Procurement Process

Procurement is the acquisition of goods or commodities by a company, organization, institution, or a person. This simply means the purchase of goods from suppliers at the lowest possible cost. The best way to do this is to let the suppliers compete with each other so that the expenses of the buyer are kept at a minimum.

Procurement usually involves a bidding process in which the bidders or sellers quote their prices and the buyer accepts the lowest possible bid. This is the most efficient and cost effective method of procuring goods or services if the quality of the goods meets the buyers' requirement.

The process of procurement usually begins when the procurer starts to search the market for bidders. After identifying the suppliers, a request for bids, proposals, quotes, and information can be made. However, direct contact with bidders can also be made instead of advertising the above requests.

Procurement Process

After selecting the suitable bidders, a quality check is essential in order to confirm the suitability of the goods in question. The next step would be negotiation of the terms, conditions, quality, and delivery schedules. Logistics and payment are the next two important processes that determine the safe delivery and the payoff of goods.

If this whole process is carried out on the Internet, then it can be called "e-procurement." The huge market that is accessible on the Internet provides numerous and unprecedented opportunities for sellers and buyers alike. This makes it a very popular tool for researching and consulting for the procurement of goods or services.

The whole process of procurement should be carried out in compliance with the existing laws in order to avoid any legal hassles. There are many consultants on the Internet who provide education and advice regarding the procurement process.

The process of procurement may differ slightly from one company to another, but the process is usually symbiotic in nature. It benefits both the buyer and the seller.

Procurement Process
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Procurement provides detailed information on Procurement, Procurement Software, E Procurement Solutions, Procurement Management and more. Procurement is affiliated with India Offshore Outsourcing.

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Effective Negotiation

INTRODUCTION

The whole cosmic economy is interactive phenomenon of animate and inanimate objects. In addition, the objects are interdependent on each other for growth and survival. Human beings are epitome of Divine Creative Activity. The interactive feature of mankind is vital aspect of Divine Scheme of Creation. A rational-moral human interaction quickens / softens evolution of individuals & groups. Mankind faces multiple challenges during varied interactions. The most complex, harmful, and frequent problem of interactive life is miscommunication. It creates mutual hatred and distrust among individuals / groups / nations and leads towards conspiracies, rivalries, and wars. The very basis of miscommunication are Perceptual Errors.Perceptual errors produce misconception among individuals / groups so that miscommunication is surfaced. Consequently, the people involved brake contacts with each other and opt long silence or confrontation or indifference. The unwanted situation can be solved through negotiation. Negotiation is helpful in every sphere of interactive life; it is used to bridge the gaps between husband and wife, parents and children, entrepreneurs and workers, business partners, political leaders, etc. In order to realize successful negotiation we must understand ins and outs of negotiation. Negotiation is the conflict management process of communication to make a compromise/better solution.The successful negotiation is called Effective Negotiation. Effective negotiation is knowledge based, manner driven, and wisdom led negotiation. It creates pragmatic and satisfactory solutions for each party.

PERCEPTUAL ERRORS

Effective Negotiation

Man is intelligent creation of Absolute Intelligence. The distinctive human trait, intellect or perceptual intelligence, make the human being supreme creation of universe. But, intellect can misjudge/misinterpret due to ignorance or lustful tendencies of human nature. Perceptual errors or intellectual mistakes lead to biases in information processing / final judgments. There may arise three types of perceptual errors in a communication process.

Generalization: -Small amount of information are used to draw universal conclusions, e.g., old people are conservative, this person is old so that is conservative, or a humble person is judged to be more honest than a scowling person, even there is no consistent relationship between conservativeness & age or courtesy and honesty. The multiple social rifts such as family rifts and neighborhood rifts are surfaced due to unscientific generalizations.

Projection: -It occurs when people ascribe to others the characteristics or feelings that they have, for instance, a person feels that he will be frustrated if he were in the other position, then he is likely to perceive that the other person is frustrated. People respond differently to similar situations so that projection of own feeling to other may be incorrect. The multiple political mis-communications are generally due to wrong projections.

