Voice of Supply Chain – Sept. 2022
Featuring: Mark Raffan
Welcome to the Voice of Supply Chain, brought to you by ISM New Jersey and SourceDay. The purpose of our show is to tell stories of people in procurement and supply chain doing extraordinary things. I am your host, Sarah Scudder. I oversee marketing for SourceDay; we automate purchase order changes and enable supplier collaboration for manufacturers and retailers.
If you want to talk more about supply chain and direct materials procurement, you can connect with me on LinkedIn at Sarah Scudder and follow my hashtags #WomeninERP and #ManufacturingMaven. Today, our guest is Mark Raffan.
So Mark, we’re gonna go way back in time; you got to put your thinking cap on for this, and we’re gonna start talking about your childhood. What was your favorite childhood memory?
My favorite childhood memory is when I stole my younger brother’s books out of his bookcase and tried to sell them to my neighbors on the street. That’s probably my favorite childhood memory. I got into lots of trouble with my parents, but made a lot of money which I had to give back to him unfortunately, but it was great. It’s my favorite childhood memory.”
What in your childhood shaped you to be the person that you are today?
“Probably my family, first and foremost. I come from the most amazing, supportive, incredible family who are also not shy to delve into conflict-based situations. If they’ve got a problem, they’re going to tell you about it, and I think that probably shaped a lot of the way that I have conversations and a lot of the way that I talk with people. But yeah, no, my family first and foremost, especially my mom and dad.
What’s a tradition that you learned from your parents that you’ve continued on with your own family now that you’re a husband and father?
Dinner at the dinner table as much as we can. There are nights, obviously, that we can’t do it because of sports and all that kind of stuff, but just eating at the dinner table, trying our best to eat together every night.
Who cooks?
I cook two nights a week, and my wife cooks the rest of the time. She’s a killer in the kitchen; she’s an absolute rockstar. When you say rockstar, recipe or no recipe type?
No recipe, no recipe. Yeah, no, the amount of flavors that she can put together from seemingly very little – if you haven’t done grocery shopping and you look in the pantry and you’re like, ‘I don’t know what we’re gonna make out of this,’ she’ll make a feast out of it. It’s incredible.
Your tonight’s recipe, or no recipe, generally, it’s a recipe?
I try and pick something new and interesting that we haven’t had before, but then the kids usually turn their nose up at it and ask for mom’s cooking anyway.
Most influential person in your childhood and why?
My dad, probably because he never complained. Not once, I’ve never heard him complain once about anything, ever. Now, has he complained to my mom? I’m sure he has, but has he ever complained to us? Never, never as kids.
What’s one thing that you’ve learned as an adult that you wish you had known as a kid?
Patience. I’m still a very impatient person. Patience is not a strong suit of mine; I have to consistently work at it and really buckle down with patience to improve it, but patience is a trait that I’ve yet to perfect.
What were you like as a kid in high school?
Very involved. I was in band, I was in a lot of choir stuff, I was in a lot of sports, did swimming and water polo, and a bunch of other things. But yeah, very, very involved in school and very, very involved in sports and extracurricular activities, and had an amazing friend group, everyone ranging from hardcore jocks to massive goth nerds. That was generally my friend group.
How many are you still friends with today?
Five. Five of them. We have a regular WhatsApp conversation.
So you were really involved in high school and you decided to go to college. Why did you choose to major in entrepreneurship?
Because I started out doing accounting and I hated it. So I started out majoring in accounting, and I thought I was going to be an accountant. My dad wanted me to be an accountant, so I thought, ‘Well, I may as well do that.’ But it turned out I hated it, and I thought, ‘Well, what fits my personality best?’ I found the entrepreneurial management major and then majored in that.
What’s the most important thing you learned in your undergraduate program?
How to cram, how to get [ __ ] done in a very short amount of time. Too much partying and not enough focus. I did end up on the Dean’s List and did very, very well, but it usually was a result of me cramming.
Worst advice you received in college?
The worst – it wasn’t really the worst advice, but it was like guidance that we got. Our heads got filled with ideas like, ‘Oh, you’re gonna come out of college and make a ton of money, and everything’s gonna be fun.’ And that was BS, it was total BS. We came out earning significantly less than what we were told we were going to earn, and at that time, it was really, really hard to get a job. And so, yeah, the first few years were a real struggle. So the advice that we got about coming out and getting a job was really, really wrong. And also, some of the advice that we got around entrepreneurship was not wrong, but just not rooted in reality, because everyone in academics who teach entrepreneurship, who maybe haven’t started a business or run a business, talk about things in platitudes. They say things like, ‘You know, write this business plan and go get some funding.’ And you’re like, ‘Well, first we have to prove if the concept works, right?’ And so there’s a lot of things like that that sound great on paper, but in practice, don’t really work.
