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Making procurement less predictable

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Make procurement less predictable

We all know that predictability can significantly weaken your negotiation position. It is a beginner’s mistake to show your hand before the game has even started.

 

But, more often than not, I have seen exactly this from procurement. Contract negotiations are scheduled according to individual holiday plans, which tend to fall in the summer months, rather than triggered when the market conditions are right, or a window of opportunity arises.

 

Negotiation and request price quotation (RPQ) templates are also continuously recycled with just minor adjustments before they are sent out. Suppliers are approached during certain times of the year only because “it’s always been like that” or because “that’s the way the industry works like that”. Neither of these statements is true. It is actually because we all just feel very comfortable with the routine.

 

This routine comes at a price. Let’s not forget, we negotiate with sales professionals, who are highly trained and well-educated. They are incentivised to understand your patterns, habits and routines perfectly to maximise returns. A buyer’s predictability combined with a well-trained sales professional on the other side of the table has a detrimental effect on your business and affects the credibility of the procurement function as a whole.

 

Just to avoid any misunderstandings, I am not advocating procurement to become totally unpredictable and hence unreliable. This too can have negative effects. What I am trying to articulate is that we should use the full range of tools at our disposal: timing negotiations correctly, spotting opportunities, using the power of surprise and taking advantage of market shifts.

 

Consider bringing negotiations or request for quotation (RFQ) process forward by 12 months. Think about setting up a bidding process instead of a private negotiation. Invite more suppliers to the process than the ones used last time around.

 

Unpredictability can be a strength even if it does make us uncomfortable. It requires preparation, guts and a clear assessment of where you stand in the power matrix. It will not make you friends but it will help you succeed.

 

Let’s break the cycle now. Dig into your toolbox and become unpredictable again.

Written by Jens Hentschel is founder and CEO of consultancy firm the Fivis Partnership. Find out more at www.fivis.io.

 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.

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