Power: - Power is an important leverage during interactions; it gives edge to one party over the other. Power develops the perception that you have power and you can impose a verdict, the power-perception limits viable options or can make someone wrongdoer, because, power has germs of corruption-development - in Acton's words, 'Power tends to corrupt and absolute powers corrupts absolutely.' The major sources of power are - Information and Expertise, Control over resources, Location / Position in an organization. Power tactics should be used only as last resort. Ignoring temporal suitability of power tactics may create chaos in the environment; a chaotic situation has certain aftermath for the power user.

CHARACTERISTICS OF NEGOTIATION PROCESS

The prominent characteristics of a negotiation process are:

Interdependence: - In negotiation both parties need each other to arrive at some solution. This situation is called interdependence. Interdependence leads towards mutual adjustments during negotiation.

Mutual Adjustments: - Negotiating parties know that they can influence the other's outcome and the other can in turn, influence their outcome. This mutual adjustment continues through out the negotiating process. Mutual Adjustments persuade the negotiating parties towards flexibility and concessions.

Flexibility and Concession: - Flexibility and concession is necessary for a settlement. In order to arrive at some acceptable outcome, it is essential to know what we want and what we are prepared to give to get something. It sounds simple but most people enter negotiations without planning their desired outcomes and believe that it is a matter of power or tactics The lopsided approach may lead towards failure. It is noteworthy that a lenient approach on concessions may lead towards unfair demands while strict approach towards concessions may create angry environ. An optimal mix of perceptual intelligence, emotional intelligence, & intentional intelligence is invoked for honest/accurate flexibility and concessions. A negotiation generally encounters two dilemmas:

Dilemma of Honesty: -The dilemma is concerned how much of the truth is to tell to other party. On the one hand, telling the person everything about your situation may give that person the opportunity to take advantage of you. On the other hand, not telling the other person anything about your needs and desires may lead to a deadlock due to lack of information. A principle stand towards information sharing is extremely effective for successful negotiation. It is noteworthy that the forgery of information/emotions is uncovered ultimately. Dilemma of Trust: - The second dilemma is concerned with how much to believe of what the other party tells you. If you believe everything that the other party says, he/she may take advantage of you. If you believe nothing, there would be deadlock. The trust depends on many factors such as reputation of party, past experiences, and present circumstances. The principle, "truth is ever green" is very much relevant for successful negotiation; otherwise one has to speak countless lies to conceal one lie even then truth is exposed ultimately.

PATTERN OF NEGOTIATION PROCESS

There is no standard and scientific pattern of successful negotiation; however, a general outline can be prepared to start any negotiation.

Framing: -It is the conceptual platform by which the parties in a negotiation define the problem. For example, Kashmir issue between India and Pakistan can be negotiated on religious frame or on historical frame.

Goal Setting: -It gives foundation to negotiation. It is necessary for successful negotiation. Goal setting includes stating goals, setting goal priorities, identifying multi-goal packages.

Planning: -Effective planning requires hard work on number of steps, such as:

Defining Issues, (agenda) - Controlling the number and size of issues in the discussion, Desirability of the defined issues - Enhancing the desirability of the options and alternatives that each party presents to the other, Define Common interests / needs - Establishing a common ground on which the parties can find a basis for agreement on issues, Research - It includes consulting related stakeholders, gathering information, developing supporting arguments, and analyzing the party.

Developing Strategy: -Strategy is an intentional work-pattern to achieve some goals. It is based on good planning. Strategy formulation modal of effective negotiation identify four elements to formulate effective strategies:

Choice: - negotiation is voluntary, i.e., a matter of choice and the solution cannot be imposed. Constraints: - Negotiation outcomes are subject to some constraints. The modal suggests pragmatism over doctrine. Interdependence: - Parties motives are interdependent, Imperfect Information: - Parties have imperfect information about each others strengths / weaknesses.

