- 05
- APR
- 2011
Arming oneself for negotiation: Making market intelligence work
Author: Jonathan Webb - Categories: Procurement Intelligence
Knowing about your supplier and their market is not only important in planning and strategising, but is vital in contract negotiation.
In the course of our upcoming research on category management, I spoke to a procurement professional from the finance industry, who pointed out that going into the negotiation room without data would be like "going in without arms".
He went on to say that "if you have knowledge and data, then you can leverage that in negotiation".
One of my colleagues within the PIU sees procurement as an arms race. Through their own internal marketing and sales operations, suppliers are equipped with a variety of techniques and tools aimed at maximising margins. This is not simply a matter of working angles, but deploying proven methodological techniques and using them against buying organisations.
Historically, procurement's armoury has looked rather light. now, suppliers are experts at swotting up on SWOT analysis and any other analysis matrix that naïve buyers might use to illuminate their path.
However, by having a full understanding of the context of the market, as well equipping negotiators with specific knowledge about the product and supplier, buyers can cut through to the facts.
It doesn't matter how organisations gather their data (whether internally or using a market intelligence company such as the PIU), as long as its buyers and category managers are armed with the relevant facts that inform planning and strategy.
The key - and where the PIU sees is expertise - is turning data into real intelligence. This is where many organisations fail. Another senior procurement leader yesterday described to me a situation where buyers forward market reports to stakeholders that delete it upon receipt.
It is important when identifying relevant information to ask yourself, 'so what?' Or more specifically, how is this piece of data relevant for my category or stakeholders?
More importantly, procurement staff need to ask 'what information do I need to know so I don't go into the negotiation room blind?'
