How do you use data and benchmarks to support your negotiation strategy?

A benchmark of multiple supplier offerings provides a good anchor point in negotiations to try and bring all competitors on the same playing field. A supplier who has the best technically acceptable solution may be the most expensive but by benchmarking you can establish what might their highest cost driver and help them lower their offer to win the scope. This is win-win for both the buyer and supplier.

Data and benchmarks refer to quantitative and qualitative information, metrics, and standards used to analyze and compare performance, pricing, terms, and conditions during negotiation processes. They provide objective measures and reference points to support decision-making and justify negotiation positions.

In my experience, data and benchmarks are powerful negotiation tools: 1) Understanding Value: Analyze internal cost data to identify your "walk-away" point and set realistic targets. 2) Market Insights: Utilize industry benchmarks to assess proposed pricing against market averages and identify potential leverage points. 3) Supplier Performance: Track past performance data to negotiate for better terms based on historical trends (e.g., on-time delivery, quality control). 3) Competitive Landscape: Research competitor offerings and pricing to strengthen your position and demonstrate alternative options.

In procurement, benchmarking shouldn't just be about comparing costs with the nearest alternative supplier. It should encompass a comprehensive evaluation of the Total Cost of Ownership (TCO). This means considering factors like quality, service, and long-term value alongside price. Effective benchmarking requires a nuanced approach that goes beyond surface-level comparisons, ensuring that you're not just settling for the cheapest option, but making the best overall decision for your organization's needs.

Using data and benchmarks to support your negotiation strategy is crucial for achieving favorable outcomes. Begin by gathering relevant data on market trends, pricing, and supplier performance. This information provides a solid foundation for understanding what constitutes a fair deal. Utilize benchmarks to compare offers and set realistic targets. Analyzing past procurement data helps identify patterns and leverage points. Data-driven insights can also highlight potential risks and opportunities, allowing you to adjust your strategy accordingly. By grounding your negotiation in concrete data and benchmarks, you enhance your credibility and increase the likelihood of securing advantageous terms.

By doing the homework prior, you are mentally prepared for any outcome during the negotiation. You understand the market trend and won’t be blind sided with their opinions. You perceived what the other party wishes to gain from this negotiation and you use it to get what you also want out of the negotiation so that it ends “Win, Win”. You have knowledge of the past & and forecasts of the future to be able to use in different negotiation rounds. Don’t throw all the knowledge on the table at the first round. Surprise your adversary at round three and if you win before round three don’t spill the beans on your homework done prior if you didn’t need to use it because you might need this precious information another time ;) Have fun negotiating!

Using the same situation of the suppliers that are dependent on the raw material price, a part of my homework for negotiations the following was prepared: 1. Other quotations received from other competitors (Market price for benchmarking) 2. cost structure from supplier perspective 3. Previous Purchase Orders along with LME relative closing price (London Metal Exchange) 4. Statistical History of previous performance (like: OTIF % -On Time In Full-) 5. Market Analysis (Specially US Treasury bond yield) This will be finalized in BATNA (Best Alternative to a Negotiated Agreement) and ZOPA (Zone of Potential Agreement)

Getting the right data or information with the resources that are available and matching this to the negotiation outcomes is important. It really is shocking how this area is so depriortised and negotiators walk in with only the existing pricing on hand and pick a number to shave off the price. Very amateurish. Opportunities may be missed by understanding the dynamics of the market and what value (not just price) other providers may have on offer. Benchmarking costs and price is easier than benchmarking other important factors such as quality and services. In all cases targets need to be set to highlight the broad range of variables dependent on the procurement.

In the preparation phase, gather relevant data and benchmarks to understand market trends, industry standards, competitor practices, and supplier performance. Analyze historical data, market research reports, industry benchmarks, and internal metrics to identify negotiation opportunities and set realistic goals and expectations.

In my experience, data and benchmarks are powerful prep tools: 1) Internal Data Analysis: Identify your strengths, weaknesses, and cost structures to inform negotiation strategies. 2) Industry Benchmarks: Compare your performance metrics (e.g., pricing, lead times) to industry averages to understand your competitive position. 3) Supplier Data Evaluation: Analyze past purchase data to identify trends, cost fluctuations, and potential areas for negotiation. By leveraging data and benchmarks, you gain valuable insights to set realistic goals, identify leverage points, and make data-driven decisions during negotiations, leading to stronger outcomes.

Using the same situation of the supplier: Since the data helped us into determination of BATNA & ZOPA this shall reflect as well in the tactics chosen inside the negotiation. To understand what is most important for the supplier (creating a cash flow in this case) against having the best in market price for us. this would be achieved by using back burner technique.

During negotiation execution, leverage data and benchmarks to support your negotiation positions, arguments, and proposals. Present factual evidence, comparative analysis, and benchmarks to substantiate your claims and counterparty concessions. Use data-driven insights to demonstrate value, justify pricing requests, and negotiate favorable terms and conditions.

