Tips to Put You Ahead Of The Game When Negotiating With Procurement, will set you up for negotiation success.
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