Supplier Negotiation Solutions: A Game-Changer for Procurement Leaders?
Procurement professionals have a major impact on the success of an organization. One of the most important levers are supplier negotiations. However, procurement is a stepchild in terms of technology investments. Technology budgets for sales are usually 10 times the size of procurement budgets.
Technological advancements have transformed the way businesses operate because they can help streamline procurement processes, improve supplier management, and facilitate better negotiation outcomes. Supplier negotiations are no exception. Most if not all of them are done “manually” without leveraging technology. Procurement leaders must catch up. There are many solutions available in the market. They have a great ROI and boost performance immediately.
“CPOs now work at the center of the organization, helping to drive its technology and transformation goals.” ― GEP-ProcureCon: CPO study 2022
Where can technology create the most value for supplier negotiations?
There are a lot of solutions out there and the market is growing. Procurement leaders have to prioritize. They should start with 2-3 solutions which are most suited for their organization and address key pain points. This might be availability of supplier intelligence or training and preparation. We see four main areas where technology can create value for supplier negotiations:
Collaboration and Communication Platforms
Collaboration and communication platforms such as MS Teams, Zoom, and Google Hang Out. They are essential tools to facilitate virtual negotiations, save time, resources, and reduce the number of physical meetings.
Information Platforms and Portals
Information platforms and portals to search for suppliers or market information and benchmarks, which can provide procurement teams with intensive information to make informed decisions. For example, supplier profiles, supplier news, raw material indices, and benchmark of labour costs and rates. Beroe and Craft are two examples of providers which create supplier profiles.
Analytical tools which help to analyse and summarize key information for your negotiations. This includes analytical tools on spending such as data warehouses and BI tools, cost analytical tools, digital supplier negotiation days, etc.
Using these tools will help procurement teams to identify cost-saving opportunities, track spending trends, and analyze supplier performance. All this data can then be used during negotiations to achieve better terms and outcomes.
AI-Enabled Negotiation Tools
AI-enabled negotiation tools, which help to prepare and execute negotiations, like LeanLinking’s DEALS solution. They cover five main functionalities:
- Expertise-enabled workflow with real-time guidance in preparation and execution of the negotiations
- Generation of fact sheets with analytics and insights automation. This might include the integration of other analytics solutions
- Benchmarking and guided target setting
- Negotiation academy with best practice toolbox and knowledge repositories (e.g., LavenirAi)
- Orchestrated stakeholder engagement and feedback
AI enabled negotiation tools are the key to unlocking opportunities in procurement. They boost efficiency and effectiveness of the negotiators, enabling them to conduct more negotiations in a shorter time, with improved preparation and a better outcome.
Impact of leveraging a negotiation management platform to execute a cost reduction programm:
This is a great investment to boost the morale of your negotiators. It will keep your most gifted negotiators in the organization. Good negotiators are hard to find and can command a salary premium. Maximizing productivity of top-notch negotiators should be a priority for each organization. Technology offers a lot of exciting options in this space with a very positive business case.