Don’t let negotiations upset the apple cart

For a buyer working in supply chain management to say their world has become more turbulent is a vast understatement. Many buyers may find themselves in a scenario similar to the one faced by Taylor. In this era of never-ending change, there is a practical need for supply chain buying managers to consider the relationship history with their key suppliers and their strategic expectations so that they can better understand and predict potential supplier negotiation behaviors and outcomes when environmental changes occur, both internal and external to their organizations.

Some buyers may have a collaborative (win-win) strategic situation with their key suppliers, in which there is information sharing and concern for the success of both firms. Other buyers may be facing a competitive (win-lose) strategic situation, where their suppliers emphasize their own short-term gains. After repeated negotiations, buyers learn to adjust to their suppliers’ negotiation styles given their past history. What happens then to buyers’ levels of trust when suppliers change their negotiation strategy to a different style after a history of doing it the same way?

Further complicating buyer-supplier relationships are environmental forces or changes, both internal and external, that are out of the control of the buyers and suppliers alike. Internal changes could include new executive leadership within the supplier organization that changes a strategic emphasis either toward or away from more long-term collaboration with their buyers. And, externally, these changes could include items such as price changes—either higher or lower—in key product components.

Read the original article from SCMR