TYPES OF NEGOTIATION

Distributive Negotiation

In win-lose / distributive bargaining parties seek their own maximum advantage through concealing information, misleading or using manipulative tactics. All these actions may lead towards bitterness or hostility. It is noteworthy that effective negotiation is an attempt to resolve a conflict with reason or without force. The second type of distributive bargaining is accommodative or lose-win strategy. One party is ready for some loss for the time being or in short run to achieve some long-run benefits.

Integrative Negotiation

It is win-win / cooperative negotiation. It allows both sides to achieve their goals. The multiple business links such as partnership and varied social linkages such as kinship are generally based on win-win approach, i.e., both parties get benefits from contact. The approach behind integrative negotiation is synergy, i.e., to expand/create possibilities so that benefits will be increased for all parties.

CONCLUDING REMARKS

Negotiation is extremely complex phenomena. It demands knowledge, wisdom, and courtesy to arrive at some acceptable outcome for the negotiating parties. The decision-making process in negotiation passes through four phases:

Orientation - In orientation phase, group members socialize, set up certain rules of communication, and agree on their reason for meeting.

Conflict - In the conflict phase, parties begin to discuss their positions on the problem, the environment is filled with arguments / confrontation / war of words.

Emergence - In the emergence phase, members arrive at some acceptable solution and put aside the differences and objections because they are convinced.

Reinforcement - In the reinforced phase, group feelings are rebuilt, outcomes of negotiation are summarized for each party, and solution is implemented in a way to block future conflicts.

The negotiating parties come up with three solutions - win-win, win-lose, and lose-win. The principle behind the win-win strategy is that the parties in conflict can better solve their problem by working together than by waging war. The principle behind the win-lose strategy is that the parties in conflict can reap more benefits by manipulating the situation than by developing consensus. The decision about manipulation should be based on pure reason subject to certain moral values. Otherwise, it would be harmful for manipulator. The principle behind the lose-win or accommodative strategy is that the one party in conflict can reap more benefits in the long run by accommodating the other party in the short run. The decision about accommodative bargain should be based on pure reason subject to certain scientific evaluation; otherwise, it may be harmful for the accommodating party.

Effective Negotiation
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Six Steps For Negotiation Preparation

The most commonly overlooked aspect of negotiation is preparation. We say things like, "We're just in the negotiation stage of the deal ..." There is no more profitable expenditure of time than the time spent preparing to negotiate. Here's your checklist:

Know what you want and don't want ... Most of us have a general idea of what we want or want to avoid in a deal. Unfortunately, general objectives tend to render general results ... leading to second guessing and dissatisfaction. Instead, write a paragraph describing in detail what you want and don't want from the transaction, then, edit this description furiously until it is laser focused and precise. When we are crystal clear on our objective(s) and rationale(s) for their acquisition, we are most likely to achieve desired results. Know what your counterpart wants and doesn't want ... Now do the same for your counterpart. Write the description of what your opposite is looking for and seeking to avoid. This exercise tends to be a real stumper ... and eventually a real eye-opener. Knowing our counterpart's goals, objectives, and sought after results helps us see commonalities that lead to creative solutions.Know what concessions you are willing to give ... What must you absolutely achieve to consummate a successful bargain? What terms, conditions, extras could you live without? Every great negotiator knows there must be give and take on both sides for agreements that make sense.Know your alternatives ... Remember when you bought your first car? Mine was a 1956 T-Bird. The ,guy I bought mine from told me, "I like you and want to sell you the car ... but there's another person coming over in 30 minutes who also wants the car." Wow, did the dynamics of the negotiation shift on the spot. Having an alternative vendor or supplier really helps your level of confidence.Know your counterpart and your subject matter ... A lot of information is available to us on personality styles, body language, and neuro-linguistic programming. Remember transactions take place between people ... and people view the same facts and appeals differently. Subject matter is simple ... Know it cold-there is no excuse for being ill informed ... and lost credibility is rarely recovered.Rehearse You know how to get to Carnegie Hall! It's the same road to negotiation success - Practice - Practice -Practice! Attend swap meets and flea markets ... They are wonderful opportunities to sharpen your skills. Remember use it or lose it! Most negotiators rarely, if ever, thoroughly prepare to negotiate. But this is the magic! Try this checklist before you negotiate ... Your returns will improve dramatically.

