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Negotiate Better Terms in Industrial Distribution

For industrial distributors, managing margins and negotiating terms are key to successful operations. What’s the best way to approach the challenge? In an article in Supply Management, Sue Preston, director at Negotiation Resource International (NRI), puts forth seven key planning and preparation steps for negotiation success:

  1. Manage your time. NRI research found 62 percent of people spent one hour or less preparing for a negotiation. Sixty-eight percent said that better preparation for their last deal would have produced a better result.
  2. Prepare open questions. Typically, closed questions can be answered with a yes/no or a short phrase, while open questions demand more information (e.g., Will you innovate for us? How will you innovate?). Of those surveyed, only 1 percent typically prepared 20 open questions for negotiations; 44 percent relied on just 1-5 planned questions.
  3. Design a strategy route map. Negotiations have clear phases, and these must be planned. Avoid entering a negotiation without having drawn up a careful map of the direction and destination of the meeting and any subsequent events. The route may not be completely sequential—you may have to backtrack—but at least you will be prepared.
  4. Consider style and personality. Personality types as well as negotiating styles and interests are key factors in building rapport and managing behavior during a negotiation. It is vital to consider these areas in the planning stage. The research found that 43 percent “sometimes” consider these aspects, while 4 percent “never” do.
  5. Define your targets. Set well-defined targets for each issue or variable. The research showed that negotiators often lose sight of their objectives. Setting objectives from “ideal” and “realistic” to “walk away” is paramount. It will help to control the extent to which you move from your ideal settlement point and to understand the cost implications of any movement.
  6. List your tactics. According to NRI, more than 75 tactics can be used during negotiations. Some will work on certain personality types, but not on others. Skilled negotiators are unpredictable in their use of different approaches. If you continue to use a pattern of the same tactics in each negotiation, the other party will prepare to counter them next time. Consequently, list and carefully plan the tactics you will use in each negotiation.
  7. Rehearse your opening statement. A clear, well-defined and well-rehearsed opening statement is crucial. The first thing you say should condition the other party and manage their expectations.

Posted by the Epicor Social Media Team.

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