Best advice you received?
Best advice I received was try a bunch of different things. If you are not happy with what you’re doing, do something else. That’s okay. It’s okay to change your mind. So that was probably the best advice I received.
And what did you try?
Oh, I tried to start a bunch of different businesses. I tried to start a market research business. I tried to start a home – basically a home construction research business. I tried to start an import-export business. I tried to start a bunch of different things, and they all went horribly wrong because I had no idea what I was doing. And most of them never really made it out of the gate. And then I had a bunch of jobs as well, so I worked in sales and I worked in a lot of procurement roles all the way throughout university, and ended up running a few categories. And then eventually decided this work thing is not for me. The corporate world is not for me. I need to start my own thing. And that was sort of the birthplace of negotiations in India.
You mentioned you had some jobs throughout university. What did you think you wanted to do after graduation?
I always had these grandiose delusions of starting my own business, and I thought that would be really, really cool. But it turns out the practice of starting a business is significantly more difficult than actually thinking that you can start a business. And so that’s why I think I had a lot of bombs because I didn’t realize how much hard work it was going to be. So yeah, that’s probably the one thing that I thought I might do, but I never expected that I would end up in a procurement role, for example. That was something that I just fell into, as is like most of the answers that you get from procurement people or supply chain people. They’re like, ‘I kind of just fell into it, you know? I was in finance, and then I moved to this,’ and the same sort of idea. I just kind of fell into it.
So what did you do in your procurement role?
Many, many different things. My first job in procurement was working as a distribution buyer, like a DC buyer, and replenishing stock in a warehouse, managing mins and maxes and managing workflow and all that kind of stuff. Then I moved into category analyst and category manager roles, and then for a number of different categories, both direct and indirect. And so I’ve sort of seen a broad scope of all different types of procurement roles.
What did you like about working in procurement?
Probably the variability of the type of work that I was doing. That’s probably the biggest thing that I liked. I was able to have a conversation with someone one day, internally, in negotiation, do analytics, prep a strategy, all in one day. And that was probably the thing that I liked the most. It’s not just one thing, you know, that you do. You do a bunch of different things to achieve a certain goal.
What didn’t you like working in procurement?
The changing shape of corporate structure. I think I would have felt this way regardless of who I worked for and what kind of role that I was in. But you know, when you get a new leader, the goals change with the organization. And sometimes your personal values don’t necessarily line up with corporate goals. And so, that’s difficult, I think, for a lot of people. That, for me especially, it wasn’t something that I particularly enjoyed. Like when a new leader comes in and that person, you know, just doesn’t align with you personally, that’s tough. I really did not like that.
So what did you do about it?
I left. I tried to change things, but inevitably my impatience resulted in me just deciding, ‘Yeah, it’s not for me.’ And so I just… I’ve decided to leave.
What did your boss say when you left?
Well, there were many organizations where I had that conversation with people, like, ‘Hey, you know, this isn’t for me. I’m gonna go and do something else. I’m gonna go and do something new.’ And usually, it was a very civil, normal conversation. Thanks very much for the opportunity. Really appreciate it. I need to go and do something else. I’ve been very fortunate in that whoever I’ve reported into has been really, really good. So, my direct bosses have always been amazing. I’ve never really had major disagreements with any of my direct bosses.
So you had enough with corporate America? You finally just said no more, right?
Tell me about the business that you started.
Negotiations Ninja is a negotiation training and coaching business. And what that means is we elevate people’s negotiation, influence, and persuasion skills to help them to either make more money and reduce risk if they’re on the sales side or save more money and reduce risk if they’re on the procurement side of the conversation. And we deal primarily with VPs and CPOs on either side of the conversation. So, you’re a VP of Sales or you’re a CPO or a Head of Procurement, and we train their procurement teams or their sales teams to negotiate better. And it all resulted from a conversation that I had with someone, a good friend of mine, in a bar where I was complaining about the lack of great negotiation content online. And then, as a good friend should and as they did, they said, ‘Well, don’t moan about it. Do something about it.’ And so, I had a few more drinks and decided that was a great idea and ended up buying all of the wrong equipment to start a podcast. Started a podcast, and that resulted in what we have today, which is one of the most well-known negotiation training companies in the world.
It’s like starting a business and how hard it is, and then we’ll get more into the negotiation stuff. I want to make sure people walk away today with some tips and things that they can do to become better negotiators themselves. But what’s really fascinating to me is the how hard it is to become an entrepreneur and then stick with it. Yeah, a lot of businesses fail, and they fail within the first one or two years, and you’ve been able to survive and stick with it, which is not easy.
So, you started your business. How did you get your first customer?
