The ‘win-win’ principle supplied in purchasing negotiations today books a lot like Larry David in the episode of “Curb Your Enthusiasm” wbelow David, in an dispute through a female character, battles to reach a compromise David said:
“I understand, look listen, you’re unhappy, I’m unhappy too. That’s what a great compromise is all around. A good compromise is once both parties are dissatisfied and I think that’s what we have here.”
This quote illustprices the prevailing myth in procurement this particular day — that every little thing has to be a damage and each negotiation ends through both parties separating the deal in question down the middle. However, the end outcome of separating the pie as such is actually a ‘lose-lose’ because neither party gets what they desire.
You are watching: A good deal is when both parties are dissatisfied
Myth – separating the pie down the middle is a great compromise
As a procurement professional, if you go right into negotiations assuming the just point of value for the supplier is price, guess what you will certainly be negotiating? You’ll be negotiating price and also the only option left to you is to budge on price and make your supplier happy. That is a rookie strategy that a true pro needs to obtain out of the company of doing.
Reality – rookie negotiators view only one pie and that’s the price pie
‘Win-win’ negotiations have actually been talked about so much that such scenarios have actually shed all definition. But we can’t forgain that ‘win-win’ indicates meeting your high worth goals and ensuring the seller feels great about the deal. This is part of the art and also scientific research of negotiations.
When you attain each of your greatest TCO objectives and still have actually the merchant feel good about it, then you have the right to say that you’ve arrived as a procurement experienced. It is instrumental that you understand what the other party’s interests are before you have the right to perform this.
The antiquated methods of negotiations out tright here – the approaches that focus on acquiring the upper hand also and paint a supplier into a corner – doesn’t work-related. That is a 1950’s technique and it has no business being supplied in today’s procurement service version.
Myth – acquiring the top hand also and painting the supplier Into a corner gets results
If you execute employ those methods, you’ll have actually bitter merchants. And bitter merchants can, and will certainly, discover ways to increase their revenue. They’ll get their money ago and eincredibly time you pick up the phone – which will happen many type of times after the contract is signed – they’ll send you a huge bill.
When sellers are happy, you’ll hear a straightforward, “certain, we’re all over it…we’ll be there…we’ll fly somebody out.” That’s the distinction – and also it is a big one.
Reality – companies will be bitter and also you’ll spfinish more money
If you try and also establimelted an unfair playing field and also take advantage of companies by making use of this antiquated approaches, they’re still going to obtain their money – and you’ll finish up paying more overall.
However before, allowing a seller to win, while still meeting your goals, is an art form. What you desire to carry out is learn just how to produce multiple pies. In truth, we want to make as many type of pies as possible – pies that have actually comprehensive value to the supplier and below TCO influence to you. We want to try and give as many pies as we deserve to to the supplier to make them feel so enriched from the deal, while you have not affected your TCO proplace.
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So, what various other pies are tright here various other than the price pie? For circumstances, free training, warranty, spare parts. But, what else?
This post originally appeared in the deyet issue of Procurement Sense Magazine, a new magazine for industry trends and insights powered by Procurify. Downpack your cost-free copy below.