What matters in negotiations

Insights into leading purchasing strategies for the automotive industry


The situation of buyers in the automotive industry has changed dramatically in recent years. The global recalls are just the tip of the iceberg: all problems relate to the fact that for decades, prices have been more important than quality. The leading automotive manufacturers have now recognized that they must counteract this. A strategic reorientation of purchasing that is based on long-term corporate goals will significantly contribute to this kind of 180-degree turn. In her guest post, author Tanja Dammann-Götsch demonstrates a way out of this devastating race to the bottom on pricing. The focus of her remarks is on preparing for and engaging in negotiations, as well as on her main idea that including suppliers as partners in negotiations will help in achieving long-term corporate goals in the future. Below she explains the cornerstone of her win-win strategy to benefit both sides in negotiations.

How buyers can reposition themselves

Regardless of whether a buyer is about to negotiate with a supplier or have an important talk with an internal sales manager, the crucial factor is for buyers to be completely aware that their actions help shape the company. Anyone with an exclusive focus on prices will not be able to achieve optimal results; the procurement field has become much too complex for that. A purchasing professional must master the entire process in order for buyers and their negotiating partners to achieve long-term business goals together. Strategic negotiation preparation plays a central role here, since without preparation, it is difficult to direct a negotiation effectively.

Avoiding hot buttons

Smart buyers never burn bridges, especially in the automotive industry. It’s why negotiating as partners is such a must: A purchasing professional has to guard against pressing people’s hot buttons, or provoking or making a fool of the other party in the negotiation, because no one forgets or forgives a loss of face. This should be obvious, but it is not: Anyone who is focused only on the numbers can step on someone else’s toes much more quickly than they mean to. It is well known that only 20% of information is communicated at the factual level, whereas 80% comes through on the mostly unconscious emotional level. When preparing for a negotiation, buyers should practice sizing up their counterparts quickly, along with their basic (unconscious) motives. It also helps to be aware of one’s own motivation for action, in order to avoid misunderstandings and to communicate better with one’s partners in the negotiation. For example, a professional purchaser has the experience to know that someone who prizes prestige must walk out of a negotiation believing they have won; playing hardball would be the wrong strategy in such a case.

More than just a single monetary target

What I am about to say will not please everyone, but the best price is a relative thing: It is invaluable to have more than just one number in your head ahead of a negotiation. Indeed, you should have a variety of them: the opening offer on the one hand – that is, the price that you estimate your negotiation partner will begin with – and on the other your minimum target, your realistic and maximum targets, and your maximum-plus-extra target. Last should be the price you don’t dare dream of getting. Give each target a number, and write these down. Have “your” numbers in your head when you go into the negotiation.

Don’t underestimate informational targets

Information is priceless. What would you like to know? What will you allow your counterpart to know about you, and what must they never find out? Master your replies in detail ahead of time. Also keep in mind that there needs to be a balance of give and take. Giving away too much about yourself or your company without demanding information in return is giving up the upper hand.

The negotiation process from A to Z

However different the items on the agenda may be, and however much the budget volumes may vary, certain rules always apply in the negotiation process, and buyers must follow them. You need to familiarize yourself with all the stages of the negotiation process and learn to dominate them. No step should be left out. Experience shows that the buyer who messes up the opening by disregarding the small-talk phase at the beginning of a negotiation and going straight to the facts, whether out of nervousness or a lack of time, will not achieve an ideal result.

Working out alternatives to price

One of the most important aspects in preparing for a negotiation is to think about alternatives to price. Purchasing professionals must be ready with at least five alternatives to their desired price, whether these are free samples, special services, better payment conditions or the provision of a resident engineer. The importance of this is obvious: You give yourself some breathing room in the negotiation and pass the ball back to your negotiation partner. This is often how structural improvements emerge that have a long-term positive effect on production, and therefore on the image of the company as well.

Judging your own bargaining power correctly

Some buyers underestimate their bargaining power, especially at internal meetings with the sales department. This not only weakens the buyer, it also limits the possibility for the two departments to work together toward better quality. At least in the automotive industry, however, it is much more likely that purchasing professionals will overestimate the power of their own position or that of the company they represent. A healthy dose of realism and specific knowledge of the facts are helpful here. In addition, buyers should remember that the balance of power in a negotiation can also tilt, and they should be equally prepared for this to happen.