My first customer was a friend who’s still a very good friend. His name is Ben Johnson. Shout out to Ben Johnson. He runs a company called Frontier Marketing. And I think it was a pity sale, honestly. I think he took a pity on me and said, ‘Well, why don’t you just come out to Vancouver and present to this group of folks that I’m a part of? And you know, I’ll pay for your flight and your accommodation and a little bit of scratch on the side. And you know, maybe that’ll be the first thing that will get you going.’ Turns out it was, so once I had that, that helped me with a lot of confidence to be able to say, ‘Okay, you know, where do I go from here and where do I take it from here?’ So, the first sale I did was to a friend who really helped me out and helped me out with a lot of confidence with it.
Did you make any money from your first sale?
No, no. I don’t think I did. I think after all of the expenses were done, I think I lost money. But it was a good experience. It was the right thing to do. In terms of like reaching out to someone who you can help you get on your way, and it certainly didn’t make me any money.
It’s a customer. I use that as leverage to basically have social proof. So, one of the main principles of influence is to be able to show credibility. That helped me to show a little bit of credibility, obviously with all the procurement and sales experience I’d previously had too. And then, that helped me to develop some social proof and go on to the next sale. So, I was able to use that to leverage into the next conversation.
So, a lot of my friends that work in corporate, that hate working in corporate but are too afraid to leave and start their own company, yeah, the number one objection I hear is, ‘I’m not good at sales.’
Yeah, I don’t know. I can’t. I don’t know. I can’t go and constantly be selling and getting new clients.
How did you overcome that objection in your head? And what has been kind of your go-to-market sales strategy? Because getting sales is tough, and just because you get a couple clients doesn’t mean you don’t always need to be focusing on pipeline, yeah, exactly.
For me, I’m sort of fortunate in that I’ve always enjoyed sales. So, I’ve never really felt like it was a chore or a burden. It’s always something I’ve really liked. So, it’s not something that I’ve felt like I hated doing. Is it difficult? Sure, absolutely. It’s difficult, but so is everything. And so, for those people that maybe feel like they’re not good at sales, I would ask them, ‘Well, have you ever done it?’ And if you haven’t done it, then how do you know if you’re not good at it? And then, the second thing that I would say to those folks that maybe are afraid to start their own businesses is, ‘Don’t.’ It’s as crazy as that sounds. If you don’t have an overwhelming desire, like where you wake up every day and you feel like if you continue with what you’re doing, you’re gonna die if you don’t start your own business, if you don’t feel that way, don’t do it. Because it’s going to be too hard, right? Like the desire has to be so great that there is no other option. You’ve got to burn the boats, you know? The whole story about where, you know, the conqueror was that got onto the island burned the boats, raced to the other side of the island to conquer. You’ve got to be willing to burn the boats. And because there’s no way back once you make that decision, you’ve got to be in it because statistically, as you mentioned, most fail, right? So, you can change your mind, but I mean you’re not really giving yourself the odds to be able to succeed. So, I would just say if you don’t have that overwhelming desire to do it, don’t do it.
What is your go-to-market strategy? How are you building and maintaining pipeline, given that you run a business, you have a family, and you’re doing a lot of the work actually yourself, right?
A lot of it is targeted account selling, so we try our best to stay away from the sort of spray and pray kind of approach. We target our accounts very specifically, and we use a lot of relationships to leverage conversations into those accounts, and it’s very targeted on how we speak to those people. For example, I sent just before this conversation, I sent out a LinkedIn message, an email, and a text message to one of the accounts that we’re targeting next week. They’re going to get a physical letter in the mail from me, handwritten, to say, “Hey, let’s have a conversation the following week.” You know, if they don’t return, there’s going to be a series of steps that we do that will be very, very targeted because we’re only after a very small portion of types of businesses that we go after because of the way that we do our training. So, we have to be very targeted in how we approach them.
What did you think would be the most difficult part of being an entrepreneur versus what actually has been the most difficult? That’s a really good question. I thought the hardest part, probably, to running a business would be the accounting side because I hate the accounting side, but turns out you can hire people for that, so that worked out in my favor. The hardest part is maintaining and building pipeline, I would say that’s probably the hardest part to any business, if you’re in any kind of marketing for the procurement and the supply chain people listening right now, maybe I can help you to develop a little bit of empathy for those sales and marketing people that you may be working with on an ongoing basis, whether it’s internally and externally. The amount of effort and creativity and focus that is and stress that is required to maintain a business and grow a business is mind-blowingly difficult, it is really, really hard. Now I’m lucky in that I actually really enjoy that process, I’d like, I’m a bit of a, maybe a bit of a sadist in that respect, I really like the pain of going through that, but there are a lot of people that really struggle with that, and so you know, if you get a phone call from a salesperson, take it, even if it’s just to say no, say no respectfully and then move on, don’t ignore it because they’re gonna try and reach out to you again, it’s easier to pick up the phone and say no.
