Don’t let negotiations upset the apple cart
When it comes to successful negotiations, a buyer’s history with a supply chain partner creates expectations. Any changes in that negotiation strategy can create confusion, as buyers search for explanations for deviations. Here are suggestions for actions to take when dealing with a turbulent supply chain environment.
For a buyer working in supply chain management to say their world has become more turbulent is a vast understatement. Many buyers may find themselves in a scenario similar to the one faced by Taylor. In this era of never-ending change, there is a practical need for supply chain buying managers to consider the relationship history with their key suppliers and their strategic expectations so that they can better understand and predict potential supplier negotiation behaviors and outcomes when environmental changes occur, both internal and external to their organizations.
Some buyers may have a collaborative (win-win) strategic situation with their key suppliers, in which there is information sharing and concern for the success of both firms. Other buyers may be facing a competitive (win-lose) strategic situation, where their suppliers emphasize their own short-term gains. After repeated negotiations, buyers learn to adjust to their suppliers’ negotiation styles given their past history. What happens then to buyers’ levels of trust when suppliers change their negotiation strategy to a different style after a history of doing it the same way?
Further complicating buyer-supplier relationships are environmental forces or changes, both internal and external, that are out of the control of the buyers and suppliers alike. Internal changes could include new executive leadership within the supplier organization that changes a strategic emphasis either toward or away from more long-term collaboration with their buyers. And, externally, these changes could include items such as price changes—either higher or lower—in key product components.
These types of changes occur in the chaos that supply chain managers have faced recently as they contend with the pandemic, the growth of inflation, global unrest and the “Great Resignation.” Given that a buyer’s relationship history with a supply chain partner creates expectations, any deviations in negotiation strategies create confusion and questions. For instance, what happens to the value of the relationship and the commitment to the relationship when environmental changes occur? Further, how is the supply chain relationship affected when, in addition to these internal or external changes, there are also changes in negotiation strategy behaviors?
This complete article is available to subscribers only.
Log in now for full access or start your PLUS+ subscription for instant access.
Latest News
Port of Baltimore May Not Reopen Until Summer Sales & Operations Planning (S&OP) Mastery A New Priority Greets Procurement Professionals in 2024 Cargo Shipping Remains on Hold in Baltimore Following Bridge Collapse Maximizing the Bottom Line: The Power of Procurement More NewsLatest Resource
Sales & Operations Planning (S&OP) Mastery In this Special Digital Edition of Supply Chain Management Review, you will find insights on the importance of sales and operations planning (S&OP) to an organization’s bottom line.All Resources
For a buyer working in supply chain management to say their world has become more turbulent is a vast understatement. Many buyers may find themselves in a scenario similar to the one faced by Taylor. In this era of never-ending change, there is a practical need for supply chain buying managers to consider the relationship history with their key suppliers and their strategic expectations so that they can better understand and predict potential supplier negotiation behaviors and outcomes when environmental changes occur, both internal and external to their organizations.
Some buyers may have a collaborative (win-win) strategic situation with their key suppliers, in which there is information sharing and concern for the success of both firms. Other buyers may be facing a competitive (win-lose) strategic situation, where their suppliers emphasize their own short-term gains. After repeated negotiations, buyers learn to adjust to their suppliers’ negotiation styles given their past history. What happens then to buyers’ levels of trust when suppliers change their negotiation strategy to a different style after a history of doing it the same way?
Further complicating buyer-supplier relationships are environmental forces or changes, both internal and external, that are out of the control of the buyers and suppliers alike. Internal changes could include new executive leadership within the supplier organization that changes a strategic emphasis either toward or away from more long-term collaboration with their buyers. And, externally, these changes could include items such as price changes—either higher or lower—in key product components.
These types of changes occur in the chaos that supply chain managers have faced recently as they contend with the pandemic, the growth of inflation, global unrest and the “Great Resignation.” Given that a buyer’s relationship history with a supply chain partner creates expectations, any deviations in negotiation strategies create confusion and questions. For instance, what happens to the value of the relationship and the commitment to the relationship when environmental changes occur? Further, how is the supply chain relationship affected when, in addition to these internal or external changes, there are also changes in negotiation strategy behaviors?
Subscribe to Supply Chain Management Review Magazine!
Subscribe today. Don't Miss Out!Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!
It’s high time to go beyond visibility Driving supply chain flexibility in an uncertain and volatile world View More From this Issue