Back to Strategic Sourcing

Today’s guest blogger is my colleague James Baehr, who in addition to his broad experience with Strategic Sourcing, heads up the IT Strategic Sourcing practice at Greybeard Advisors LLC. Jim has had management roles in IT sales, IT operations, and IT procurement at major firms, before joining Greybeard. Jim can be reached at [email protected].

In the book Bargaining for Advantage, the author G. Richard Shell points out that there are two basic personality types when it comes to negotiations – cooperative and competitive. The media tends to aggrandize the competitive negotiator. The shouting, table pounding negotiator makes for good theater. While this style can work for price focused transactions, the cooperative style is a much better fit for strategic sourcing.

Strategic sourcing creates value by addressing total cost and value over time and across various dimensions. A cooperative negotiator looks at the big picture. The cooperative negotiator tends to be a good communicator. The cooperative negotiator recognizes the importance of establishing relationships and maintaining those relationships – both internally with Stakeholders and externally with Suppliers.

Strategic Sourcing calls for going beyond reaching an agreement. It calls for all participants to make a commitment. Tactical buying is essentially the classic "win – lose" scenario. In fairness, Strategic Sourcing is not necessarily "win – win" upon signing the contract; however, done properly the buyer/supplier association should balance out over the duration of the agreement. If done properly a strategic sourcing initiative should improve the relationship over time.

Too much of the buying being done today is resulting in competitive scenarios where the sole decision criterion is price. Speak with a Sales Professional and she or he will tell you that price is all that a buyer wants to discuss. Buyers are driving only to "win – lose" outcomes. The end result - relationships are suffering, or at the very least stressed. Stakeholders don’t see their needs being met. Suppliers, while reluctant to admit it, are frustrated and don’t care.

The sooner that we go back to Strategic Sourcing, led by cooperative negotiators, the better!

SC
MR