So I see we have lots of questions starting to come in from the audience that are negotiation related questions, Mark. So we’ll pivot our conversation a little bit to talk about what your company actually does, and then I want to make sure we have time to get to people’s specific questions. So, your business, you help people become better negotiators, sounds like you focus on sales and people in procurement and supply chain, that’s right. Why is it important for someone to hire an outside expert to come in and help with negotiation? I’m, if I’m putting my hat on here and thinking about, you know, I’m a CPO or Chief Supply Chain Officer, I pay my team a lot of money to come in and do their job and they should already know these things, yeah, you would think. They should already know a lot of the things. Unfortunately, for many people, even if they do know some things, they get stuck in a rut and they have the same routine and the same tactics that they do over and over and over, and whoever’s sitting on the other side of the table can usually see those from sort of a mile away. Also, most people don’t really know how to approach negotiations. Most people, as much as it might shock you, Sarah, most people are winging it. Most people actually have no idea what they’re doing when it comes to a negotiation. Some people might have a little bit of an idea, but you know, the first question I thought was an interesting one where you said, why should someone hire an expert to come in and train? Because you increase the amount of profitability and reduce the amount of risk per person that you have within the organization. So if you want to maximize the output of the people that you have, you hire an expert to do that, right? Especially if you feel like you need to develop that skill set. It would be the same as hiring any expert externally. Like, why do you hire someone to help you with process development? Why do you hire someone to help you give you consulting expertise on intake? Why do you hire someone to show you how to maximize the productivity of your team? Because you probably don’t have the ideas or you have some ideas and you’re like, I wonder if we could get some different ideas. So that’s why you hire someone. At the end of the day, you’ve got to make a decision on what’s best for you. If you don’t have the budget to be able to operate that, don’t hire someone, buy a stack of books, get your people on some video courses and do it that way. It’s not going to be as effective as bringing someone in to be able to do that level of training, but at least it’s a good stop gap measure to help with that process. So even if you don’t have the budget to be able to do it, make sure you’re actually doing something to improve the negotiation skills of your team. Ultimately, it’s about making more money and reducing risk, right? At the end of the day, those are the two main functions that I’m hired for, how do we make more money or how do we save more money, and how do we reduce risk? And if you need help with those two things, negotiations are probably part of the equation for you.
So, my leader brings you in to run a negotiation workshop or do some sort of training, what are you going to teach me? Depends on what you need. So, it ultimately at the end of the day, I need to have a very in-depth discussion with whomever the leader is to be able to say, “Okay, where are the gaps? Where do you see needs being really missed?” And also to chat with some of the team to say, “Okay, give me your feedback. What do you want to learn?” And then I provide some insights on what I think they should learn based on the discussion that we’ve had. And then we move forward generally with a curriculum that’s developed for that. Most leaders that I speak to are trying to train their team on negotiation fundamentals. The real thing is that really lever up a team, most teams aren’t ready to get into the really advanced negotiation and persuasion influence tactics. Most teams are focused on the strategy, like how do we ensure that we’re all approaching the negotiation the same way? Yes, everyone has their own unique style, but we want to make sure that everyone’s approaching the negotiation the same way strategically so that we can create consistency in a lot of our results. So most leaders that I speak to or hire me for that reason.
So Rodrigo’s question, he wants to know, what do you think is the hardest part or most common problem for organizations for getting into a strong position to negotiate? Planning and preparation. Most people don’t invest the time that they need to plan and prepare appropriately. Most people actually don’t even know what they need or want. They are responding to something instead of planning for something. So someone sends in a quote, if you’re on the procurement side, and now you’re reacting to the quote instead of thinking about what do we actually need, what do we actually want? And so you’re automatically on the back foot immediately. Same thing on the sales side, you’re often responding to a response from a procurement person instead of thinking very deeply about, you know, what do we actually need from this deal? What, how are we going to reduce risk, how are we going to maximize profitability, how are we going to increase sales? Are we going to cross-sell into anything? Like so many people don’t think about those as negotiable items, but you’ve got to think very clearly about what your negotiable items are that you’re going to try and get into the deal and then make a deal that makes sense for you that surrounds those things. We call those success drivers, what are the things that are going to drive your success in the negotiation? What are the success drivers? Can we go through this totally? It really depends on what negotiation you’re going into because each negotiation is unique, so you can’t really say, well, you know, my the success drivers for this negotiation are going to be exactly the same as the success drivers for the next negotiation.
