5 Special Considerations in Conducting Negotiations
The Certified Professional in Supply Management (CPSM) Exam’s 1st part covers the Foundation of Supply Management. If you are planning to take this exam soon, you need to know that 32 questions will focus on Contracting and Negotiation.
As a Supply Management Professional, it is expected that you will lead/conduct/support negotiations with suppliers and obtain desired results.
If you want to pass the CPSM Exam you have to remember the five (5) special considerations in conducting negotiations:
The fact-finding session serves as the opening session in every negotiation. Ground rules are established during this meeting, such as the specific areas to be negotiated, availability of both parties and so on.
Fact-finding sessions help each party to assess the adequacy of the pre-negotiation efforts. It is the host who frequently ask broad questions during the meeting. These questions are designed to determine the overall issue of the contract or proposal.
If the host is not satisfied with the answers given by the guest, the host may adjourn the negotiation until adequate data is supplied.
Fact-finding sessions are done to determine whether the strategies and tactics you have prepared for the contract are effective. Moreover, tact should be used in negotiating to avoid hostile tone that may ruin the contract negotiation.
Final Proposal Revisions
Proposal revision refers to the change in the proposal made after the negotiation or fact-finding sessions. A contracting officer may request or allow revisions in the contract to clarify and document the agreements reached during the fact-finding session.
Negotiating with sole offer or vs. entire competitive range
Sole offer refers to a procurement that leaves a buyer to accept a proposal from one supplier of a certain product, material, or service while competitive range refers to multiple bids that are specifically rated in accordance to the needs of the buyer.
Sole offer are more complicated to deal and negotiate. You can increase your negotiation power by determining your worth when the supplier loses you as a customer.
Documentation of Negotiation
It is very important for a contracting officer to document the negotiation. He or she should note the following:
- Purpose of negotiation
- Description of the acquisition
- The name, organization, and position of every person present in the negotiation process
- Changes of the pricing
- Significant facts or considerations concerning the establishment of the pre-negotiation objectives
- Summary of the contractors proposal
Negotiation as a Consortium or Cooperative
Entering to a consortium is like preparing for a marriage. To enter into this kind of setup, each party must be comfortable and should get a long with each other. Negotiation as consortium involves sharing of proprietary information.
Meanwhile, for the negotiation as a cooperative involves the participation of legal counsels to resolve all issues in the agreement.
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