Today’s Guest Post comes from James Wright, SCMP. James is a supply chain professional with 15 years experience in the oil and gas, telecommunications and power generation industries. His particular areas of specialization are negotiation and supplier relationship management.
My personal belief is that Supply Chain Management as a profession is terrible in teaching its people how to negotiate. This is a problem for the organizations that employ us. Because we aren’t delivering the value that we should.
This point was driven home to me about 3 years ago. I was working in telecommunications as part of a strategic sourcing team. One of my teammates, with 30 years’ experience in contracts, was asked to negotiate a better deal (in this case better deal = a lower price) with a supplier. This individual had no idea where to begin or even how to approach the supplier. I was flabbergasted. How could anyone be in this field for such a length of time and not know how to commence such a conversation with a supplier? Since then I’ve noted the same inabilities in a large variety of organizations in different industries. I’m still floored by it. We should all be able to pick up the phone and have a conversation about price, terms, delivery, shoddy workmanship, etc.
To be clear – I’m not blaming any individual at all. Rather I am faulting Supply Chain as a whole for not providing better training. Practical training.
I feel we, as a profession, have become so wrapped up in process, compliance, analytics, software, etc. that we lose sight of the interaction element. At the end of the day, there needs to be people talking to other people to start the whole cycle of supplier and customer that is integral to supply chain management.
I’ve taken negotiation seminars for 20 years. For the last 10 years they have been exclusively Supply Chain-focused. They’ve all followed a similar pattern. I’m sure all of you can relate:
The training is invariably given by a consultant and/or academic who usually espouses some form of “Integrative vs Distributive” theory of negotiation. And you are exhorted throughout the one or two day process to get to a “win –win” situation for both parties. Usually there is some sort of role play involving the selling of a used car.
I don’t know about you, but I can’t see myself going to the president of my company and telling him we can’t buy a $50 million turbine because there is no “win – win” situation.
I’m curious as to how these seminars equip new and even experienced Supply Chain practitioners to interact with suppliers?
Don’t get me wrong. I believe you need to understand the theoretical basis of anything in order to master it. But there needs to be a practical component as well. For example I came out of university with a commerce degree. So I had a theoretical understanding of accounting, finance, marketing, operations, HR and IT. I was hired to start up a company. Very soon thereafter I found out having theoretical knowledge was not enough. I needed practical skills to complement the theoretical.
During my Supply Chain career I’ve developed three fundamental truths:
1) Most people don’t like negotiating.
Negotiating usually means conflict or at least the potential for conflict. And most people don’t like conflict.
2) Negotiation is a core competency of SCM.
Internally, externally, with peers, up the org chart or down to your team, negotiation happens all the time. I’m willing to bet there is not a job posting out there that does not list “negotiation skills” as a must have. The bright side to this truth is that those who are good at negotiating will always be in demand. And negotiation is one job function that cannot be automated.
3) Negotiation is a learned skill.
People are not “born negotiators”. They are developed. All you need is training, experience and feedback.
I truly believe that the third truth is where Supply Chain as a profession falls down. The problem, as I see it, is that there is far too much theoretical training and not enough practical. We need to correct this. WE need to work with our junior, intermediate and experienced members in order to develop, enhance and refine their negotiation skills. It will benefit us greatly. It will benefit us personally to develop a crucial skill, and professionally to enhance the effectiveness of our brand.
To further this discussion please contact me. I can be reached via email firstname.lastname@example.org Or join my Linkedin Group “Buy Side Negotiations” which I started as a platform to discuss and share tips tactics and tools on negotiation within a SCM context.
Thanks very much to James Wright for the informative post. As he mentions, we hope this discussion starts a conversation. So what’s your input? Could Supply Chain to a better job of training negotiation skills? What’s your experience? Let us know in the comments!