The best supply chain managers are also effective negotiators. Sure, negotiation skills are essential to purchasing — but they also play an important role in inventory management and transportation and logistics. Interestingly, some of the most essential negotiation skills also happen to be displayed each week on those reality TV shows about world-famous pawn shops. If you’re unfamiliar, basically, the programs depict a pawn shop staff’s interactions with customers, who bring in a variety of artifacts. Viewers watch as the players haggle over price and debate each piece’s historical background.
Following are some of those key lessons:
Knowledge is power. If the pawn stars need help, they call in local experts — rare book specialists, history buffs, longtime toy store owners and people who authenticate famous signatures. Experts negotiate more effectively than novices. Follow this example, and make sure you have the expertise to make a good deal, even if that expertise comes from an outside source.
Let the other party make the first offer. If you make the first offer, the deal is never going to get better than that number. If you quote too much, you lose money; if you quote too little, you might insult the other party and stop the negotiation in its tracks.
Likewise, never accept the first offer. It is expected that you will negotiate. I was a purchasing manager for years. If I quoted a price to a new buyer, and he or she didn’t negotiate, I would immediately withdraw my offer. Watch the pawn shows, and observe how the players always try get a better deal.
Be creative. To be a successful negotiator, you must find a deal that meets the needs of both parties. One of the pawn shop stars is known as the “King of the Bundle.” He often buys several products together to get a reduced price. In purchasing, we know this as price-quantity breaks. When you think outside the box, you’re more likely to reach a positive outcome for all.
Be ready to walk away. There are some instances when a deal is simply impossible. At these times, just turn and go. As part of your planning process, you should determine the minimum or maximum prices you are willing to accept. If, after you start to negotiate, it is obvious that a deal is never going to come together, walk away.
Don’t burn bridges. In the best possible world, negotiations should be fun. Make sure you treat the other party with respect, and don’t approach negotiating as a contest whose goal is to crush the other side. On the contrary: The key is establishing a relationship of trust. The pawn stars always take the time to get to know the customers. One shop owner will even flip a coin to determine the final deal if the haggling ever reaches an impasse. And everyone always shakes hands when a deal is done. In your own negotiations, keep in mind that building a strong relationship could yield more successful deals down the road.
Mark S. Miller, CIRM, CPM, is associate professor at Carthage College. He may be contacted at firstname.lastname@example.org.
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