Reasons for Negotiating

Objectives of Negotiation in procurement & supply chain mgt
Several objectives are common to all procurement or sales negotiations:
  • To obtain the quality specified
  • To obtain a fair and reasonable price
  • To get the supplier to perform the contract on time.
  • To exert some control over the manner in which the contract is performed
  • To persuade the supplier to give maximum cooperation to the purchasing company.
  • To develop a sound and continuing relationship with competent suppliers.
  • To create a long-term relationship with a highly qualified supplier.
  1. The advantages of negotiation are that it limits the number of players to those involved in the dispute. This allows for a focused approach to problem solving.
  2. Arbitration allows a third party to resolve disputes between two or more parties. The advantage of this system is that it allows a neutral party to decide on a resolution to the matter presented which is binding upon all parties.
  3. Mediation has the advantage of allowing a neutral third party assist in helping find a resolution to conflicts. In short a mediator cannot force parties to accept a resolution but he or she can guide the parties to work from points of mutual agreement.
Disadvantages of negotiation
  • The disadvantage is that if the viewpoints of the parties are too distant then progress is difficult to achieve.
  • A particular negotiation may have a successful outcome. However, parties may be of unequal power and the weaker party/parties may be placed at a disadvantage. 
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