| Word Count |
5,000 words (+/- 10%) |
PIN- Assessment 4 Crib Sheet Task
Select a category of spend from your organisation. Develop and discuss a plan using the knowledge gained from this programme which could form the basis of a formal commercial negotiation. Your assignment should include an explanation of the key facts, data and approaches that you will use in the negotiation.
Remember, the negotiation does not have to be just about price. Other considerations could include quality, delivery schedules, timing and amendments/variations etc.
Select a category of spend from your organisation
What category / area of spend / contract are you going to use?
Provide context in the introduction.
Develop and discuss a plan… which could form the basis of a formal commercial negotiation
COMMAND WORDS – ‘Develop’ and ‘Discuss’
- Why are you negotiating? What are the reasons for the negotiation? What business needs will be addressed as a result of the negotiation? What are the business objectives, and how important is it that these are fully met?
- Who are the stakeholders (both in the negotiation situation, and those that will be affected by the outcomes of the negotiation)? What is the scope and source of their power and interest?
- Who is the supplier? What is your past history and relationship with them? What kind of relationship do we want with the supplier? How are they performing?
- What type of market does the supplier operate in, and what is their position in the market? What external environmental influences could have an impact on the negotiation process? How dependent are we on the supplier / is the supplier on us? Where does the balance of power lie in the relationship? What is the scope and source of the supplier’s bargaining power, and how can we improve our bargaining power?
- Will we be negotiating with the other party on our own, or will the negotiation be undertaken by a cross-functional team from across the organisation? If it will be a team, who should be involved and why? What roles will they play in the negotiation situation? What skills should they have? Do we expect the supplier to negotiate as a team? Who do we anticipate will join from the supplier’s side?
- Where will the negotiation take place? Face to face or remotely? What impact could this have on the negotiations?
- How important is the contract / category to our organisation, and which model(s) could we use to demonstrate this? How important are we to the supplier, and which model could we use to demonstrate this?
- What is in scope for negotiation (and importantly, what is not in scope for negotiation)? What points might we be willing to concede on and why? What impact might concession on these points have (price / quality / relationship, etc)? What is our BATNA / WATNA? What happens if we cannot reach an agreement (either at all or on some of the points of the negotiation)?
- What are the risks that might present before, during and after the negotiation, and how can these be addressed (and by who)?
- Refer to this CIPS document to help you identify the key areas you should consider during the planning and preparation stage - https://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/5-Strategy-and-Policy/Negotiation/Negotiation%20Preparation.pdf
Using the knowledge gained from this programme
It is important to refer back to the different modules as they will all feed into this assignment. For example (where relevant, and this list is by no means exclusive or exhaustive):
- Driving Value – Sources of added value (remember what Ury & Fisher said – “the reason you negotiate is to produce something better than the results you can obtain without negotiating”; Martin Christopher’s 4Rs; Stakeholders; Sustainability and the Triple bottom line; and so on.
- Managing Expenditures – Tools to assess the external environment; markets and competition; models for categorising expenditure; whole life costing; and so on.
- Developing Contracts – Contractual terms that could be negotiated; specifications and standards; value analysis and value engineering; performance indicators and improving supplier performance; supplier relationship management; and so on.
- Sourcing Essentials – Early Supplier Involvement; stakeholder management; principles of public sector procurement; sourcing approaches; financial statements and sources of information on suppliers; and so on.
Explanation of the key facts, data and approaches that you will use in the negotiation
COMMAND WORD – ‘Explain’
- What internal and external sources of information could / should you use as part of the preparation and why? What information does it give you? Why is that important? How will it help in the negotiation situation?
- What approach to the negotiation will you take, and why? What methods of persuasion and influencing will you use, and why? Why is this the best approach? What are the strengths and weaknesses of this approach? What approach do you anticipate the supplier to take, and why? How will you address this?
