Fortune favors the prepared mind—”luck” in negotiations is actually the result of hard work and good planning. This presentation is for those who seek some collaborative negotiation skills that can be applied for success. One of your major functions is to negotiate the best terms and price for the materials and services your organization needs to operate. This complex task requires knowledge, tact, superior communication skills, and a solid game plan! But few people understand that 90% of all negotiations take place before the involved parties even get to the bargaining table. Collaboration is “in” and compromise is “out” for successful negotiators. Learn how to make collaboration one of your best negotiating assets and reduce your anxiety as you assume a negotiation comfort level.

1. The Artful Application of
Collaborative Negotiations
with Providers
67th Annual SWSMC Conference
Track 5 Session C
3 October 2013
Albuquerque, NM
Presented by Thomas L. Tanel, C.P.M., CTL, CISCM
© 2013 CATTAN Services Group, Inc.

2. Agenda
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The Four S’s
Preparation and Planning
Three Types of Objectives
Remember to Remember
Partnering/Alliance Negotiations
Agree to Agree
Negotiation Tips

3. The Four S’s: Source
• Identify Logistics and Transportation
requirements
• Gather data and manipulate
information
• Create a RFI

4. The Four S’s: Solicit
• Develop a RFB/RFP
• Send bid/proposal package to qualified
sources
• Hold a Pre-Bid or Pre-Proposal
Conference

5. The Four S’s: Select
• Verify documentation submitted
• Establish T&Cs that may require
adjustment, compromise or
negotiation
• Analyze bid or proposal submissions
• Develop selection criteria or
negotiation strategy
• Select or conduct negotiation
• Execute Memorandum of Agreement
or Understanding

6. The Four S’s: Secure
• Provide contracts to selected 3PLs and/or
carriers
• Emphasize Long Term Relationship
• Monitor 3PLs’ and/or providers’
performance, costs and commitments
• Seek continuous improvement and
incorporate feedback to and from
• Hold IPRs and provide a performance report
card on a regular interval

7. Preparation and Planning
• 90% of all negotiation takes place prior to
actual negotiation
• The best defense is a good offense!
• Luck is the residue of hard work and good
planning

8. Planning for the Negotiations
—The Scope
Let the complexity, value, risk,
and importance of the provider’s
service to be negotiated determine
the scope of your negotiation.

9. Collaborative Negotiation
Planning Focu$
• Focus on Pareto’s Law—20% of your
outsourcing providers constitute 80% of your
total outsourced dollar spend.
• Focus on alliances, partners, and preferred
providers.
• More extensive negotiations are appropriate for
higher dollar value procurements, because the
dollar savings are potentially larger.

10. 3 Secrets of Collaborative
Negotiators
• Preparation
• Preparation
• Preparation

11. 3 Aspects of Preparation
Physical – being prepared
to withstand the rigors of
the process

12. 3 Aspects of Preparation
Emotional – being able to handle
personal pressures

13. 3 Aspects of Preparation
Technical :
• Understanding the process
• Having a plan

14. Three Types of Objectives

15. Primary Objectives--Deal
From Strength
The successful negotiator deals most
The successful negotiator deals most
effectively when he/she has identified
effectively when he/she has identified
his/her strongest points and uses them
his/her strongest points and uses them
strategically ..
strategically

16. Secondary Objective—
”How To” Establish
Maximum
Supportable
Position (MSP)
Best Possible
Scenario
TARGET
Position
Least Acceptable
Scenario
Minimum
Acceptable
Position (MAP)

17. Setting the Target and RangeSecondary Objective
Max
High
Min
Their
Objective
Their
Range
Price
Terms
Quality
Delivery
Service
Etc...
Your
Range
Your
Objective
Min
Low
Max

18. Negotiation Targets for Secondary
Objectives–Format of Conditionality
• What You Want
• What You Offer in Return
• If you give me
• Then I will give you
Example: “ If you make it a 97 % service level,
then we will incentivize you for each % above.”

19. Concessions—Tradable Objective
Tradables are very useful objectives that allow the negotiator to make
or gain concessions without harm to the plan. Tradables are valuable
items to be used to gain your desired Primary or Secondary objectives.
People who are uneasy
People who are uneasy
will grant concessions to
will grant concessions to
extricate themselves from
extricate themselves from
an uncomfortable
an uncomfortable
situation.
situation.

20. Concessions—Trading Off
By asking for something in return,
you’ve elevated the value of the
concession. When you’re negotiating,
why give anything away? When you
elevate the value of the concession,
you set it up for a trade off later.

21. The Essence of Negotiation

22. Remember to Remember

23. Four Rules to Guarantee Success
1. Learn to be
comfortable not
knowing
2. Learn to ask questions
3. Operate with a high
degree of ethics
4. Seek an even
exchange

24. Negotiations and Provider Relationships
• The traditional price-based relationship with
providers is changing to long-term relationships
based on total cost, trust, flexibility, innovation
and quality.
• Advantages:
Stronger partnering-collaboration
Better provider performance
Improved communication
Increased industry and functional knowledge
Increased trust and reliability
Reduced adversarial relationships

25. Understanding Collaborative Purchasing
Negotiations
• There is a common notion
—even among some
experts—that someone
always gets skinned in a
negotiation.
• In purchasing negotiations
this should never be the
case---collaborate don’t
compromise.

26. Understanding Collaborative Purchasing
Negotiations
• Power of Persuasiveness. In order to bring a
seller to agreement with your view, you need
to:
– Make sure he/she understands what you are
saying.
– Present compelling facts and information.
– Meet his/her needs.