Bio

Six Steps For Negotiation Preparation

Six Steps For Negotiation Preparation
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As a California Criminal Trial Lawyer with 28 years of courtroom experience, JOHN PATRICK DOLAN has handled everything from traffic tickets to death penalty murder cases. Dolan is a recognized California State Bar Certified Specialist in Criminal Law and a true courtroom veteran. He is AV (highest) Martindale-Hubbell rated.

As an author, JOHN PATRICK DOLAN has written twelve, best-selling books, including his classic Negotiate like the Pros™. He is a recognized international authority on negotiation and conflict resolution. And, just to show that he does not take himself too seriously, he is also the co-author of the wildly popular Lawyer's Joke Book™.

A communications veteran, John Patrick Dolan is a radio broadcaster and television legal news analyst appearing frequently on Fox News Channel, MSNBC, and Court TV. He has also been honored by the National Speakers Association as a member of the Professional Speakers Hall of Fame.

In addition to his professional legal experience, John Patrick Dolan serves as CEO of LawTalk™ MCLE, Inc., a continuing legal education company.

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Writing an RFP (Request for Proposal)

A while back, a potential client provided me with some general details of the writing work he wanted me to do for his company. Then he asked me to send him a proposal.

Proposal?! I panicked as I tried to confirm with him what he meant by that since I had never done one before, at least not as a freelancer.

I must've not really wanted to pursue this opportunity since I didn't bother to do research or follow up with the company after submitting a contract instead of a proposal. A little time passed, I came across an article on writing RFPs (Request for Proposal). Ding! The light bulb went on. This guy verbally gave me his RFP and wanted a written response.

Writing an RFP (Request for Proposal)

When a company needs a project to be completed by a contractor or outside source, they write a RFP. This is a formal document describing the project, how the contract companies should respond, how the proposals will be reviewed, and contact information. Often, the company documents the submission guidelines to make it easier for them to compare responses. There are no specific standards or guidelines for creating the RFP, but government agencies usually strict standards they follow when conducting the proposal process.

Outside companies read the RFP and write a proposal (a bid) explaining how they can best provide and meet those needs. When writing the proposal, the company should closely follow the guidelines established in the RFP to avoid being removed from consideration for the potential project.

A typical proposal contains:

Executive summary - summary of the entire proposal Statement of need - why project is necessary Project description - How project will be implemented and evaluated Organization information Project schedule Budget Conclusion

My situation was an informal version of all this. The client gave me a high level overview of what I might do for him. If I knew then what I know now, I would've written up a description of the client's needs and how I would complete the work in meeting those needs.

Small businesses would likely do a proposal in between the one I got and the complex government required ones. Most small businesses will be prompted to write a proposal when approaching a client. The client may ask you to submit a proposal outlining what you can do for them. In this case, write a proposal including the elements of a typical proposal and keep it short and to the point especially if the client is not a large company.

There are examples of RFPs and responses peppered throughout the Web, but which one you can learn from depends on the type of work involved. A proposal can be two pages or as big as a book. Rely on your favorite search engine and do the research to create an unbeatable proposal.

Writing an RFP (Request for Proposal)
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Meryl K. Evans, Content Maven, is Editor-in-Chief of eNewsletter Journal and The Remediator Security Digest. She's a slave to a MarketingProfs weekly column and a Web design reference guide at InformIT. She is the author of the popular e-report, How to Start a Business Blog and Build Traffic. Visit her site at http://www.meryl.net/blog/ for free newsletters, articles, and tips.

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Negotiation - Planning For A Successful Outcome

In any kind of negotiation the planning stage is probably the most important. Too often we go in badly prepared and end up giving concessions that reduce the overall profitability of the final deal. The importance of planning is in having a very clear idea before entering into the negotiation i.e.

o What are my objectives?

o What does the other side wish to achieve?

