Generally, we all like to find ourselves in comfortable situations where we have a good read on the environment, the people we are doing business with and the methods in which we operate. Negotiations are no different. This is typically characterized by negotiations that lack tension, disagreement and conflict. While these are safe discussions, ultimately the best negotiations and negotiators are comfortable being uncomfortable which allows them to employ a wider range of tools and strategies to generate the most value possible. Now, I am not subscribing that conflict play out with loud arguments that upset both parties as this approach is not productive. However, there is room in a negotiation for a healthy level of tension that pushes all parties involved to challenge the boundaries of what is possible.
I recall one negotiation I was in with one of the largest suppliers we were doing business with at the time. The company I was working for had financial challenges and there was a need for our organization to renegotiate our commercial arrangements with a myriad of suppliers. As we were planning for the negotiation, some of my colleagues commented that we did not have leverage with this supplier and there was really no reason for this company to open the agreement that was in place between our two company’s. Additionally, our ability to switch suppliers would have required millions of dollars in conversion costs. When we took the senior team through our negotiation plan, including our opening offer, target and walk-away points, there was an understandable high level of indigestion that we were going to upset this supplier and that the relationship would be impaired.
Thankfully, we were given the latitude required to go into the discussions. Admittedly, while we had the scope to do what we thought we had to do, in the back of my mind (actually in the front of my mind) was the knowledge that there was a high degree of concern in the organization for what we were going to do. Given I personally had only recently started with this company, the creditability risk was high should we not be successful in the negotiation and / or if the relationship was materially impaired.
With this, we started the negotiation. Our opening offer was significant as we asked for the equivalent of a 40% reduction in cost. As you can imagine, this opening offer was met with a high level of resistance. In the upcoming weeks and after many meetings and discussions, we were able to agree on a 30% reduction in our costs with the relationship very much in tact. In future blogs, I will outline the tools and techniques we used to achieve this result. The point I am working to make this week is that the easy, safe play for us to take would have been to either not enter the discussions or to place a much more palatable offer in front of this supplier. However, in pushing the boundaries with our approach and ‘getting out of our heads’ and ‘getting into their heads’, we achieved a significant savings without any relationship impairment. Essentially, we were comfortable being uncomfortable.
In your upcoming negotiations, should you find yourself in a position where you are feeling comfortable, challenge your thinking and try some different techniques and approaches to push the boundaries. While it may not feel comfortable, it may lead you to a better result.
As I mentioned in my first blog, I am looking forward to the journey of exploring the multiple aspects of commercial negotiations. If there is a specific area that you would like me to speak to, please send an e-mail to me at email@example.com and I will work to provide the answer in upcoming blogs. I would also welcome any feedback you have on the blog.
Warren Sarafinchan is providing advisory services and professional development in the areas of Business Strategy, Negotiations, Supply Chain Management, Sales Management as well as Leadership
Coaching. Warren has extensive experience working with leading organizations across North America designing and implementing solutions to complex business challenges and opportunities. Warren’s facilitative approach
has allowed teams he has worked with to accomplish ‘impossible dreams’.
In addition to Warren’s experience leading Supply Chain functions, he has implemented multiple ERP solutions, lead a Sales organization through a period of significant challenge and change as well as heading
Information Technology functions. This broad ranging experience allows Warren to bring total business solutions to his clients. Warren works from the initial problem solving / visioning through to successful implementation.
Most recently, Warren was the Vice President of Supply Chain and Sales at SunRype Products Limited. Prior to SunRype, Warren worked in senior leadership roles for Mars Canada, Maple Leaf Foods and Labatt
Breweries of Canada. Under his leadership, the teams Warren worked with have developed and implemented strategies that have delivered significant financial improvements, increased customer collaboration and overall improvement in team engagement. Additionally,
Warren has developed a professional development program focussed on negotiation that is proven to enable organizations to create significant value with both customers and suppliers. All posts by Warren Sarafinchan