Bargaining for the least, attaining the best

Speaker: Reinhard Eckhardt

Title: Senior director of purchasing

Company: Infineon Technologies

Date: 27 March 2008

 

If you weren't there, here's what you missed:

One of the mantras purchasing professional Reinhard Eckhardt lives by is: "As business as in life - you don't get what you deserve, you get what you negotiate."

Opening with that mantra, the German-born professional delivered a passionate presentation on the art of negotiation. He reminded procurement professionals of the loggerhead environment in which they are required to negotiate in -suppliers looking to maximise profits and minimise risk, while a buyer's objectives are to minimise cost and maximise their own protection.

Because the environment is such, Eckhardt believes relatively new theories of supplier collaboration may not work for everyone. "You can cooperate, but to collaborate in this area is very difficult," he says. This is because of the inherently different agendas suppliers and buyers bring to the table.

How does a buyer resolve this? A good negotiator knows that deals that do not result in a win-win situation will eventually fail, Eckhardt says. With that in mind, a buyer should work toward striking a deal that is advantageous to both his corporation and lay the foundation for a long term relationship with their supplier by making sure the other party comes out of it a winner as well.

In addition, Eckardt believes that the bulk of successful buying lay in the preparation stage. He urged procurement professionals present to do proactive research and preparation before entering the negotiation stage. Buyers would do well to be equipped with the knowledge of all players in the market and their market position, what the cost structure of their supplier is as well as their profits and customers.

He further advised buyers to remain ahead of the game by listening to the supplier - his body language as well as what is said - and taking the lead in the negotiation.

"It is very easy to be a negotiator, but a good negotiator asks wonderful questions - then he has the leading position in the negotiation," Eckhardt says.

Eckhardt closed the presentation with a list of dos and don'ts for procurement professionals, including keeping your target clearly in mind as well as obtain and maintain the initiative at the negotiation table.

One of the most important things not to do is to disagree among buyers at the negotiation table, he stresses. "Don't air your dirty laundry in front of the supplier - get the supplier out, or do it privately."