Supply Chain negotiation using spreadsheets

In all of the hype about supply chain management and cloud based operating platforms, simple solutions such as using spreadsheets to improve communications with other departmental heads seems to get overlooked. But according to Alexandra Moschell in a recent article she wrote in “Inside Supply Management,” a magazine published by The Institute of Supply Management, spreadsheets can play an important role.

Alexandra Moschell is the senior strategic buyer for Hallmark Cards and she has developed a spreadsheet that she uses to improve communication with internal partners. The idea is to bring greater clarity in terms of goal setting, in preparation for conducting negotiating with suppliers within Hallmarks supply chains.

Ms. Moschell says that there are four basic steps that she employs to develop her spreadsheets.

Step 1: Communication and goal setting

The initial step is to convene a meeting with the various internal partners with a view to sharing information pertaining to the roles that people will play, to agree a basic timetable and to set out what a successful negotiation should achieve.

In Ms. Moschell’s opinion a frank exchange of views and an open discussion also means that there is less likelihood of non supply chain personnel opening their own negotiations with suppliers to support their own agendas.

Step 2 – The preparation stage

This is the step whereby supply chain managers can begin to populate their spreadsheets. Spreadsheets can be made out to the individual priorities of specific supply chains, but in essence they need to include columns for:

  • Key points to be negotiated
  • Background information on the points to be negotiated
  • The key objectives behind each negotiating point
  • Listing the negotiating point in priority order
  • Relating each negotiating point to the appropriate business partner

The very act of noting down what it is that each of the internal business partners wants to achieve enables supply chain negotiators to target their negotiating strategy accordingly.

It’s also important to establish what information any internal business partner may have about a supplier. This not only helps to form the negotiating strategy but also indicates respect for the knowledge that the internal business partners have.

The spreadsheet must also have a column to denote all of the requirements necessary to achieve a beneficial outcome during the negotiations. This will make the negotiation practice that much easier to follow. It will also allow supply chain negotiators to plan effective counter arguments to any objections that suppliers may raise, and it will also help negotiators to understand when to stand firm and went to concede.

The next step is to discuss the completed spreadsheet with the internal business partners and agree the overall contents and strategy.

Hallmark's Negotiations Summary Tool

Hallmark’s Negotiations Summary Tool

Preplanning the negotiations

Carefully preplanning the negotiations will help to ensure that they run more smoothly. This preplanning needs to include who is to be present during the negotiations, when and where the meetings should take place, and what type of format the meetings should follow.

According to Ms. Moschell it’s also a good idea to hold a pre-prep meeting with internal business partners in advance of any negotiation, in order to build confidence in the process and to confirm who is responsible for what.

The spreadsheets can also include a column to document the outcome of each negotiation in relation to each particular negotiating point.

Once negotiations are concluded, supply chain negotiators should then meet with the internal business partners to go over and review what was achieved and to summaries any outstanding points.

Creating a formal summary

The final step is to create a formal summary once the negotiations have been completed and the key objectives of the individual internal business partners have been satisfied. Ms. Moschell recommends creating a one page executive summary to advise internal business partners what has been agreed and to ascertain their satisfaction with the negotiating process.

Ms Moschell advises that in her experience creating this type of summary that internal business partners can refer to reduces the amount of day-to-day questions that they may otherwise have.

This type of negotiation strategy spreadsheet provides visibility to all participants and concerns both within and without the supply chain and clearly records the outcomes. It also confirms and recognizes the important role that partners play in the negotiating process and what leads up to formulating that process.

Do you think that this sort of tool could work for you or do you have something of your own you would like to share with your peers?

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