27. Understanding Collaborative Purchasing
Negotiations
• Power of Solidarity. A united front to
counter “Divide and Conquer” tactics:
– Particularly needed when negotiating in teams.
– Teams that are not united can weaken our
negotiating position because they make foolish
remarks.
– Avoid careless remarks that may weaken your
negotiating position.

28. Understanding Collaborative Purchasing
Negotiations
• Power of Competition. Examples of
“Foolish Remarks” that let a Seller know
they have little or no competition:
– “Your level of service is the only one that will do.”
– “We really like yours best.”
– “As far as we can determine, you’ve got the only type of 24/7
service available.”
– “Your competition can’t handle it right now.”
– “We’ve had nothing but trouble with your competition.”
– “I understand we always get these from you.”
– “You’re the only one providing this type service.”

29. Concluding Negotiations
• Have a Memorandum of Agreement or
Memorandum of Understanding
• Be careful not to make it a contract
• Insert a special protection clause

30. Partnering/Alliance Negotiations-Collaboration
• Add value to the other
• Be supportive
• Avoid surprises
• Be open & above board
• Frame of reference
• Anticipate opportunity
• Anticipate problems
• Do your homework
• Treat each other as people

31. Four Rules of Collaborative Negotiations
1. Negotiate decisions in which both parties
benefit
2. Establish guidelines and an agenda
3. Invent options
4. Insist on objective criteria

32. Collaborating with Others-FAB

33. Collaborating with Others-

34. Collaborating with OthersSeek Rapport

35. Raise Your “Eye-Q”

36. Reading People—Part I
• It can be done based on a
sound principle of nature.
• By understanding how the
brain and body react in
certain situations, you can
train yourself to decode the
nonverbal messages people
unwittingly transmit.

37. Reading People—Part II
Five Ways to Read People
1. MISMATCHED GESTURES
2. TONE SHIFTS
3. AVOIDANCE or OVERFRIENDLINESS
4. FALSE SMILES
5. EYE DARTS

38. Agree to Agree
Agree to agree .. .. ..
Agree to agree
This pre-frame
This pre-frame
focuses everyone on
focuses everyone on
collaboration and
collaboration and
problem solving
problem solving
rather than posturing
rather than posturing
and positioning.
and positioning.

39. Definition of Three Negotiation Terms
for Collaborative Negotiations
An Impasse is when you disagree on a major issue and it
threatens the negotiation.
A Stalemate is when you and the supplier or contractor are still
talking but you seem unable to make any progress toward a solution.
A Deadlock is when the lack of progress has frustrated both sides
so much that neither you nor the supplier or contractor see any point
in talking to each other.

40. Breaking Deadlocks—Five Ploys
1. Focus on the problem.
2. Turn a problem or contentious issue into
an answer.
3. Reduce the scope of the issue
4. Take a break, recess, or caucus.
5. State the other side’s case.

41. Use NAL with Emotional Factors

42. The Essential Principle of
Negotiations—LINKAGE
LINKAGE
Never Give Up Something without
Getting Something in Return
Avoids a Bad Deal

43. Asking Effective Questions
“You can tell whether a man
“You can tell whether a man
is clever by his answers, you
is clever by his answers, you
can tell whether a man is wise
can tell whether a man is wise
by his questions.”
by his questions.”
—Naquib Manfouz
—Naquib Manfouz

44. Five Functions of
Questions
1. Cause Attention.
2. Get Information.
3. Give Information.
4. Start Thinking.
5. Bring to a Conclusion.

45. Use Questions Collaboratively in a
Socratic Manner
• Devise a question or series of questions
whose answers will lead to the answer that
you need.
• Example: “How do you think your senior
management will respond to our facility
layout change?” instead of, ‘Don’t you
think you should of checked with your
senior management before we discussed
this issue?”

46. Use Questions Collaboratively in a
Socratic Manner (Con’t)
• Do not ask questions in a
condescending manner, a manner that
implies, “See if you can guess the
answer.”
• Instead, try “what if “ phrasing: “What if
you were to change the mode of
transport?”

47. Why Should I Care About How I Ask
Questions?
• The more information you have, the better
decisions you’ll be able to make.
• How you ask a question can have just as
much impact as the words you’re saying.
• You want it to be as easy as possible for
people to share information with you.

48. How Do I Ask Effective Questions?
Effective questions are open ended:
• Ask for stories, background, and interests
• Ask “Why” questions
• Ask for speculation

49. Negotiation Tips

50. Tips for Better Negotiating
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Write down in advance your “walkaway” position.
Understand your supplier counterpart’s
emotional issues.
Understand your supplier counterpart’s
real objectives.
Never bluff! Be prepared to back
whatever you say.

51. Tips for Better Negotiating
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Be patient. Learn how to handle
silence during a negotiation.
Never permit debate and
disagreement to become personal—
stick to the issues.
Try to find items to trade (concessions)
that are more important to the other
side than to you.

52. Tips for Better Negotiating
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Do not be constrained by the specific
scope of what is being negotiated;
collaborate and mutually invent
options.
Negotiate only with supplier
counterparts who have the authority to
close or consummate the agreement.
Never give up! Learn to distinguish
among an impasse, a deadlock, or a
stalemate.

53. Negotiating the Contract and the Conduct
of a Collaborative Negotiation
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Emphasize the Four S’s
Do prepare and plan
Set objectives and ranges of acceptability
Establish roles and authority
Listen to and explore the supplier’s position
Focus on the key issues, ask questions
Seek a fair, collaborative agreement
Record results as compared to the plan
Perform final actions

54. SUMMARY and THANKS
© 2013 CATTAN Services Group, Inc.