Global Purchasing & Supply Management

GLOBAL PURCHASING & SUPPLY MANAGEMENTGLOBAL PURCHASING & SUPPLY MANAGEMENT

Juni Purwo Widadi - 163.150.004Juni Purwo Widadi - 163.150.004Magister of Industrial Engineering Magister of Industrial Engineering

Trisakti University - JakartaTrisakti University - Jakarta

Chapter 12 : NegotiationChapter 12 : Negotiation

Lecturer : Dr. Dadang Surjasa, SSI, MTLecturer : Dr. Dadang Surjasa, SSI, MT

Chapter Overview

What is negotiation? Environment of Negotiation Negotiation Strategy Negotiation Tactics & Checklist Fundamental of Negotiation (Global Perspective) A Settlement of Negotiation

Global Purchasing & Supply ManagementGlobal Purchasing & Supply Management22

What Is Negotiation?

A process of formal communication, either face to face or through electronic means, in which two or more people come together to find a common agreement on problems or issues.

Involves time management, information and power between individuals and organizations that are interdependent.



Webster defines "negotiate" in three ways: "To discuss this issue with the intention to come to

terms about it" "To get or set by means of a discussion of the term" "Negotiations" is the "Parlay or conference of their

terms."



In the situation of the procurement / purchasing, negotiations can be changed depending on the intent and purpose. Negotiations can include:Set the specific contract terms, including price. the revisions to improve the agreement.Changing the term to meet changing circumstances.Get an agreement in advance on the terms and conditions

selected.Settle a variety of commercial unforeseen issues.

55Global Purchasing & Supply ManagementGlobal Purchasing & Supply Management

Environment of Negotiation Sensitivity and tolerance to the time needed to reach consensus

on major decisions (especially on international environmental procurement process). For example : European and Japanese need two times more than american.

Meeting locations and communication channels is essential. For example : location can be done at a place other than the office.

Sometimes negotiations were conducted after the meal more enjoyable (although sometime makes drowsiness)


Negotiation Strategy



Positions : A negotiator’s opening offer Represents the optimistic or target value of

the issues being negotiated The stated demand at the negotiation table



9

The Negotiation

ProcessStep 1:Know

Exactly What You

Want

Step 2:Know

Exactly What They

Want

Step 3:Propose Action in a Way that They Can Accept

Global Purchasing & Supply ManagementGlobal Purchasing & Supply Management


Alternative solutions improvement: Quid pro quo Propose questions, clarification and achieve an

alternative Open-ended question Propose question effectively such as “ Why” or “Why

not?”


Model of AgreementStep a negotiation process :Step a negotiation process :

1111

1

2

3

4

5

6

7

Develop problem list

Decide an acceptablelimit

Focus on priorityitem

Estimate to achieveBy seller

Provide solution when Negotiation over limit

Use a question toAssume test

Segregate of alternatives


Tactics & Checklist

1212

DO’s DON’T’s

• Find out buyer interested or made a deal• Negotiate with a decision maker• Patience• Slow down or take a little break• Use a technic such Cost and Value

Analyze• Think negotiate for long term• Confirmed a deal item and fairly• Consultant could help if necessary.

• Offering some tips too easy• Absorb some first alternative directly• Focus only to item detail could

unreached a goal• Using irrelevant and wrong information • Try to proofing a buyer is wrong.


Global Perspective

International Negotiation : Added complexity and challenge Substantial extra time and effort required Culture shock Barriers and obstacles Need for translators


Global Perspective

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CANADIAN Personality In Business

• Generally personality mannered / polite but a bit slow in doing business.

• Early introductions using first names.• Inviting after a judge us to be polite and

friendly• Sticking in conducting a social

relationship.

• In business you should use a translator in the process.

• The creation of smooth communication difficult / easy Will create a very formal situation

• Everyone using bilingual language, sometime they use french to discuss


Global Perspective

1515

MEXICAN Personality In Business

• Generally admired personalities have the protocols and competent in social skills.

• Doing handshake in business.• Having a bad judgment on the United

States as a result of past events• If you feel compared to the sensitive

nature and humbled to something• Proud of the country

• In business decision makers be centralized without consulting or something

• Negotiators have no technical expertise• Trust and compatibility is the basis of

business support in assessing your opponent. So, we need to socialize more.

• Doing bargaining process outside the normal process

• Difficult to manage time to meet so spare time and patience are required.


Negotiation Sensitivity

Foreign trading partner, we should do are :

Be patience

Make a communicate effectively


Avoiding the pitfalls

Here are obstacles that can disturb any process of negotiation:Let suppliers know of no other available source.

Boasting / lied with regard to financial ability to do a deal Leaking of limits.

Not knowing what we want

Doing a deal in the spring.


Nonverbal Cues

Purchasing & Supply Chain Management, 4ePurchasing & Supply Chain Management, 4e1818

Facial expression The tendency will expression sweet face / smile than frown face

Eye contact. Honesty is emitted when a person's eyes interlocutor

Posture The body movements such as bending, folding her arms and legs are signaled to change or suggestions

Movement Tapping your fingers, fiddling with a ring, or tap your foot all the distractions that give others a feeling of impatience, or lack of interest in their ideas

Speech pattern Level, volume and clarity of speech affects how your message is received.

Tone of voice. What you say is often missing in how you say it. Tone of voice in the delivery of meaningful than words.

Attitude It's important to communicate, a good communicator,patient, even-tempered, and not easily frustrated. A sense of humor can help. To achieve a successful negotiator

Settlement of Negotiation

Negotiation as a point of procurement process, its always considered between reactive-support function and profit oriented that management decided.

What ever a negotiation result, even disappointed, need to remember short term tactical to achieve a long term prospect. So its could make a business relationship, working together for a long time.


GLOBAL PURCHASING & SUPPLY MANAGEMENTGLOBAL PURCHASING & SUPPLY MANAGEMENT

Kluwer Academic PublisherKluwer Academic PublisherVictor H. Pooler, David J. Pooler & Samuel D FarreyVictor H. Pooler, David J. Pooler & Samuel D Farrey

Thank YouThank You

Chapter 12 : Chapter 12 : NEGOTIATIONSNEGOTIATIONS