Chapter 1.4 Flashcards
Identify the different types of relationships that impact on commercial negotiations
What does the CIPS Relationship spectrum do?
It describes the range of commercial relationships between a buyer and supplier based on richness of communication, longevity and mutual dependence
Name the 11 stages of the CIPS relationship spectrum
- Adversarial
- Arms length
- Transactional
- Moderate
- Bespoke
- Single-source
- Outsourced
- Strategic
- Collaborative
- Partnership
- Co-destiny
What is the CIPS supplier relationship spectrum based on?
The important idea of supplier segmentation, whereby the buying organisation segments its supply base based on how important the supplier is perceived to be to the success of the buyer’s organisation and the potential value that could be lost from a lack of proactive supplier relationship management
Name a 3 step way of segmenting suppliers
- Transactional
- Tactical
- Strategic
Name 4 methods of negotiation with transactional suppliers
- Limited negotiation -may not be worth effort
- Focused on price and delivery
- Over phone/e-mail/no meetings
- Win-lose or win-win
Name 4 methods of negotiation with operational suppliers
- Selective targeted negotiations
- Focused on wider cost and risk elements
- Over phone/e-mail/in-person buyers
- Win-lose or win-win
Name 4 methods of negotiation with strategic suppliers
- Regular structured negotiations
- Focused on total cost - both parties
- In person with stakeholders
- Win-win
Define reputation
The beliefs or opinions that are generally held about someone or something / a widespread belief that someone or something has a particular characteristic
Name 10 ways you may base whether a supplier has reputational strength
- Quality of products or services
- Enhanced levels of communication
- Brand alignment
- Low cost/high value for money
- High ethical standards
- Reliability
- Cutting-edge technology
- Strong customer focus
- Engineering excellence
- Cultural alignment
Name 3 examples of how one incident has caused huge damage to a country’s reputation
- BP - Deepwater horizon oil spill in the Gulf of Mexico
- Volkswagen - cheating on diesel emissions reporting
- Samsung - Galaxy Note 7 battery catching fire
Name 4 examples of how you can help to buy your company a good reputation
- Sponsorship of prestigious events to drive brand association
- Recruitment of sales people with technical qualifications
- Employment of high-profile sports people, celebrities or leaders, to bolster reputation
- Buying brands or smaller companies to acquire their reputational goodwill
Define trust
The expectation that the other party will behave in a predictable and mutually acceptable way
Who identified a taxonomy of three types of trust in commercial relationships
Dr Mari Sako
What are the taxonomy of three types of trust in commercial relationships
- Contractual trust
- Competence trust
- Goodwill trust
Name 9 trust/partnership building behaviours
- Joint issue resolution
- Quick sharing of information
- Joint agreement in re-evaluating KPIs
- Open discussions on root cause of failures
- Joint planning, focus on value for money
- Strong sense of ownership for high-quality service
- Commercial transparency and co-proposition of cost reduction and service improvement programmes
- Joint recognition and celebration of successes
- General mood: Appreciation, trust, opportunity, excitement, self-examination
Name 7 trust/partnership-destroying behaviours
- Hallway rumours/gossip of partnership breaking down
- Emotion-based assessments of performance, usually due to recent service breakdowns
- Quick blaming of other party for service or performance problems
- Constant shadowing and oversight, focus on controls
- Avoiding traditional decision makers in new contract agreement
- Avoidance of accountability
- General mood: resentment, distrust, resignation, overwhelm, frustration and blame
What is litigation
Where parties go to court to resolve their dispute
What is a vicious circle of blame
Where the supplier blames the organisation (or less likely procurement), and the organisation blames the suppliers
How can you break the vicious circle of blame?
Procurement will need to use their negotiation and conflict management skills, adopting a collaborative and integrative approach
What should you do to repair a relationship (4)
- To establish the facts that led to the situation where the relationship broke down
- Consult with your business partners internally to establish their points of view of where the issues and sources of conflict are
- Contact the supplier and get their side of the story
- Apply principled negotiation separating the people from the issues, focusing on interests and not positions and then looking for options of mutual benefit
What else can you do to repair a relationship
Involve a third party to facilitate elements of repair
What may you have to consider when restarting a relationship
A relationship relaunch event, joint triage teams and new governance structures for problem solving and escalation
