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It may sound like sacrilege to a weathered procurement professional but perhaps one of the most effective things you can do as a CPO during supplier negotiations is to remove yourself from the day-to-day process of it.
Before you click away, let me explain: I was recently speaking to a procurement chief who has been leading a major project that has been going on for the last few years and has involved building up a completely new supply base. With this came some intense and long-winded negotiations, and they said that one of their most successful tactics was to place themselves at arm’s length from the day-to-day negotiations.
They said that going into the negotiations they made sure that they made sure their negotiating team had all the information they needed about where the company was willing to compromise as well as where it wasn’t, had made sure they went through a rigorous training process and then took a step back to let them get on with it, confident in the knowledge that they could get the job done.
This not only freed up some of the CPO’s time to concentrate on other important aspects of the project but it also gave them the opportunity to step-in and help solve any problems that arose during the process without being too close to it to see a way through it.
"If you embed yourself in the process too much [early on] you won’t be able to unlock those problems as easily as if you take a step back and remove yourself from the process in the first instance," this particular procurement chief said.
They are of course right, you can’t control everything in the negotiation process and you need to give yourself the best chance of being able to get the best terms out of the deal, which work for both your business and your supplier. There are those leaders who meet suppliers virtually every day of the week and like to stay hands-on, while there are those that stay in their office and strategise – perhaps striking a nuanced balance is more vital than is often appreciated.
Beyond just this however such an approach will also build the confidence up in your team because of the fact that they are being trusted to carry out these important negotiations, knowing that they have your support and that of the business.
The Procurement Leaders 2015 CPO Planning Guide (available to members here), a part of which focused on CPOs’ time management, found that many procurement chiefs want to spend more time setting strategies and motivating their team rather than firefighting on day-to day tasks. With time at a premium and the function needing to show the value it can offer beyond just cost savings, looking at ways to move yourself away from the negotiation process seems to be the perfect place to start.