In one deal, you may be negotiating with a textile company in Vietnam, and they are trying to buy raw materials from you, and you’re selling into that textile company. You’re going to have different needs, you’re going to have different wants from that negotiation than you do when you negotiate a software deal, for example, so it totally depends on the market that you’re playing in, the industry that you’re playing in, the geography that you’re playing in, the culture that you’re negotiating with, and for a lot of people, they don’t like that answer because they want the Easy Button. They want to take the same thing and apply it across all negotiations. That’s a massive mistake because you’re going to be leaving a ton of value on the table and you’re going to really put your organization in a lot of risk.
What makes a good negotiator? Curiosity. It’s probably the one main attribute, personal attribute or characteristic, and good listening skills. If you have those as characteristics or attributes, those are probably the two biggest personal attributes that will help you to become a great negotiator. Outside of that, it’s like any skill. The more that you practice it, the better you’re gonna get. So as long as you’re practicing and learning, you’re going to get better.
How can someone practice their negotiation skills outside of having to do it for work? Role play, that’s the biggest thing that we advise. So find someone internally within the organization or someone personally that you trust and have regular role plays with them on the next few negotiations that you’re going to be going into. Give them a role, you have your role, you plan and prepare appropriately, you tell them what role they need to play, and role play the negotiation. That’s probably best. And then also practice it wherever you go. I mean practice your bargaining, practice your bartering. If you go to the store, ask for something for a deal. Like a lot of people really struggle with the fear of rejection in negotiations because they’re afraid, like if I ask for something, this person’s gonna say no, and I’m going to feel shame or ridicule or whatever feeling you’re feeling. And that’s a normal feeling, by the way. That’s not, you shouldn’t be ashamed to feel that feeling, but you should practice to deal with that feeling. So learn how to deal with it, practice it wherever you go. Ask for more than you think you need in those situations so that you can see what you can get. I mean, many of the people that I speak to, I think including you, ask for deals on airfare or hotels to be upgraded or whatever it might be. Perfect situations because you and I and a few other folks in this space do a ton of travel. And if you’re not utilizing those negotiation skills to at least try and get a better hotel room, then you’re really doing yourself a disservice.
Arter has a couple questions. What do you think about the value for money in procurement? I’ll expand on that with his second question. If we receive a satisfying proposal at the beginning of the negotiation, should we push further or take it? But is the juice worth the squeeze? I guess is his question. It depends on what it is you’re trying to achieve. I mean, if you know, like if you’ve understood from the business what the urgency of it is and what the importance of the project is, this is where a lot of procurement people go with the rails. They haven’t first sat down with the business owner to say, “Okay, how important is this to the business? And what’s the urgency, meaning like when do you need a decision in place, when do you need a solution in place? What happens if the decision isn’t made by that time and what happens if the solution isn’t in place by that time?” Like what’s the impact to the business? Then you don’t know, right? But if someone tells you like, “We gotta get this in today,” and the impact to the business if we don’t get this in today is, you know, 500 grand per day, and the negotiation is fifty thousand dollars, who gives a damn about the fifty thousand dollars? Get it done, right? Move on. But if you’ve got more time to be able to maximize that negotiation, now you’ve got more time to be able to do that. But first check with the business to understand what the urgency and the importance of it is.
So in my career, I’ve been on the receiving side and the creating side of RFQs and RFIs, and I’ll save my tangents for a different conversation here today, yeah, but it’s something that most people, whether you’re on the buy side or the sell side, have had to experience or be involved in in their careers, right? What should somebody do when they receive an RFQ or RFI? I see it come in my email, I see it come in my inbox, what is the first step I should take? Probably the first thing I would want you to do if you were a salesperson and you’ve received an RFI or an RFQ is to be able to determine whether or not you’ve even got a legitimate shot of being top two, because otherwise you’re wasting your time. And I know that sounds like a ridiculous thing to say, but the RFP, RFI, RFQ process is there to benchmark primarily the providers of the service or the product that the person in procurement is buying. They’re trying to understand who could offer the best value for the thing that they’re trying to buy. If you don’t think you’ve got a good enough shot to be top two or top three, don’t bother responding, because the amount of time that you’re going to invest into the process is so substantial and the amount of energy that you’re going to invest into the process is so substantial that I would suggest it’s not worth it for you, unless you do that, unless you’re just doing it to make sure you stay on the list, right? That they constantly send the RFPs and the RFQs out to if there’s a list, for example, that they send folks out to, then maybe it’s worth it. But if you don’t have a decent shot of getting into at least top two or top three, don’t do it.
