investigative negotiations & value creation · 2019. 9. 27. · omid ghamami, mba, cpscm...
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Omid Ghamami, MBA, CPSCM
President, Purchasing Advantagewww.PurchasingAdvantage.com
CEO & Chairman, Center for
Purchasing & Supply Chain
Management (PSCM) Excellencewww.CenterForPSCMExcellence.org
“THE Godfather
of Negotiation
Planning”
~ Intel Corp
The CPO AgendaInvestigative Negotiations &
Value Creation
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Omid Ghamami, MBA, CPSCM™❖ MBA, University Of California System
❖ President, Purchasing Advantage; CEO Center for PSCM Excellence
❖ Globally Recognized Author, Speaker, Trainer, Consultant
❖ 18 Years At Intel: Ran Global Corporate Purchasing Operations with $16B USD scope –“THE Godfather of Negotiation Planning”
❖ Thousands Of Hours Consulting/Speaking/Training In 26 Countries
❖ 2 Best Selling Procurement Books; Multitude of Industry Articles
❖ 50+ Hours TV Appearances As Procurement/Negotiations Expert
❖ Twice Hired to Train the 50 CPOs of U.S. ($3.2 Trillion USD)
❖ Regularly Speak to Harvard University Supply Chain Management Master’s Program
❖ Founder & Adj. Professor Of Purchasing, Los Rios Comm. College
❖ Interviews Published by SAPAriba & Fortune Magazine
❖ Named one of the “Top 5 Procurement Influencers in the World” by CPO Strategy Magazine in 2019 2
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• 3 million copies of this photo were
printed in campaign literature in
1912
• AFTER printing, It was discovered
that the owner was Moffett
Studios, and it could cost $1/each
to license the photos!
• Cost impact in 2019 dollars =
$65M in royalties
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Parasitic Value Creation
• Moving costs back up the supply chain = Parasitic
Value Creation
• Negotiation strategies have to be developed that both
Create JOINT Value
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Moving Costs
Moving Costs
Goal: REMOVING Costs From the Supply Chain
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What You Need to Understand in Advance of
Negotiations
Issues
InterestsPositions
The topics both parties want to
discuss
Where each party stands on
each topic
Underlying needs and wants
that are not readily evident
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Solving The Trash Problem With
The Largest Stone in the World
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London Developer Couldn’t Complete Medical
Center – Because 1 Lady Wouldn’t Sell Her
Home…
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Oregon State Capitol Building – Electricity
Challenges
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EGGER Wood Buildings Negotiations With Lumber
Providers
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Fruit Juice Manufacturer Fighting Price &
Supply
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Gathering Information in Advance
About Supplier• Pre-meetings with supplier
• News articles
• Executive interviews
• Analyst reports
• Annual reports
• Asking employees
• Internet searches
• Internal documents regarding supplier
• People who have personal experience working with that supplier
The Best Negotiators are Great LISTENERS
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Understanding the Other Side’s Priorities is
THE Most Overlooked Part of Negotiations
• You need to deeply understand the priorities of the other side
• The more priorities you can uncover, the more CURRENCY
you have to maximize value
• SEEK OUT your differences in advance
• If they are adamant, find out more! How much do they value
it? Use that to develop a trade strategy!
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Textiles Market and the Lycra
Brand Name
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“How Can I Avoid Agreeing To Their Demands?”
“What Can I Learn From This Demand? What Does It Tell Me
About The Other Party’s Interests?”
Get Excited About Supplier Demands
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Peeling the Onion on Supplier Bottom Line
Positions
What You Can’t Ask: “What Are All Your Bottom Line Positions?”
What You CAN Ask: “Besides the revenue, how does this deal contribute to Division/Company Objectives?”“What are the biggest challenges you are trying to tackle this year? Are there 1 or 2 thorns in your side right now?”“What outcome from this deal would thrill your management and why?”“What are the top success metrics your group is measured on?”“How would you rank the various positions you offered in your quotation in terms of importance to your company?”
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Low Cost, High Value Trades
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You Are Getting Paid to INVENT Options in
Negotiations
• Don’t assume suppliers are only interested in the
money
• Investigate their interests, problems, and needs
• Invent options that make the pie bigger
• Secure high value concessions in return
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Self Fulfilling Prophecy of Negotiations
IF YOU ASSUME THE MAIN THING YOU WILL
BE NEGOTIATING OVER IS THE MONEY…
YOUR NEGOTIATIONS WILL REVOLVE AROUND WHO GETS THE MONEY
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NOVICE NEGOTIATORS➔ See one pie – the money pie➔ Focus on TRANSFERRING VALUE ➔ Allocates assets to themselves➔ Go through issues one by one➔ Get less and so do their suppliers
EXPERT NEGOTIATORS➔ Create MANY pies➔ Focus on CREATING VALUE ➔ Allocates assets to the party that values
them more➔ Go through issues all at once, to negotiate
packages➔ Get more, and so do their suppliers
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Thank You Very Much!
•Procurement Transformation
•Procurement Consulting
•Negotiation Advisory
•In House Training
•CPSCM™ Certification
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www.CenterforPSCMExcellence.org
www.PurchasingAdvantage.com
1-888-TCO-4889
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Sources Cited
• Negotiation Genius, Malhotra & Bazerman
• 3D Negotiations, Lax & Sebenius