Expecting the unexpected

How should we react if our negotiation partner surprises us? This happened a few years ago at one of the largest automotive manufacturers: Picture a yearlong negotiating process with one of the most important suppliers, where all of the purchasing managers are present, and imagine themselves to be in a good bargaining position. The purchasing volume at stake is several million euros. The door opens. The director of the supply company enters the room, throws a thick package of invoices on the table and says: “We can start the negotiations once these bills are paid.” No one was prepared for such a situation. These days, part of the “purchasing skillset” is for negotiators to be prepared for surprises, so that they are able to defuse these immediately. Instead of reacting rashly and even making concessions that you may regret afterwards, you can interrupt or break off the negotiations. Anything is better than making false commitments you cannot keep and that will only make you lose face later on.

Practicing on real cases

All theory is gray. You can only gain certainty in negotiations through concrete experience. You can prepare yourself by going through the whole dialogue, checking and improving until all the pieces fit together. An important tool here is the RoadMINDMap©, developed by the Purchasing Partner Academy, which includes the complete strategy for a real case. The RoadMINDMap© has all of the relevant aspects of negotiation preparation listed here and more. Plus, it fits in your pocket.

GPS for your negotiations – the RoadMINDMap©

As you work through the RoadMINDMap©, developed for a real-world practice case, you will begin to internalize it, and your recall during negotiations will improve. Purchasing professionals take their internalized RoadMINDMap© with them into negotiations as a mental support. However, it does not belong at the negotiating table itself. The consequences would be ruinous: Who wants to have all their cards on the table? The route planner that navigates the buyer through the negotiation towards the strategic goal is a mental one.
Recognized training methods inspired by the Harvard program of expert negotiation were used in the creation of this internal road map, which pursues a win-win strategy that strives to achieve the greatest utility for both sides. This kind of result brings advantages to all partners involved in the negotiation.

Testimonials

Frau Dammann-Götsch hat bei uns in ihrer hervorragend strukturierten Führungs- und Arbeitsweise den organisationalen Aufbau des Projekteinkaufs Akquise und in dieser...

Global Purchasing Director, Premium Automotive Tier1 Supplier

We would like to thank Tanja very much for all her efforts and indeed throughout the project. Organizing the relation with suppliers, planning trips...

Dr Jerome Bazin

Global Procurement, Global Supply Syngenta Crop Protection AG, Basel Switzerland

В процессе исследования рынка с целью поиска альтернативных поставщиков всех товаров и материалов для авиационной промышленности госпожа...

Евгений Чемниевский

руководитель отдела закупок, IONA KG.

Solo quisiera decirte que aprecio mucho a personas como tú en el mundo. Tu eres capaz de motivar y cambiar la vida de las personas, realmente estoy muy agradecido!!!!

Elivan Niño

Buyer Automotrices Nicaragua

Vielen herzlichen Dank für Ihren Vortrag für BME. Es war soooo motivierend ...

Ludovic Montécot

Program Purchasing Manager Fluid Commodities, Norma Group Holding GmbH, Maintal, Deutschland, Führungskraft

Ich wollte kündigen, aber durch die Module in Ihrem Einkäufertraining hat sich jetzt alles geändert und ich bin froh, dass ich durchgehalten habe.

Anonym da Coaching

Mrs Dammann-Götsch has been able to develop and upgrade my regional buyers to where I expect them to be: senior business partners adding value by procuring...

Global Purchasing Manager, Premium Automotive Tier1 Supplier

Einfach genial – einzigartiges Seminar – jederzeit wieder!" Der Stoff / Das Thema wird auf eine ganz außergewöhnliche Art und Weise dargestellt und bleibt einfach...

Ivonne Schott

Sachbearbeiterin Einkauf/Teamassistentin Michel Bau GmbH, Klingenberg am Main

针对这次公司组织的采购培训,我收获颇丰,培训分为4个模块,每个模块都是相互衔接递进的 ,针对所有的采购新人或者有经验的采购工作者来说,我想说:这次的培训将会让你 更加 系统的 科学的认识自己的谈判对象...

Veronica Gao

Direct Buyer, Shanghai, China

Ms. Tanja Dammann-Götsch was the trainer for our Americas purchasing team of buyers, she provided a week long training in the US and Mexico for 20 buyers. The trainings...

Chip Vogel

Director of Procurement Automotive USA

Tener la experiencia de cómo relacionarte y negociar con otras culturas, ha sido una gran herramienta. Tanja tiene una forma muy profesional...

Lourdes Salguero

Ontological Coach, Mexico-Brazil

Frau Tanja Dammann-Götsch ist eine hervorragende Trainerin und Dozentin mit einer sehr großen Ausstrahlung. Ihre Seminare sind sehr erfolgreich und das...

Kambiz Kiarass

Senior Sales Manager Automotive

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