So, let’s say I think I have a chance, I can make it in the top two. What should I do next? You need to understand what it is there, or at least try your best to understand what it is they’re actually trying to source. Because it may not necessarily be all that obvious based on the RFQ or the RFI. I’ve seen some very well-written RFPs, RFQs, RFIs, but I’ve also seen some horrifically written RFPs, RFQs, RFIs, so try and get a better understanding of what they’re actually trying to achieve. So, call the procurement person who sent out the RFI and say, “What are you trying to achieve? Call the salesperson or sorry, the business owner that you think is responsible for those things and say, “What are you trying to achieve here?” Usually, in most RFPs, RFQs, they’re gonna say, “Let us… There’s an acceptance date, that’s your first usual milestone, right? You accept the RFP, you’re gonna participate in the process, and sometimes there is language associated inside of that RFP that says you can only chat with procurement, for example. You’re not allowed to go around procurement before you sign off that you’re part of that process, that you’re agreeing to those terms. Call the person in the business that you think is responsible for this and try and get their insights on it before you say yes, you’re going to participate in the process. Because once you say yes, you’re going to participate in that process, you’re bound by those rules, and you will get a slap on the wrist and sometimes disqualified from the process for going around procurement in that process. So, make sure that you get an understanding of what they actually want and what they’re actually trying to achieve. And also ask the point-blank question, like, you sent this to me, I need to know if you think I’m a top two provider because otherwise, I may not necessarily submit a proposal. And if they, in that moment, you get a good feeling and a good sense like, “Okay, no, they’re really banking on me sending in a proposal,” okay, maybe it’s time for you to send in something and then work with whomever you have, in, by the way, marketing, your proposal-writing team, whoever it is, to make sure that your proposal is up to snuff.
How do you… How can you tell if somebody just cares about cost versus value add in an RFP? Yeah, that’s a really good question. There is, I would say, I don’t know that there is really a way to know for sure whether or not they care about cost or whether or not they care about value, unless they’ve told you what their ranking criteria is. And if they’ve told you that, you know, the most important thing, for example, is cost or is price, and if you can’t compete at that level, I would say then also don’t respond because you want to make sure that you’re making money as well. But if they’ve told you that that is the most important thing, then, then at least you know. Ask the question before you sign off on the process, if there’s a lot of questions around pricing and all that kind of stuff, generally speaking, that’s obviously very heavily weighted in their ranking criteria. But very few, and this may be shocking for a lot of salespeople to hear, but very few procurement people actually rank cost as the highest. They usually rank the technical requirements, your ability to do the work, your ability to provide the service, your actual cultural fits, sometimes even above whatever the cost is.
So don’t just make the assumption. Ask the question if you don’t get a good answer, try and determine based on the RFP how heavily they weighted based on how many questions and how intense those questions are.
Got it submitted. What should I? 100 hours would be on the light side. I’m being generous here today.
So, I’m a buyer and I’ve narrowed down my top two or my top three, right? What should I be focusing on in my negotiations as I’m trying to make a selection for the person or the provider to award the business to? Well, hopefully, by this time, as a procurement person, you’ve got your ranking criteria down. You know exactly what you’re going to rank the proponents based on because you’ve already narrowed it down to the top two. So, I would assume that your ranking criteria is done, which means if your ranking criteria is done, you’ve had a conversation internally with your business owner to say, okay, what’s the most important thing to the business? And that’s really important because as a procurement person, your needs can never supersede the needs of the people that you represent ever. And as a salesperson too, your needs can never supersede the needs of the people that you represent. So, going into the negotiation, just first understand what the business needs are and then negotiate for those things and make sure that you’re getting what the business actually needs to be successful.
So, I’ve been involved in negotiations in person and I’ve been involved in negotiations via Zoom, two very, very different things. Yes, yeah. What strategies and tactics should somebody who’s running a negotiation change if they’re doing something in person versus doing it virtually?
I think there’s a few things that people need to recognize when it comes to virtual negotiations. Just because you are on, you know, behind a screen doesn’t mean people can’t see you. So, make sure that you’re in good light, right? That light is coming in, whether it’s natural light or artificial light doesn’t really matter, just make sure that you can be seen, because you want to be seen as trustworthy, you want to be seen building a good rapport. If you’re in a dark place, if you’re in a dark situation, generally we don’t associate people hiding in the shadows with trustworthy, right? So, we want to make sure that the lighting is good, we want to make sure your audio is good, you want to make sure your video is good, make sure you have a stable internet connection, make sure you turn your camera on, and make sure you ask the counterparty to turn their camera on. That’s very, very important, because you’re still going to try your best to have an actual conversation with someone. If the counterparty doesn’t want to turn their camera on, turn your camera off, because otherwise, you’re at a strategic disadvantage. You’re not going to be getting the information that you need from them, but then ask them for next time, and I generally sort of chalk this up to being old-fashioned, and I’d like to say to people, look, I’m old-fashioned. I like to know the people that I’m having a conversation with, that we’re negotiating with. I want to see your face, I want to develop a relationship. The next time that we have this conversation, would you please make sure that you turn your camera on? And I’ll turn my camera on, and that way we get to see each other and actually have a relationship. Because if we’re successful, I want to make sure that our relationship is strong.
