Sourcing Industry Group Blog Understanding the Technical Aspects of Negotiations

SIG University Certified Sourcing Professional (CSP) program graduate Connor Ryan describes the technical aspects of approaching negotiation conversations and how applying these tools will absolutely enhance your success and create a strong supplier relationship.After completing the SIG Sourcing Certification course, I learned many takeaways from this course. As I explained in numerous discussion posts, I am fairly new to the sourcing organization. I joined in January of 2022 and didn't have any sourcing experience before my time in my current role. This certification was extremely beneficial as I have learned many soft skills through trial and error in my current role. However, I had never learned the technical skills or approaches to sourcing as I learned in this certification course. Specifically, the biggest takeaway I had from this course was the soft negotiation skills and the many lessons we learned on negotiation practices and approaches. Over the past 18 months, I have had direct experience and exposure to negotiations, as the external environment has dramatically caused the price of production and materials in the print and distribution category. Our senior leadership team has increased pressure on my team to negotiate lower costs as we have seen anywhere from 20-30% increases in costs even after sending out these projects to bid in complex RFPs. So, even though I have had experience negotiating, I only had a foundation of education on approaching these conversations in this course. The biggest takeaways for me on negotiating will be the use of the three key negotiating targets discussed in class: the most desirable outcome (MDO), the least acceptable agreement (LAA), and the best alternative to a negotiated agreement (BATNA). In the future, I plan to take these negotiation targets and baseline tactics into the conversations with the suppliers. We loosely defined an MDO in the conversations, but I plan to meet with the business and my leadership team before the 2024 negotiations to understand the MDO. In addition, we will understand what the LAA should be for the business and the sourcing organization. As mentioned, I did not know these technical terms, so we had a loose understanding of the LAA, but it needed to be clearly defined and refined with the business. For an MDO, I will propose with our vendors that we hold production prices flat for the length of the SOW and keep material price increases to only once per year. This should incur cost avoidance savings for outer years and keep the business budget competitive. For the LAA, I plan to propose production increases tied to the CPI as defined by the labor bureau and statistics. This way, if inflation rises, the supplier will have an opportunity to increase production prices during the length of the SOW, but it won't be unwarranted increases. As I go into these conversations and apply the learnings from the course, I will also have a BATNA in mind if we cannot agree to a cap on the production increases. I plan to work directly with the business to understand the tradeoffs of moving the print work to one of the two strategic vendors with which we already have long-term MSA agreements. If we can use this as negotiating power with the current suppliers, we should be able to meet somewhere in the middle of the MDO and the LAA, as the suppliers (hopefully) will not want to lose our business. In conclusion, this course helped me understand the technical aspects of approaching negotiation conversations. In addition to the key negotiation targets, there were numerous preparation techniques that I will apply to my negotiation conversations in my role and with the suppliers we work with for 2024 contracts. I plan on meeting with the business and my leadership team to get a clearly defined and approved MDO, LAA, and BATNA. The education from this course has armed me with the tools to be as successful as I can be in these negotiation conversations and make a real difference to the bottom-line results at Cigna.The Certified Sourcing Professional (CSP) Program is a 10-week course that focuses on the hard and soft skills of sourcing, including strategic sourcing and outsourcing methodologies, as well as best practices in negotiations.learn more Contract ManagementNegotiationsSIG UniversityStrategic SourcingTags:certified sourcing professionalnegotiationssoft skillscontract negotiationAddThis: Headshot: Blogger Name and Title: Connor Ryan, Category Management Advisor, CignaBlogger Bio: Passionate about problem-solving and driven to tackle Cigna and healthcare's most complex challenges, Connor graduated from Drexel University in 2018 with a bachelor's and master's in biomedical engineering. He is currently pursuing his MBA in finance at the University of Hartford, with a projected graduation date of August 2024. Connor joined Cigna's Operations Leadership Development Program after graduating from Drexel in 2018. Connor had two Enterprise Operations roles before moving to the Global Procurement team in 2021. Over the past year and a half in his current role, Connor has negotiated contracts, managed vendor relationships, and implemented cost-saving strategies to mitigate external cost drivers that have delivered value to Cigna's bottom line. Connor recently graduated from the Operations Leadership Development Program in July of 2023. Outside of Cigna, Connor loves spending time with his family and friends on the beach in Ocean City, NJ, and is an avid Philadelphia sports fan and soccer player.