Negotiation - Planning For A Successful Outcome

o What information will influence the final outcome of the negotiation?

o What concessions can I make?

o How am I going to achieve my objectives?

o What part will other people play in the negotiation?

Generally, the more time that is spent in planning and preparing for the negotiation,
the more beneficial will be the final outcome.

Objectives:

Before entering into the negotiation, you need to have a clear idea of your objectives
and try to work out those of the other side. Ask yourself the following questions:

o What exactly do I wish to achieve from this negotiation?

o Which of my objectives:

- Must I achieve?

- Do I intend to achieve?

- Would I like to achieve?

o What options or alternatives would be acceptable to me?

o What are the other sides. objectives?

o How does the other side see the negotiation?

Information:

It has often been said that information is power. In any negotiation, there will be four types of information that is important to the final outcome.

o What information do I have that the other side has also?

o What information do I have that the other side does not have?

o What information do I need to have before negotiating with the other side?

o What information does the other side need before it can negotiate with me?

This can be particularly important when negotiating with people who concentrate
on price issues.

o What other things are important to this person?

o What pressures does he have on him to conclude the deal?

o How well is his company doing at the moment?

o How important is it that he deals with my company? etc.

The early phases of negotiation consist of both sides finding out more information
before talking about a specific deal or set of alternatives. For example, if you find out
the other side has a time deadline that only your company can meet, it may give you
the chance to negotiate on more favourable price. If you know that the other side
has recently expanded their production capacity, you may be able to negotiate more
favourable terms in return for a commitment to buy certain volumes over an agreed
time period.

By spending time as part of your preparation in listing what you already know and
what you need to know, you will give yourself a better chance to negotiate well on
your company's behalf.

Concessions :

Negotiation is a process of bargaining by which agreement is reached between two
or more parties. It is rare in negotiation for agreement to be reached immediately or
for each side to have identical objectives. More often than not, agreements have to
be worked out where concessions are given and received and this is the area where
the profitability of the final outcome will be decided.

When preparing for negotiation, it is advisable to write down a realistic assessment
of how you perceive the final outcome. Find out the limits of your authority within
the negotiation and decide what you are willing and able to concede in order to
arrive at an agreement, which satisfies all parties.

Concessions have two elements; cost and value. It is possible during negotiations to
concede issues that have little cost to you but have great value to the other side. This
is the best type of concession to make. Avoid, however, conceding on issues that
have a high cost to you irrespective of their value to the other side.

When preparing for negotiations, ask yourself the following questions:

o What is the best deal I could realistically achieve in this negotiation?

o What is the likely outcome of the negotiation?

o What is the limit of my authority?

o At which point should I walk away?

o What concessions are available to me?

o What is the cost of each concession and what value does each have to either side?

Strategy:

Planning your strategy is important in negotiation. Once you know your objectives,
you need to work out how you are going to achieve them. It is also useful to try and
see the negotiation from the other side and try and work out what their strategy will
be.

During the negotiation there will be opportunities to use various tactics and you
need to decide which of these you feel comfortable with and at the same time recognise the tactics being used by the other side. Ask yourself the following questions:

o How am I going to achieve my objectives in this negotiation?

o What is the strategy of the other side likely to be?

o What tactics should I use within the negotiation?

o What tactics are the other side likely to use?

And Finally - Tasks :

If you go into negotiation with a colleague or colleagues, you need to decide during
the preparation phase:

o What role will each team member take in the negotiation?

o How can we work together in the most effective way?

Some teams of negotiators appoint team leaders, note takers, observers and
specialists, each with their own clearly defined authority and roles to perform.
Having a clear understanding of roles within the negotiation will make the team
approach much more effective.

Copyright © 2007 Jonathan Farrington. All rights reserved

Negotiation - Planning For A Successful Outcome
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Negotiation - Understanding Movement, Concessions And Bargaining

Asking questions and listening effectively are important skills both in selling and
negotiating. The first phase of negotiation involves both parties agreeing the
background to the negotiation and fishing for the opening demand or offer.

It is often better to present the opening demand or offer in terms of a hypothetical
question, as this allows the negotiator to retreat to his initial position if necessary.

