Jū: gentle, supple, flexible, or yielding.
Jutsu: technique of manipulating an opponent’s force against themselves rather than confronting it with one’s own force.
One of the most common frustrations I hear from supply chain professionals across the globe is the practice of “back-door” selling to the purchaser’s internal clients. Specifically, sellers go around a buyer directly to an end-customer or Sr. Executive, who promptly gives away all the leverage the buyer has worked so hard to create by telling the seller everything they want to know about their position in a negotiation. The dreaded statement, “we decided to give you the business, now go negotiate with purchasing,” comes to mind.
Admission: I started my career as a seller and I went around buyers to gather information as often as I could.
I say this because when I moved to the buy-side of negotiations one of the first things I did was develop a method to combat this powerful sell-side tactic. It’s worked very well over the years, regardless of functional group, company, industry, or region of the world. It not only mitigates back-door selling and protects buyer value but also builds strong internal relationships. The beauty, aside from its effectiveness, is the minimal effort required to do it well. The secret? Instead of fighting against the practice, use it to your advantage – jujutsu negotiations.
In other words, BEFORE the seller has a chance to go behind your back, go behind theirs. In the initial project kick-off meeting or in your first meeting with a new internal client, use these words: “I want to support you effectively, so I’m going to need your help. WHEN a supplier comes to you behind my back for information I need for you to work with me. I will negotiate a great deal with the supplier you (we) want, but you have to follow the plan we’re going to create together.”
I’ve even gone so far as to tell my internal clients to go out with suppliers and gather information that would help us maximize value. To find out the suppliers critical deal points and what else they’re willing to offer us. To find out what they won’t concede so I can move on to another point. I also grant my team explicit permission to complain about me and how difficult I can be to work with – so the supplier “better not play games and quickly offer us a great proposal.”
The typical outcome? Internal clients have consistently spoken highly of the method. They recognize the need to offset the sales-tactic and appreciate that not only is procurement actively looking out for their best interest, but also that we include them in the negotiation plan and don’t try to stop them from communicating with the suppliers they need to do their jobs. Oh, and some of them love to play a role in the negotiations. One even said they felt like James Bond – keeping their information secret while discovering the other side’s plan.
But it’s not all cloak & dagger “for us to win, the other side must lose.” Of course there’s a win-win in mind. And jujutsu negotiations play a role again.
Regardless of situation: a sole source (the only supplier in the world that can provide a solution), single source (your plan is to aggregate with just 1 of several suppliers), or a supplier who has discovered that “they have the business and now they’re just negotiating with purchasing…” Growing frustrated and fighting against the situation will most likely lead to a less than optimal result. I offer this alternative.
Embrace the entrenched supplier.
Consider this; if a supplier has a lock on your business need, chances are they also have an advantage with your competitors as well. So, in order to have an advantage with end-customers in your space, what you really need to have is a better deal in place than your competitors. But how do you do that?
You could use tactics and fight the supplier to show you’re not an easy target. But ultimately they’re going to win and all you’ll have to show for it is sleeping well knowing you fought a good fight. OR, you could use jujutsu negotiations and tell the supplier, who is used to confronting direct force: “Look, we both know you have an advantage in this negotiation, what will it take to ensure my company has an industry leading deal with your organization?”
Perhaps they need customers to test a new solution? Or there is a volume discount that incentivizes you to spend more rather than a minimal amount? Maybe they could provide additional products and services? What if a long term deal (with someone you’re likely going to do business with anyway) will get your organization significantly more value? Even monopolies have needs beyond price – if you can find out what they are, you have an advantage over your competition.
Another way of maximizing value with entrenched suppliers is asking them to show you best practices using their products or services to improve your profitability. If 2 competitors have an identical solution and deal in place, the one that uses it better has an advantage.
My intention here is certainly not to make negotiations about combat with the other side. Rather it’s to help everyone understand that we must continue to find new ways to create real relative value and then claim it. As with most things in life, what separates us is the path we choose.
Mike Inman works internationally as a professional negotiation instructor and advisor with TableForce. Previously he was a Head of Global Procurement for MGM Resorts International and IAC/InterActiveCorp: