How eSourcing Has Changed the Negotiation Game

Love it or hate it, but there is no denying that eSourcing has revolutionized the purchasing arena. Negotiations will never be the same. Strategic eSourcing initiatives, processes and technology bring clear benefits to companies by:

• Speeding up the negotiation time. Time savings is one of the most significant benefits of using eSourcing.
• Increasing transparency. Both companies and suppliers get real-time visibility into what should be considered fair market prices.
• Levelling the playing field for all parties. Everyone receives the information in the same way. Communication through the use of a portal keeps the information clear and consistent.
• Broadening the geographical reach. Buyers can reach new suppliers in different locations. The online platform allows companies to exchange information and perform negotiations with suppliers that were previously deemed inaccessible due to geographical constraints.

However, companies must overcome or accept some challenges that arise when implementing strategic eSourcing initiatives and technologies:

• eSourcing depersonalizes the negotiation process. There is less direct personal contact during online negotiations, which is a real drawback in situations where business relationships thrive on extended personal contact. However, some might view the lack of personal contact as a positive benefit that levels the playing field for all parties. 
• Communicating through technology can complicate language and unseen cultural barriers. I always encourage my prospects and clients to remember that the true “meaning” of what is said is only 7% conveyed through words; 38% is conveyed through tone of the voice and 55% through body language. Therefore, if we are moving away from face-to-face and phone conversations, we are bound to lose a lot of nonverbal communication.

How has strategic eSourcing changed the negotiation game for your company? How have you overcome the challenges associated with eSourcing projects and initiatives?

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2 Responses to How eSourcing Has Changed the Negotiation Game

  1. I agree that e sourcing de- personalises the negotiation ans we do miss out on a lot of clues which one gets from non verbal communication.

    Neera Sud
    AGM, SAIL

  2. I do not think that esourcing has to de-personalize the negotiations process. Take for example using an esourcing tool to manage an RFP for a consulting and/or service based offering. I would suggest that you follow the standard process and use an esroucing tool to facilitate the RFP response and evaluation process. Then, I would short list and have those suppliers come in for proposal presentation/discussion. Further down select if needed and then enter into negotiations. If you chose to use an auction, that really is focusing on one part of the deal, the price. Does that part of the discussion need to be “personalized”? You have done your due diligence, meet with your potential providers and assessed them, baked the variables of their proposal and resources into your analysis, basically you have done a lot to get to know your choices. Esourcing tools, when used properly, enable the process. In fact, using them may give you more time to focus on getting to know the potential providers, since you are not spending hours or days trying to assess and standardize disparate proposal formats and pricing models. That extra time can be used more constructively to conduct deeper discussions/due diligence with the potential providers.

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