The opening offer will probably be at or just about the level of the negotiator's
maximum expectation, giving him room to manoeuvre, but not so high that the offer
lacks credibility. Do not attempt to win. at this stage, but hold sufficient back so that
you are able to move, if necessary, at a later stage.

Negotiation - Understanding Movement, Concessions And Bargaining

This is a difficult period in the negotiation process and a professional negotiator will
often use silence or other pressure techniques to solicit information from the other
party.

Further Movement and Concessions:

During negotiations, it can be in the interest of each side to keep asking questions
and raising objections. Many excellent negotiators are low reactors who will proceed
very slowly. However, given that the opening position of each party differs, then there has to be movement and concessions if a deal is to be struck.

Negotiators will tend, at first, to discuss extra demands, trying to get the other side
to agree to these without offering anything in return. They will be reluctant to give
information or will defer decisions in order to increase the pressure on the other
person.

When an offer does come, it will often be on the basis of a quotation based on the
minimum quantity at the lowest possible price. In all this, the negotiator is
attempting to dominate the interview, pressing for maximum advantage, and trying
to force the other person to concede on a major issue.

The skilled negotiator will ask the other side for a complete list of all his, or her
requirements, and will not concede on a single issue until he knows the nature of
the whole package. He will then begin to trade concessions, starting with the
smaller, less important aspects of the package.

Negotiators should avoid making one-sided concessions which will severely weaken
their final position and could affect the overall profitability of the deal.

When movement comes, it begins slowly, and then can be very rapid as both parties
sense a deal is on the cards. Movement does tend to be discontinuous with
either party moving and the other holding up the agreement at any one time. This
leads to short periods of deadlock, which can be brought to an end in different
ways.

Some of these are:

o Period of silence. Wait for the other party to speak.

o Agree to a concession. Always trade concessions by saying"If I do this, will you do that"?

o Adjournment to review positions.

o Agree to leave certain issues to one side for later and concentrate on the rest.

Identify areas of common agreement.

o The use of the relationship with the other side to break the deadlock.

Signals to be aware of that could mean the other side wishes movement to take
place could include:

o Trial movement. One side uses words like "What would you say if ...?"
or uses hypothetical examples.

o Summarises the position to date and asks "Where do we go from here?"

o One side calls for adjournment.

o Appeals to the other side's better nature.

o Asks for more information.

o Uses "crowding" techniques to force movement, e.g. aggressive behaviour, sets
deadlines and time limits, threatens use of the competition.

The use of concessions is a vital part of building a profitable relationship for both
parties in the negotiation. Earlier, we discussed the different elements that could
constitute the final deal. The use of concessions enables negotiators to build a
mutually profitable deal that is not one-sided in the other side's favour i.e. It results in a "win-win" outcome.

And Finally - Bargaining:

When it comes to bargaining try to get the other side to commit themselves first. For
example:

Scenario 1.

Buyer: "I'm willing to reach some sort of deal, but I want a 10% discount".

Salesperson: "Okay, I'll agree a 10% discount, but we'll have to look at a
longer-term agreement".

Buyer: "Well, thanks for the 10% but the 1 year contract we have already
agreed will have to stand".

Scenario 2.

Buyer: "I'm willing to reach some sort of deal, but I want a 10% discount".

Salesperson: "Okay, we may be able to look at our discount structure, but to
do that we'll need to agree a 2 year contract".

Buyer: "Okay, well 2 years may be possible, but can we go to the full 10%?"

In the first scenario an offer of 10% was made, but what was asked for was vague.
Responding to a specific demand like this we need to be vague, but positive: "Okay, we may be able to look at our discount structure". and our counter demand needs to be specific: "But to do that we'll need to agree a 2 year contract"

Remember, when you bargain, offer vague, ask specific.

Copyright © 2007 Jonathan Farrington. All rights reserved

Negotiation - Understanding Movement, Concessions And Bargaining
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You can also read his highly informative and popular weekly blog at: http://www.thejfblogit.co.uk

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