In my experience, data and benchmarks are powerful tools for successful execution: 1) Data-driven decisions: Use real-time data to monitor progress, identify roadblocks, and adjust strategies for optimal results. 2) Performance tracking: Compare your execution against internal data (e.g., historical performance) or external benchmarks to identify areas for improvement. 3) Set realistic goals: Utilize benchmarks to set achievable yet challenging targets that motivate your team and track progress towards them. 4) Measure impact: Quantify the results of your execution using relevant metrics to demonstrate success and identify areas for future optimization.

In my experience, data and benchmarks are powerful execution tools: 1) Data-driven Decisions: Use real-time data to monitor progress, identify roadblocks, and adjust strategies for optimal results. 2) Benchmarking Progress: Compare performance against internal goals or industry standards to measure effectiveness and identify areas for improvement. By leveraging data and benchmarks, you can make informed decisions, track progress, and ensure your execution stays on track.

Los datos en la negociación le. Dan contexto y le permiten crear sus limites y su MAAN claves para negociar. Cual es su objetivo Cual es su meta Cual. Es su acuerdo de mínima y que hará si tiene que levantarse de la mesa... Si mejor alternativa de acuerdo negociado es decir que obtendra si dice que no. Los datos son su contexto Si ese contexto no se puede negociar. Sin permite que el otro sea reconocido en la negociación no se va a negociar Y como hace participe al otro en la negociación desde los datos y los criterios objetivos que se tienen de ella

In my experience, for supplier evaluation, we must 1) Data Analysis: Analyze your own internal data on past supplier performance (e.g., cost, quality, delivery times). 2) Benchmarking: Compare your supplier's data (if available) or industry benchmarks to identify strengths and weaknesses. 3) Identify Trends: Look for patterns in data to understand supplier consistency and potential risks. 4) Data-Driven Decisions: Leverage insights from data and benchmarks to make informed decisions about supplier selection, performance improvement plans, or potential red flags.

After negotiation sessions, evaluate the outcomes and performance based on predefined metrics, benchmarks, and objectives. Compare achieved results against initial goals, industry benchmarks, and historical performance to assess effectiveness and identify areas for improvement. Analyze data trends, patterns, and feedback to refine future negotiation strategies and tactics.

In the evaluation phase of a negotiation, analyze the outcomes using data and benchmarks. Assess whether the achieved terms align with industry standards, benchmarks, and the data presented during the negotiation. Consider the overall success in meeting your objectives and the fairness of the agreement. Evaluate the effectiveness of your use of data in influencing the negotiation and whether benchmarks were appropriately applied. Reflect on lessons learned to enhance future negotiation strategies, ensuring continuous improvement based on the insights gained from the evaluation of data and benchmarks.

Using data and benchmarks in evaluation is vital for assessing the success of negotiations and making informed decisions for future strategies. A procurement director from a leading university shared an example where they used benchmarks to evaluate a major supplier contract. Post-negotiation, they compared the agreed terms against industry standards and historical data to measure performance. By analyzing metrics such as cost savings, delivery times, and service quality, they identified strengths and areas for improvement. This comprehensive evaluation not only validated their negotiation strategy but also provided actionable insights for enhancing future supplier relationships and achieving better outcomes.

A few points to consider during negotiation:- 1) Always be honest in presenting data. Nothing can give you more leverage than the Trust you have built with the other party. 2) Always think from all stakeholder's point of view. If you present their benefit, it will help them listen to yours, too.

One more thought from me - make sure your data is accurate and correct, or the whole negotiation process fails. You might even find you lose out but don't even know...

Contextual Relevance: Ensure that data and benchmarks used in negotiation are relevant, accurate, and up-to-date to enhance credibility and effectiveness. Flexibility and Adaptability: Be flexible in adjusting negotiation strategies and tactics based on real-time data, changing market conditions, and evolving stakeholder priorities. Ethical Considerations: Use data and benchmarks ethically and responsibly, avoiding manipulation or misrepresentation to gain unfair advantages or exploit counterparties. Continuous Improvement: Continuously update and refine data sources, benchmarks, and negotiation techniques to stay competitive and drive continuous improvement in negotiation effectiveness.

Data and benchmarking is certainly critical in negotiation preparation. But can there be too much reliance on this? Some cultures are very data/ information driven in their negotiation process and sometimes miss other aspects that can't be printed off and analysed. Benchmarking relationships for example is rarely undertaken and assessing the best culture fit' for long term contracts are rarely undertaken. Don't get me wrong, data/ information for negotiation prep is absolutely critical, but so are other things that are trickier to be quantified.

Define Clear Parameters: Start by clearly defining the parameters you wish to benchmark and collect relevant data. Leverage Benchmarking Data: Utilize benchmarking data to understand market standards, pricing trends, and vendor performance insights. Set Realistic Goals: Establish short-term benchmarks and realistic but ambitious final goals to guide the negotiation process, unrealistic goals leads to mistrust. Negotiate with Confidence: Back up your claims and proposals with facts and figures from benchmarking data to negotiate with credibility and confidence, aiming for mutually beneficial win-win agreement. Shorten Negotiation Time: Good data can significantly decrease negotiation time by helping both parties be clear on priorities.