So, what should I do differently for an in-person negotiation versus talking to somebody on Zoom? Because there’s a lot of body language and eye contact, and I’m just curious what your thoughts are about all of that.
So, in-person negotiations are always going to be better in my opinion than virtual negotiations because you can actually touch someone and have a connection with that person. But that doesn’t necessarily mean that those things disappear in a virtual negotiation. Pardon me, I’m just going to pause for one second. I have a dry throat. You should make sure that in a virtual negotiation, if you want to have eye contact, it’s primarily a result of camera placement. Like your camera and my camera look like we have great eye contact, but you’re probably just looking at a picture of yourself and I’m looking at a picture of myself, and so we want to make sure that we at least give the impression of creating great eye contact. The same thing is true in a real situation, we want to try and mimic as much as we can from a real-life situation into a virtual negotiation. And if you want to go grab some water, feel free to do so.
Hold it, I’m far away from the water right now. So, what are the things that people should just absolutely avoid, they are just complete train wrecks, nightmares, like your list of never do these things in a negotiation?
Never get angry. I know that’s easier said than done, a lot of us have trouble with anger, but emotional outbursts are generally, unless they’re designed and engineered for a specific situation and you’re doing it intentionally to create a response, uncontrolled emotional outbursts are never a good idea. Because now what’s happening is you’re losing face in that negotiation, that person feels like you probably are untrustworthy, you can’t handle yourself in the negotiation, so how do I know if you can handle the work that we’re asking you to do? So, try your best to control and manage your emotions as best you can. That doesn’t mean you have to, there’s a lot of people that would say leave emotion at the door, that’s impossible, but you can manage your emotions a lot better. A lot of that comes down to a lot of self-awareness, and I recommend a lot of meditation and mindfulness practice, actually. It really, really helps people a lot. The other thing that you should never do in a negotiation is, if you’re in a virtual negotiation, never come off, and this goes for physical as well, but never come off as someone who is cold or distant. And I know that sounds contrary to what a lot of people have heard in negotiation training, because we want to try and maintain that poker face as best we can, right? But a lot of the goal with negotiation is to try and develop rapport with someone, to make someone feel as though they can trust you so that they can give you information. Right? We need information to negotiate, it helps us to make better decisions, and that person’s not going to give you any information if they don’t feel comfortable with you. So, you want to try and make someone feel comfortable with you, and you want to try and make them feel comfortable enough to share information with you. So, a lot of people, especially procurement people, come off as very cold, very distant, very aloof. And unfortunately, that’s not really the greatest situation to be in because we want people to share information with us. So, those are probably the two big things that I would suggest.
How do you know when to walk away if you’re not achieving what you set out to achieve at the beginning of the conversation? We talked about making sure that we are aligned with the business to understand whether or not we’re getting the things that we need to get so that they’re successful. If you’re not getting the bare minimum to make that successful, you probably should be having a conversation internally to determine whether or not you should be walking away. But in whether you’re in sales or you’re in procurement, you don’t have the luxury of walking away until you have a conversation internally with the person that you represent. Because maybe they will change their minds about what it is they actually want to achieve, and I’ve seen this many, many times where a procurement person chats with an internal stakeholder and says, “Hey, I don’t think we’re going to be able to get what we need from this company. What do you want to do?” And they say, “Well, let’s change the requirements so that we work with that company.” Now, is that the right thing to do? That’s not for me to decide, but it is for you as a procurement person to make sure that you’re aligned with the business. So, we need to make sure that we’re first having that conversation internally before we decide to walk away from the table. And then one of my good friends, Alan Sang, he says you should never walk away from the table, you should always invite the counterparty to walk away from the table, which I love. So that way, it becomes incumbent upon the person you’re negotiating with to make the decision to walk away. So, you don’t have to make the decision to walk away. And the way that you could structure that sentence would be, “Hey, I don’t think we’re going to be able to get into a range of acceptable outcomes for us for this negotiation. It doesn’t look like we’re going to be able to achieve what we want from this. Is this a negotiation that you’re prepared to walk away from if we can’t do that?” And now the ball is in their court, they have to make a decision. Usually, with most people, they’ll say, “Well, what is it that you’re struggling with?” And then you can share that with them and hopefully come to a deal that makes sense.
The environment has changed a lot for procurement practitioners, in particular, my team and I work in the direct materials, direct procurement space. I have a lot of clients in the direct material space. So, the conversation has really pivoted from I to we when talking about suppliers. I would argue that five years ago, the big bad mean procurement person comes in and flexes their muscles and squeezes, you know, 10 cents out of the supplier for every item, and that’s high five, and that’s considered a win, right? Completely changed now with major supply issues, and companies being willing, in some cases literally anything, to be able to get supply, correct. How has this new environment changed how procurement people negotiate with their suppliers?
