CONTRIBUTION BY DR. TOM DEPAOLI – UNIVERSITY PROFESSOR AND CONSULTANT
A few years ago, I introduced the information-based negotiation concept. I defined it as a radically different approach to negotiations. It emphasises deep knowledge of the supplier and their industry. It is different from some traditional approaches to negotiations. It is not the adversarial negotiation style with the emphasis on game playing, theatrics and taking full advantage of a supplier’s weaknesses. In information-based negotiations the purchasing or supply chain professional gains a deep understanding of the supplier’s industry, its margins and its culture. In essence, this is an immersion or empathy with the supplier and the competitive landscape. The best way to describe it is that the purchasing or supply chain professional knows as much or more about the supplier and their industry as the supplier does! They become a data driven industry expert. Below is a graphical representation of the concept.
It requires a lot of homework, data digging, research and flat out work. The approach often leads to a strategic alliance or partnership with a supplier and cooperative ventures. A purchasing or supply chain professional obviously cannot do this with every supplier, only the most important ones. The challenge to the information-based concept today has dramatically shifted. Technology, data analytics and informational advances are rapidly outpacing any tactics or strategy inherent in information-based negotiations. This does not mean that relationship building becomes less important. Quite the contrary, with new technology growing pains; trust and relationships become even more critical! Below are some of the new emerging technologies that have the potential to take information-based negotiations to a higher level.
Blockchain data verification has at its foundation trust and verification. It can also help understand trends and risks. It promises to practically eliminate non-vale adding work for supply chain professionals thus allowing them to focus on breakthrough ventures and more strategic projects. In fact, the entire procure-to-pay process will be automated.
Virtual reality and spatial analytics will provide a visual record of the entire supply chain and a record what actually happened at every stage that a product experienced. Super enhanced QR code generators will give a complete supply chain “movie” of every step. Instant visual contact will be possible with suppliers’ factories, warehouses and logistics platforms (container ships, aircraft, astronomies trucks etc.) All parties will see any upsets to the supply chain and take immediate corrective actions.
Predictive analytics models will help with total cost of ownership differences, supplier choices, and country and geopolitical risk assessments.
Social media harnessing will greatly improve marketing campaign efficiencies and results. Customers online behaviors will be accessed, understood and met with ever increasing speed. Customers will be able to provide real time feedback on products, packaging and other satisfaction issues. This will help the organization master speed-to-market and better understand the voice-of-the-customer.
An information-based approach has tremendous flexibility to cope with market and industry changes. Information drives supply chain decisions. It requires the supply chain professional to become the resident expert on a market and an industry. The major change here is that now it requires them to understand and take advantage of new supply chain enhancing technologies. Using the information-based approach is one of the best methodologies for transforming your supply chain and developing true breakthroughs with your supplier.