It’s a really good question. I think it’s culturally changed things, but it should never, ever change the approach because the approach is always dependent on the situation that you’re in, right? So, the market, the industry, the geography, all of that needs to be taken into account prior to going into the conversation, and you always need to understand what the true needs of the business are. And so, culturally, I think in procurement, we’ve been so cost-focused that that has driven the type of negotiation that we generally have with our suppliers, and that’s created a culture around it. When in fact, we should have been thinking about why are we having that conversation? And now, because of the supply chain challenges that we’re having, I mean, this is a perfect situation for people to get a true understanding of what their real needs and wants are, right? Like now, the primary need for, especially a lot of direct sourcing people, like direct material sourcing people, is just getting the stuff. Right? Like now the negotiation is no longer about what the price is, yes, that’s still a component, but it’s can we actually get the material? Can we actually source it from this company? And if we need to pay more to get the stuff, we have to do the calculation internally to be able to say, “Okay, how much more are we willing to pay to do this so that we don’t lose our customers on our end because we’re selling stuff too?
So, I think for especially a lot of direct materials folks, they’re really experiencing a big crunch on two sides. They’re experiencing inflation issues and commodity issues and supply issues. So, it’s becoming incredibly difficult for a lot of direct material sourcing people to make sure that they have a curative supply. I would also argue it changes negotiation when you get to the terms and conditions of a contract because I feel like what I prioritized two or three years ago has completely…
I feel like I don’t have a lot of leverage right now in the market. What, what should my negotiation strategy be?
It’s a really good question. I mean, once you open up a contract, everything becomes negotiable within that contract. So, if you’re a procurement person and you’re, or a direct material sourcing person, and you’re opening up a contract to renegotiate payment terms or to renegotiate something else, know before you do that that once you do that, everything becomes negotiable in that contract. You can’t pick and choose because now you’re opening it up again. So, be prepared for whomever you’re negotiating with to say, “Okay, I can give you those things, but I need these things in return.” So, make sure that you’re aware of that before you go into the conversation with them.
And if you are going to renegotiate it, just make sure that it’s worth the juice, is worth the squeeze, right? Make sure that the effort that you’re putting into it is going to actually result in the change that you want to see. I’ve seen this a lot with a lot of folks changing payment terms, for example, like something from the CFO will come out and say, the CFO will say, “Hey, we’re moving payment terms from 60 to 120 days, renegotiate all of your contracts.” Well, I mean, that’s nice, right? Like it’s a good idea, but also know that if you do that, the smart suppliers are going to say, “Cool, I’ll give you 120 days if we increase our prices by 30 percent.” Now, are we willing to be able to sacrifice that? So, just think very clearly about what the result of that conversation may be. Shouldn’t stop you from having the conversation, but you should think very clearly about the effect of the conversation before you go into it.
Best negotiator you’ve ever met in person?
Herb Cohen.
And why is he the best? Herb Cohen is the author of a book, I think he’s probably about 87 now, 88. He is the author of a book called “You Can Negotiate Anything.” And in the ’80s, he was in Rolling Stone magazine, if you can believe it or not, touted to be the greatest negotiator in the world. He during the Jimmy Carter era was the person who was so good at understanding culture and politics that he was able to predict the release of people who the people who were in the Iranian hostage crisis. He was able to predict that release down to the hour. No one else can do that. He’s probably, and he’s still alive, he’s probably the greatest negotiator alive, in my opinion, yeah, that I’ve met for sure. I mean, other ones are like amazing, like if you think about Nelson Mandela or you think about folks that negotiated freedom or those kinds of things, those are amazing folks, but I haven’t met any of those folks, so Herb Cohen for sure.
Kids are pretty darn good negotiators as well, yeah, really good. The persistence is the thing that pays off with the kids, right? Like they don’t know a different way to ask for something, so it’s like, “I want this. Can I have this? Can I please have this? I don’t want this. Can I please?” And that’s just that the consistency and persistence is the thing that really kills people, I think. Certainly, it does with me with my kids.
All right, so we’re time for our Spitfire round. I’m gonna ask you five questions, and you’re gonna respond with the phrase or word that first comes to mind for each.
Okay.
Accomplishment you are most proud of? Maintaining my business.
Quality you admire most in yourself? Curiosity.
What’s your dream? I’m living it.
Biggest pet peeve? Lack of patience. My lack of patience.
Favorite thing to do in your downtime? Read.
If people want to reach out and connect with you, where do you want to send them?
Connect with me on LinkedIn. That’s probably the best place to do it. Just search my name, Mark Raffan, and I’m happy to have a conversation with whoever connects. Join me for our next show, October 12th, at 2 pm Eastern Standard Time.
